Grand Canyon University appeals record $37.7 million fine from Biden administration

The nation’s largest Christian college pledged Thursday to fight a record $37.7 million fine that the Education Department levied against it for “deceiving” federal student loan applicants about graduate program costs.

Brian Mueller, president of Grand Canyon University, said the for-profit campus in Phoenix will pursue two internal Education Department appeals processes and sue the Biden administration if they fail. He did not give a timeline to resolve them but noted the Education Department had refused his requests for independent mediation.

“Somebody has to stand up to these people,” Mr. Mueller said, raising his voice with indignation several times during a midday press conference.

He said that while 23 regulatory agencies had visited the school and approved its financial practices, Education Department officials had refused his invitation to do an on-site inspection.

“Could we pay the fine? It would be a hardship, but it doesn’t matter to me whether the fine is $37 million or one dollar, we’re not going to pay the fine because the truth is just the opposite of what they’re saying,” Mr. Mueller said. “We are the single most transparent university in the country in terms of helping students understand what the time to complete a degree and the cost to complete a degree is.”

In an email, an Education Department spokesman referred The Washington Times to the Oct. 31 announcement about the fine.

In that document, the department accused Grand Canyon of falsely advertising the cost and coursework required to complete some graduate and doctoral degrees.

“GCU’s lies harmed students, broke their trust, and led to unexpectedly high levels of student debt,” said Richard Cordray, the chief operating officer of the department’s Federal Student Aid office and a Biden appointee. “Today, we are holding GCU accountable for its actions, protecting students and taxpayers, and upholding the integrity of the federal student aid programs.”

The department said it would encourage more than 7,500 former GCU students to file federal borrower defense to repayment claims to cancel their loan debts.

Grand Canyon, which had 20 days to appeal the fine, has argued it was more transparent about graduate degree costs than most universities.

The school said it posted clearly on its website that “continuation credits” — a common practice in higher education — could increase the course hours and fees required to complete advanced degrees.

Speaking to reporters Thursday, Mr. Mueller called the dispute a “colossal waste of time and resources,” “government overreach” and “the weaponization of a department that has an opinion that isn’t shared by anybody else.”

“There’s no corroborating evidence to indicate that there’s something nefarious about what’s going on here, which is why things have never been better at GCU,” he said.

Founded as a nonprofit liberal arts college by the Southern Baptist Convention in 1949, Grand Canyon morphed into a for-profit, non-denominational Christian university in 2004 as it struggled to pay its bills.

The school hired Mr. Mueller, a former leader at the for-profit University of Phoenix, in 2008. He said the campus — which does not accept state tax subsidies — has grown from 900 to 26,000 students and from “a couple thousand students online” to 92,000 virtual learners over the past 14 years.

The move to fine GCU comes as the Biden administration works to clear a backlog of $6 billion in BDR claims the Trump administration ignored. As part of a class action legal settlement last year, a federal judge has ordered the Education Department to process them by July 2025.

With BDR claims, borrowers can ask to have their federal student loans discharged if they can show a private or public college misled them or engaged in other misconduct prohibited by state law. Once the government forgives a loan, it may impose fines to recoup the money from a school.

According to the latest progress report from Federal Student Aid, officials forgave the debts of 11,779 BDR claimants between May 1 and July 29, denied none of the applicants, and asked 2,041 others to “revise and resubmit” paperwork. Another 60,429 claims sent to campuses were still pending.

Efforts to cancel federal student loan debts have intensified under President Biden, who promised it during his 2020 election campaign.

Besides GCU, the Education Department under the Biden administration has issued fines against the for-profit DeVry University and the for-profit University of Phoenix. As legal challenges against the department have mounted, it has also started sending BDR claims to nonprofit schools in recent months.

Robert Layton, an administrative law judge in the federal Office of Hearings and Appeals, temporarily blocked the Education Department in an Oct. 17 ruling from collecting a $24 million fine against DeVry, pending the outcome of legal challenges.

The Biden administration’s use of BDR claims to forgive student debts incentivizes frivolous claims, said Bill Caruso, DeVry’s chief legal officer, and Jake Bonifield, the school’s vice president of public policy and government relations.

“The reward of instant loan forgiveness will surely continue to invite borrowers to submit unfounded, incomplete, and implausible claims,” they told The Times in a joint statement.

In a separate lawsuit, a federal appeals court has temporarily blocked the Biden administration from enforcing new BDR regulations, pending the outcome of a legal challenge the Career Education Colleges and Universities network of for-profit campuses filed in Texas.

The Education Department says the new standards will weed out frivolous claims. Critics say they would make it easier for loan forgiveness activists to make frivolous bulk claims look legitimate by coaching former students to “check the right boxes,” setting up colleges like GCU to pay for the losses without due process.

“The misuse of BDR against any institution is reprehensible, and the past several months have shown the absurdity of the process,” Jason Altmire, president of CECU and a former Democratic congressman from Pennsylvania, told The Times. “The new Biden BDR rules are even more unrestrained and open-ended.”