The Trump administration’s Education Department has rescinded a $37.7 million fine against Grand Canyon University in Phoenix.
The Biden administration had levied the fine against the university in 2023, accusing GCU of misrepresenting the cost to students of getting doctoral degrees. The Education Department at the time said that ended up costing students thousands of dollars more than they’d expected to pay.
And GCU announced Tuesday that the IRS had reaffirmed its 501c3 status, making the school tax exempt as an Arizona nonprofit institution.
Helen Rummel, who covers higher education for The Arizona Republic, joined The Show to discuss.
Full conversation
MARK BRODIE: So what exactly was GCU accused of doing by the Biden Education Department? Like how did they, how were they maybe not telling students, according to the allegations, how much their doctorates would cost?
HELEN RUMMEL: So, in 2023, the U.S. Department of Education came out with this multi-million dollar fine, and they said that it was regarding severe misrepresentation of their doctoral degrees. They specifically cited an internal investigation that said they had misrepresented costs to more than 7,500 students.
And the department said that roughly around 2% of the students who had completed their degrees with the university had done so within the costs advertised. And they, as a response, released this fine. And had done so in saying that these were students who had faced higher student loans and were facing a significant amount of costs as a result.
BRODIE: We should point out that GCU officials had from the start denied these allegations, said that there was nothing to them. What changed, I guess, other than the change in administration, like what is the Education Department now saying about why it is relieving the university of these fines?
RUMMEL: Yes, leaders at GCU have long said that there is no merit to these claims and have fiercely denied the university, saying that they are actually within compliance and that they have been more, they have disclosed more than is legally required, such as pointing to tools as their online degree program calculator and other disclosures. They have said that this is just an example of them finding no fines or liabilities or penalties of any kind.
A joint stipulation of dismissal from the Department of Education's Office of Hearings and Appeals dismissed the case entirely, and they received, they also shared a response with me from a spokesperson, who said that this was just an example of how the Trump administration will continue to ensure how every institution of higher education is held based on facts, but the department enforcement will be for the purpose of serving students, not political bias. And that was a statement from the U.S. Department of Education spokesperson from earlier this week.
BRODIE: Do GCU officials seem vindicated by this change?
RUMMEL: Yes, so GCU's president, Brian Mueller, said that the fine was well or the fine dismissal was welcome news, and he shared a statement saying, quote, “the facts clearly support our contention that we were wrongly accused of misleading our doctoral students, and we appreciate the recognition that those accusations were without merit.”
Like I said, GCU has, has long had the opinion that the Department of Education was engaging in government overreach and they felt that they had been wrongfully targeted by the Biden administration when this fine was issued in 2023.
BRODIE: Helen, let me ask you about something else GCU related that came out just a very short while ago, which is that the IRS, the Internal Revenue Service, has reaffirmed the university's nonprofit status.
This has been a years-long debate, I guess, right, between GCU and the federal government when it should, is it really a nonprofit, a for-profit. Now it's, it's back to being a nonprofit. What is the significance of becoming a, regaining its nonprofit status to GCU?
RUMMEL: Yeah, like you said, this has been a long, longstanding debate between multiple federal institutions and the university. So just this morning, the university announced that the IRS had reaffirmed its 501c3 status, and so what that means is they are now tax exempt as an Arizona nonprofit institution. And this comes after a four-year examination from the IRS that is coming to the same conclusion that they originally came to.
And this is significant, and it puts it in line with several other organizations that view GCU as a nonprofit organization, a nonprofit institution. So that includes the Higher Learning Commission, the state of Arizona, and the Arizona Private Post-secondary Board of Education.
For the school, this is significant and there's another, an institution that is going to view them as both the, the nonprofit that they have continued to, to fight for the status of and for the tax exempt status, obviously is very significant for a university of that size.
BRODIE: Is it fair to say that this is important for GCU both from a financial standpoint, but also from an academic and sort of reputational standpoint?
RUMMEL: Yes, I think that this alongside the revocation of the fine in March is a sign of, of different organizations coming to conclusions that the university was hoping for. And so I think it is significant in both financial and, and perhaps other reasons as well.
