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April 19, 2024
A battle between the largest Christian university in America and President Joe Biden’s administration took a new turn this week after U.S. Department of Education Secretary Miguel Cardona reportedly vowed to shutter Grand Canyon University, a Christian college in Phoenix, Arizona.
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Cardona commented during an April 10 House Appropriations Committee hearing, stating the administration is “cracking down not only to shut them down, but to send a message to not prey on students,” according to Fox News.
GCU, in a statement delivered to CBN News, called Cardona’s statements “disturbing and defamatory.” Where the Battle Began
The university made headlines over the dispute last fall, when the Department of Education fined the school a historic $37.7 million over claims students were misled about the cost of a doctoral program.
Despite GCU denying these assertions, appealing that ruling and defiantly pledging not to pay Cardona doubled down. He said the fine is the “largest … in history against a school that lied about costs and terminated a school from Title IV.”
An October press release from the Department of Education provided further details about these claims:
The U.S. Department of Education (Department) office of Federal Student Aid (FSA) today announced a $37.7 million fine against Grand Canyon University (GCU), which disbursed the most federal student aid of all participating institutions for the past four award years. An FSA investigation found GCU lied to more than 7,500 former and current students about the cost of its doctoral programs over several years. GCU falsely advertised a lower cost than what 98% of students ended up paying to complete certain doctoral programs.
Brian Mueller, president of Grand Canyon University, recently told CBN News he believes the government is unfairly targeting his school. He called the massive $37.7 million fine “incredibly disappointing.”
Watch him respond and explain GCU’s stance: The Roots of Debate
“This all started 14 years ago … [when] Grand Canyon was in a very difficult spot,” he said, noting the school buildings were aged and the institution was millions of dollars in debt. “We switched from a nonprofit to a for-profit status and went to the public markets to get access to capital.”
Mueller continued, “We wanted to make private Christian higher education affordable to all socioeconomic classes of Americans. And the plan worked better than we thought.”
Just 10 years later, he said GCU is in a “very good spot” and the campus is “growing like crazy,” with online education exploding in popularity.
With the previous issues remedied, GCU wanted to go back to being a nonprofit university.
“We thought, for the legacy of the institution, [we] would be best served by doing that,” he said. “We went through the process and the IRS, who has the authority to do that work, did it, and said, ‘The operation you’ve set up qualifies as a nonprofit, and we’re giving you the legal authority to operate as a nonprofit.’ And then the state of Arizona reinforced that.”
But Mueller said GCU found out the Department of Education did not plan to recognize the newfound nonprofit status. After four years of reportedly attempting to work with the government, he said GCU got nowhere. That’s when GCU filed a complaint. Refusal to Recognize GCU’s Non-Profit Status
One of the Department of Education’s reported sticking points was that the university, in the midst of initial troubles, sold to a for-profit called Grand Canyon Education (GCE).
Later, the school’s board reportedly created a new entity called New GCU to buy back the university and begin the path to operating again as a nonprofit, according to Courthouse News Service.
An agreement that persists between New GCU and Grand GCE, the for-profit, seems to have sparked some consternation, as 60% of the revenue from the university goes to GCE for marketing, accounting, and other needed services something Mueller, who leads both groups, has defended.
Education officials have said this agreement operates in a for-profit manner, but school officials said these sorts of arrangements are common in the education space.
And there’s yet another twist: As Forbes has reported, the Department of Education’s refusal to recognize GCU’s nonprofit status was made under the tenure of former Education Secretary Betsy DeVos, who served under former Republican President Donald Trump.
The government wrote in a 2019 letter that officials believed the main purpose of the conversion of status was to “drive shareholder value for GCE, with GCU as its captive client potentially in perpetuity.”
The dispute over the IRS’ determination of GCU as a nonprofit forges on, as Courthouse News Service reported the Ninth Circuit recently heard arguments in the case regarding whether the Department of Education can override the IRS’ powers on the matter.
In January, U.S. Circuit Judge Daniel Collins expressed skepticism over the Education Department’s handling of the matter, directing questioning toward government attorney Casen Ross.
“I still dont understand how you understand the definition of nonprofit to carry over the entirety of the definition of 501(c)(3) so that you will be checking the IRS homework,” Collins said, doubling down when Ross reportedly pushed back. “You certainly did [check the IRS’ homework], You took their test, you applied it, and you then said they reached the wrong conclusion!”
It’s unclear when the ruling will come on that matter, though Mueller views many of GCU’s current problems, including the fine, as being rooted in the university’s decision to fight back.
“Once we filed that complaint, the retaliation started,” he said. “The [Federal Trade Commission], the Department of [Education], and the VA in Washington had publicly stated that they were going to go after for-profit institutions because their default rate on student loans was higher than the national average.”
Mueller contends GCU’s default rates are lower than the national average and that they were no longer, according to the IRS, a for-profit.
He believes federal agencies kept digging into GCU’s affairs until they could find something, settling in on the claim GCU “miscommunicated the time and cost it takes to complete a doctoral degree.” He found this particularly surprising and alleged there have been no student complaints on the matter.
It should be noted the Federal Trade Commission (FTC), purportedly based on the Department of Education claims, also announced a lawsuit in December, accusing GCU of “deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices.”
