Education Department walks back $37.7M fine against Grand Canyon University

Dive Brief: 

• The U.S. Department of Education walked back a $37.7 million fine levied against Grand Canyon University under the Biden administration, the large Christian institution announced Friday. 
• When the Education Department announced the fine in October 2023, it accused the university of misleading thousands of current and former students about the costs of its doctoral programs. Grand Canyon University quickly appealed the decision. 
• The agency’s Office of Hearings and Appeals has now ruled in Grand Canyon University’s favor, dismissing the case “with no findings, fines, liabilities or penalties of any kind,” according to the institution. The office dismissed the case with prejudice, meaning it cannot be reconsidered. 

Dive Insight: 

When Grand Canyon University announced its intention to appeal the $37.7 million fine, it cast the financial penalty as government overreach and the Biden administration as targeting it for being a Christian institution. 

Grand Canyon University also said at the time that the Higher Learning Commission, its accreditor, deemed its disclosures “robust and thorough” in a 2021 review — a point it reiterated last week. 

“The facts clearly support our contention that we were wrongly accused of misleading our Doctoral students and we appreciate the recognition that those accusations were without merit,” Brian Mueller, the university’s president, said in a Friday statement. 

The Education Department confirmed the news Monday. 

“Unlike the previous Administration, we will not persecute and prosecute colleges and universities based on their religious affiliation,” Ellen Keast, a department spokesperson, said in a statement. 

The university has notched other victories amid the handful of legal challenges it has faced in recent years. 

Just a few months after the Education Department fined Grand Canyon University in 2023, the Federal Trade Commission sued the institution over similar allegations regarding its doctoral programs. 

The lawsuit accused the university of telling applicants that they would only have to pay the equivalent of 20 courses to finish accelerated doctoral programs, even though almost all required more. A federal judge dismissed the lawsuit’s claims against the university in March. 

However, the FTC’s case is still ongoing against Grand Canyon Education, a for-profit company that provides marketing and enrollment services to the institution. 

Grand Canyon University was a part of GCE until 2018. When it split off from the company, the university entered a 15-year contract for educational services in exchange for about 60% of its tuition and fee revenue. Mueller also serves as the CEO of GCE.

Last September, the FTC filed an amended complaint alleging that GCE has falsely advertised Grand Canyon University as a nonprofit institution, made “abusive telemarketing calls,” and misled students about how long it would take to complete the university’s doctoral programs. 

Although the IRS considers Grand Canyon University a nonprofit, whether the Education Department does as well was the subject of a long-running legal battle. 

In 2019, the Education Department denied Grand Canyon University’s request to be considered a nonprofit for federal financial aid purposes. But a federal court ruled late last year that the agency applied the wrong legal standard when making that determination and ordered it to reconsider the university’s request under the correct statute. Grand Canyon University said Friday it hopes that process will be completed soon. 

In Friday’s announcement, Grand Canyon University described the ongoing allegations against GCE as “the same manufactured nonprofit and doctoral disclosure claims that have been refuted, rejected and dismissed.” 

Late last year, Mueller predicted during one of GCE’s earnings calls that the company would face a friendlier regulatory environment under the Trump administration. 

In Friday’s announcement, Grand Canyon University also pointed to a 2023 appeals court ruling that in part dismissed allegations from a former student, Donrich Young, who had argued in a class-action lawsuit that the institution breached its contract by making it impossible to finish doctoral programs in 60 credits as promised. 

In its ruling, the appeals court wrote that the university did not make such a promise and that enrollment documents said 60 credits was the minimum needed to complete a doctoral program. 

Young further argued that the university breached its contract by not providing the faculty support he was promised to complete his dissertation. A three-judge panel overturned a lower court’s decision to dismiss that claim and sent the case back to it for further proceedings. 

The student and the university agreed to end the lawsuit in late 2023. 

GCE faces another major lawsuit alleging the company has engaged in a racketeering scheme by misleading students about the cost of the university’s doctoral programs. Earlier this month, a federal judge rejected GCE’s motion to dismiss the case.