Grand Canyon University, nation’s largest Christian college, balks at $37 million fine by feds

Grand Canyon University, the nation’s largest Christian college, has refused to pay a record $37.7 million fine as it resists multiple federal investigations from the Biden-Harris administration.

The Phoenix campus appealed the fine in November after the Education Department’s Federal Student Aid Office accused it of “deceiving” government loan applicants about graduate program costs. School officials expect a hearing on the appeal to be held early next year.

The fine noted tuition ran $10,000 to $12,000 higher than the advertised $40,000 to $49,000 for some 78% of doctoral graduates the school required to take “continuation courses” — a common requirement in universities for students writing dissertations after finishing their coursework.

Building on that fine, the Federal Trade Commission sued GCU in December. That complaint accuses the school of using misleading advertising and telemarketing to falsely present itself as nonprofit and suggest programs cost less than they did.

At the end of December, GCU received word that the Department of Veterans Affairs had started a separate financial audit. In March, however, the VA’s Arizona State Approving Agency issued a report that found “no substantiated findings” of wrongdoing in its review of GCU records.

The Biden-Harris administration has opened five investigations into GCU since February 2021, when the school sued the Education Department for denying its request to transition from a for-profit to a nonprofit institution.

Administrators say the investigations represent a pattern of harassment and retaliation for their lawsuit, which a federal judge dismissed the following year.

“Somebody has to stand up to these people,” GCU President Brian Mueller said during a news conference in November, his voice rising with indignation.

In an email this week, GCU spokesman Bob Romantic insisted on the university’s nonprofit status under state law and IRS statutes. He also noted positive accrediting reports and pointed to multiple federal court rulings exonerating its financial practices.

“The Department of Education’s action against us is still a proposed fine at this point, as we have not had our opportunity to refute their findings through the appeals process,” Mr. Romantic said. “As such, no amount has been paid nor do we expect that it will once objective third parties have had a chance to review these unsubstantiated claims.”

In recent months, the Arizona Department of Education and conservative Goldwater Institute have come to the school’s defense as federal rhetoric about the investigations has intensified.

Rep. Rosa DeLauro, Connecticut Democrat, asked Education Secretary Miguel Cardona during an April congressional hearing how the Biden-Harris administration might shut down GCU as a “predatory for-profit school.”

“We are cracking down not only to shut them down, but to send a message not to prey on students,” Mr. Cardona responded, according to Fox News.

Mr. Cardona accused GCU in his testimony of “preying on first-generation students” who didn’t understand the degrees could cost more than the advertised price.

He cited “borrower defense, debt discharge, holding colleges more accountable, and holding higher education institutions more accountable” as ways the federal government could change that.

“Mr. Cardona’s inflammatory comments, which are legally and factually incorrect, are so reckless that GCU has no choice but to demand an immediate retraction. He is either confused, misinformed or does not understand the actions taken by his own agency,” GCU said in a statement about the hearing.

Arizona Superintendent of Public Instruction Tom Horne, a Republican elected in 2022, responded with a letter urging Mr. Cardona not to “shut down” the university.

“In the U.S., anyone accused of wrongdoing is presumed innocent and entitled to their day in court,” wrote Mr. Horne, a lawyer and former state attorney general. “For a Cabinet-level official, one who is sworn to uphold the U.S. Constitution, your threat against GCU is contrary to those constitutional guarantees and unworthy of your position.”

As of Tuesday, Mr. Horne’s office said he had received no response to the letter or acknowledgment of its receipt from the Education Department.

In February, the Phoenix-based Goldwater Institute filed a lawsuit against the Education Department after it refused to turn over emails between federal agencies discussing last year’s record fine.

The complaint asks a federal judge to make the department comply with a Freedom of Information Act request that Goldwater submitted to understand why the fine exceeded what other schools have paid in the past for covering up sexual harassment.

“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 intentional targeting of a successful university — one that’s no stranger to run-ins with the feds — based on extraordinarily thin allegations,” Goldwater staff attorney Stacy Skankey said in a statement.

The Education Department did not respond to multiple emails this week seeking comment on the dispute.

In the Oct. 31 announcement of the fine, 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.

Efforts to cancel federal student loan debts through BDR claims and other means have intensified under President Biden, who made it a signature promise of his 2020 election campaign. Vice President Kamala Harris has issued multiple public statements trumpeting the administration’s student loan forgiveness policies, which Republican presidential nominee Donald Trump opposes.

Meanwhile, Grand Canyon has argued it is more transparent about graduate degree costs than most universities. The school has long posted online notices that “continuation credits” may increase the course hours and fees required to complete advanced degrees.

Founded as a nonprofit liberal arts college by the Southern Baptist Convention in 1949, Grand Canyon morphed into a for-profit, nondenominational 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 — subsequently grew from 900 to 26,000 students and from “a couple thousand students online” to 92,000 virtual learners in 14 years.

School officials have pledged to sue the Education Department if their appeals fail next year. They noted the federal agency has refused their requests for independent mediation.

GCU’s president said in November that while 23 regulatory agencies had visited campus 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.”