And the Department of Veterans Affairs also launched a risk-based audit to presumably explore conditions surrounding veterans using GI Bill Funds to pay for the school. GCU Refuses to Pay the Fine
Mueller told CBN News GCU is recognized for its transparency and said the school was “shocked” by these agencies’ claims.
Once the $37.7 million fine came into play, Mueller said he and the school doubled down and have no plans to stop.
“We said that it doesn’t matter whether the fine’s $37 million or $1 we’re not paying it,” he said. “We’re going to contest this and, right now, it’s under appeal.”
Mueller said the massive $37.7 million fine doesn’t make sense compared to other schools’ punihments. For instance, Penn State was fined $2.4 million, and Michigan State was slapped with $4.5 million for failing to handle crimes surrounding Jerry Sandusky and Larry Nassar, as Fox News reported.
“This $37 million dollars stands in unbelievable contrast,” Mueller said.
GCU has appealed the fine within the Education Department, but doesn’t expect to have a hearing until January. It will first be heard by the Office of Hearings and Appeals and then, if [the] resolution fails, Cardona himself. A motion to dismiss the FTC lawsuit has also been filed with the U.S. District Court in Arizona. GCU’s Massive Success
Mueller offered an interesting perspective on whether he believes the U.S. government is targeting his college because of its Christian affiliation. At its core, he said, the higher education complex is in “bad shape,” with rising tuition, claims of free speech issues, and rampant student debt.
But, while much of the college megaplex is struggling, GCU has swelled to more than 118,000 students (92,000 online students) and hasn’t “raised tuition on [the] campus in 16 years.”
Considering the wild growth and influence, Mueller pondered if some people in power might not like what they’re seeing.
“Our online campus will grow from 92,000 students to 150,000 students, because of the creative mechanisms we’re putting in place to create teachers, and nurses, and other areas of our culture [where] we don’t have enough labor,” he said. “And, so, they’re looking at that and they’re saying, ‘You know, these people are going to have a significant reach into the culture.’”
Mueller continued, “We’re the largest private university in the country. In a couple of years, will be the largest university in the country, and we do teach from a Christian worldview perspective, across all 10 colleges, across all of our programs.”
He said there’s an “appetite” for this type of education in America today. ‘Zero Findings’ in AZ Audit
Mueller also noted the Arizona State Approving Agency of the Department of Veterans Affairs conducted an audit of GCU, purportedly looking at the same issues the Department of Education and the FTC examined, and had “zero findings” to back the claims.
The Arizona State Approving Agency of the Department of Veterans Affairs responded to a CBN News inquiry about its audit by confirming that there were no findings that would prevent the state agency from approving educational benefits.
“On Feb. 20, 2024, the Arizona Department of Veterans’ Services State Approving Agency (SAA) conducted a Risk Based Survey at Grand Canyon University (GCU) at the request of the Department of Veterans Affairs (VA),” the statement read. “The Arizona SAA did not encounter any findings that would prevent the continued approval of VA education benefits at GCU.”
Mueller said he was unsurprised by the results of the audit.
“We have 26 regulatory bodies, including all the accrediting bodies that regulate what we do,” he said. “You know, accrediting bodies that do engineering, and social work, and education and business, et cetera, et cetera. We are in very, very good standing with every single accrediting body or regulatory body, except the agencies in Washington, D.C. who’ve never been here.” Where Things Currently Stand
GCU and the government remain locked in a series of procedural and legal battles but Cardona’s recent comments about shuttering the school seem to have elevated the temperature.
The university separately and specifically decried Cardona’s comments, calling the education secretary’s proclamations “disturbing and defamatory public comments.”
“Mr. Cardonas inflammatory comments, which are legally and factually incorrect, are so reckless that GCU has no choice but to demand an immediate retraction,” the statement read. “He is either confused, misinformed, or does not understand the actions taken by his own agency.”
It continued, “There are no factually supportable allegations that warrant an attempt to shut down GCU.”
The university said the Department of Education’s statements and actions epitomize “the weaponization of federal agencies power against a private Christian university.”
One final development must be mentioned: The Goldwater Institute, a conservative and libertarian think tank, has stepped in to sue the Department of Education in an effort to “get the answers the public deserves,” particularly surrounding what led to the massive $37.7 million fine.
“After this unprecedented fine was announced, the Goldwater Institute submitted a Freedom of Information Act request to the department seeking emails between key individuals of the Education Department and other federal agencies that discuss the departments fine against GCU,” the group said in a statement. “The records may help inform the public about this extraordinary fine, as well as coordination between various federal agencies in what appears to be the intentionally targeting of a successful university one thats no stranger to run-ins with the feds based on extraordinarily thin allegations.”
The Goldwater Institute accused the Department of Education of refusing to give access to those records and is, thus, taking legal recourse.
CBN News has reached out to the Department of Education and the FTC and will update the story as responses come in or more details unfold. Read more about the story here.
The GCU debate unfolds as the Department of Education also recently imposed a $14 million fine on Liberty University, a Christian school in Lynchburg, Virginia. The settlement is related to claims Liberty was guilty of “material and ongoing violations of the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (Clery Act), including with respect to its published crime statistics and treatment of sexual assault survivors.”
The Department of Education noted in a statement this was the “largest fine ever imposed for violating the Clery Act,” a law requiring colleges to provide public safety information to staff, students, and parents. Read more about those claims here.
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