FTC drops lawsuit over how Grand Canyon University marketed its doctoral programs

The Federal Trade Commission has voted to drop its lawsuit against Grand Canyon University’s largest service provider, Grand Canyon Education, and the school’s president.

The 2023 lawsuit claimed the school lied about the costs of its doctoral programs.

The FTC alleged GCU told prospective students that its accelerated doctoral programs cost the equivalent of 60 credits when about 78% of them had to take five or more other courses, adding thousands of dollars in costs.

The university itself was initially included as a defendant, but that claim was dismissed by the U.S. District Court of Arizona.

GCU has maintained that the allegations were a "coordinated effort by former officials within the Biden Administration to undermine a thriving Christian university."

Hear Helen Rummel on The Show with host Sam Dingman

Listen • 7:23

Reporter Helen Rummel has been covering this for the Arizona Republic. She joined The Show break this down.

Full conversation

SAM DINGMAN: So can you remind us of the specifics here? What did the FTC originally sue GCU and Grand Canyon Education for?

HELEN RUMMEL: So, in 2023, the Federal Trade Commission sued under several things, including that they had misrepresented the costs of their doctoral degrees and that they were also misusing telemarketing practices to send out these mass calls, in some cases to people who had specifically asked not to. And they also said that the university at the time was misrepresenting itself as a nonprofit institution.

DINGMAN OK, and just to clarify for folks, what is the difference between Grand Canyon University and Grand Canyon Education?

RUMMEL: So Grand Canyon Education Inc. was the former parent company of Grand Canyon University. They eventually sold the university when it made its switch to become a nonprofit. And they still have a relationship in terms of providing some marketing and other tools, education tools to the university, but they are separate entities. It is worth noting that President Brian Mueller is the president of GCU, while also being in charge of Grand Canyon Education Inc.

DINGMAN: Right. OK. So in a statement, the FTC Chairman Andrew Ferguson in making the decision to drop the lawsuit, said, “This case, which we inherited from the previous administration, was filed nearly two years ago and has suffered losses in two motions to dismiss.” Do we know how much of an effort Ferguson and the FTC made to continue pursuing the lawsuit?

RUMMEL: So there hadn't been much movement in any particular direction in the Trump administration. As noted, the lawsuit did see some losses, and eventually Grand Canyon University, which had originally been sued, saw the lawsuit dismissed against them, which is cited by Ferguson as one of the losses.

And he also cites some of the recent wins for the university, including that the IRS had confirmed their nonprofit designation and that the Department of Education had recently revoked a pretty hefty fine over pretty similar grounds that the FTC had cited as well.

DINGMAN: Yes, let's talk about that Department of Education fine. That was, if I'm not mistaken, $37.7 million over similar allegations of misrepresenting the cost of doctoral degrees to potential students. The school is now clear of that fine and the FTC lawsuit, as we've been discussing, but there is an ongoing dispute between the school and some former students. What are those students alleging?

RUMMEL: So, similar to what the U.S. department of Education under the Biden administration had said, there is a class action lawsuit brought by students against the former parent company, Grand Canyon Education Inc. And they say that they were misled about those costs of the doctoral degrees as well and are seeking reparation for that.

The university has been very clear that they feel that they have been very, very transparent about the cost of their degrees. But that class action lawsuit continues, and we have yet to see if it will reach a different end than a lot of these federal organizations have seen.

DINGMAN: And that original fine, that again was revoked, the fine from the Education Department to GCU, an investigation associated with that fine found that GCU misrepresented the cost of a doctoral degree to more than 7,500 students and that only 2% of those students had completed their degrees within the cost advertised.

In a piece you did earlier this year on that fine, you spoke to a lawyer with the National Student Legal Defense Network who pointed out that in dropping the fine, the Department of Education did not dispute the findings of that investigation. Is there any sense that GCU has changed the way it markets these courses and programs?

RUMMEL: So GCU has said that they took a very close look at all of their practices immediately following that investigation and even before then, and they said that they had taken a close look and had not seen any wrongdoing. But since then, they have been very adamant in being clear in their advertising, documents and materials of just what costs could mean for students and specifying that even though there are minimum costs associated with a degree, there could be additional classes that bring more money.

It is also worth noting that the Department of Education, their investigation is the one that is cited by the Federal Trade Commission as well. And so a lot of this all goes back to that original investigation. And yes, while it was not specifically discussed in the reversal of the fine, GCU is very adamant that they will continue being transparent about these costs for future students and going forward.

DINGMAN: OK, just about 30 seconds left, Helen, let's come back to GCU President and Grand Canyon Education CEO Brian Muller. He has claimed that GCU has been unfairly targeted. What is his basis for that claim?

RUMMEL: So President Mueller has said pretty often that he feels that GCU has been targeted, both by the Biden administration but also these individual entities from the federal government. He says that they have been leading a coordinated campaign. And his basis for that is kind of like I mentioned before, a lot of these investigations do have similarities.

They are all mostly looking at the doctoral degrees and the way that those are marketed to prospective students. And in his words, he says that the federal government is taking these requirements for universities, but is not playing fair and is being more aggressive towards GCU because it is a private Christian university. And he has said that now the university is looking to move past this and move forward and to move on from this era of a coordinated campaign, as he put it.