Christian University’s Appeal Granted in Pursuit of Nonprofit Status

November 11, 2024 TruthUSA

In a recent decision, a federal appeals court overturned the U.S. Education Department’s denial of Grand Canyon University’s petition to return to its previous nonprofit status.

Grand Canyon University (GCU), a prominent Christian higher learning institution, had its nonprofit status wrongly denied by the Education Department, according to a recent ruling by the U.S. Court of Appeals for the Ninth Circuit.

The court found that the Education Department had erred in its legal standard when rejecting GCU’s nonprofit status application in 2019, shortly after the university transitioned back to its nonprofit roots.

Originally established as a nonprofit in 1949, GCU went through a for-profit phase in 2004 before seeking to return to nonprofit status due to increased regulatory scrutiny of for-profit colleges during the Obama administration.

Despite approvals from Arizona and the IRS, the Education Department rejected GCU’s nonprofit petition, citing concerns about the university’s former for-profit owner benefiting from its earnings.

This decision also prevented GCU from marketing itself as a nonprofit institution.

In response, GCU filed a lawsuit challenging the Education Department’s decision. Subsequently, the Education Department imposed a hefty $37.7 million fine on GCU for allegedly misleading students about program costs, a claim strongly denied by the university.

Another legal challenge came from the Federal Trade Commission (FTC) accusing GCU of deceptive practices related to program costs and nonprofit status. The FTC referenced the Education Department’s analysis as supporting evidence.

Amidst these challenges, Education Secretary Miguel Cardona introduced new rules focused on penalizing for-profit colleges with high student debt-to-earnings ratios. GCU spokesperson Bob Romantic welcomed the court’s ruling favoring GCU’s nonprofit status.

The court’s decision highlighted the Education Department’s misuse of legal standards and called for a reconsideration of GCU’s nonprofit status. GCU officials expressed optimism about official recognition of their nonprofit status in the near future.

On the other hand, Grand Canyon Education, the former for-profit owner of GCU, looked forward to a more favorable regulatory environment under the upcoming Trump administration, anticipating a shift in policy towards for-profit colleges.

During an earnings call, Brian Mueller, Chairman and CEO of Grand Canyon Education, criticized the new gainful employment rules and expressed the company’s resolve to advocate for more supportive higher education policies.

Mueller emphasized the importance of having a voice in shaping future higher education policies and ensuring that institutions like GCU are valued and encouraged for their contributions to the educational landscape.

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