The U.S. Department of Education’s historic fine against Grand Canyon University (GCU), a Christian college in Phoenix, Arizona, has been dropped, according to the institution.
Brian Mueller, president of GCU, told CBN News Tuesday he believes the government was unfairly targeting his school and heralded the dismissal of the massive $37.7 million fine as a victory.
The Department of Education confirmed the decision to CBN News. A spokesperson pledged not to “persecute and prosecute colleges and universities based on their religious affiliation” and accused the previous administration of doing so.
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It’s a moment that came after years of battling back and forth with the Department of Education, with the Biden administration taking what Mueller saw as an aggressive approach.
“This thing all started six years ago, when we reverted to our nonprofit status and it was approved by everybody, and including the [Internal Revenue Service], who has the authority to do it — and the expertise to do it,” he said. “And so we tried to work with the [Education] Department because everybody else approved our nonprofit status, which was important for a lot of reasons to the university.”
How the Issue Began
Mueller said GCU ended up filing a complaint when they weren’t making progress with the Department of Education — a move he believes sparked more problems for the school.
“Once we filed a complaint, they started retaliation and they opened up five different investigations that literally [have] cost us millions of dollars to defend ourselves,” he said. “They looked at thousands, and thousands, and thousands of documents and eventually centered on, ‘We think you misled your doctoral students around the time and cost to complete degree.'”
Mueller insisted there was nothing nefarious or misleading going on surrounding the doctoral program and GCU refused to pay the fine.
“Obviously, we’re not going to accept that,” he said. “Not only did they say we misled them, but they fined us $37 million, which was the largest fine in the history of the Department of Education. We said that we were not in the mood to negotiate a single penny of that.”
Mueller continued, “We wouldn’t pay even a dollar, because, not only is it not true, the opposite is true.”
A Fresh Look
He said the Trump administration “took a fresh look” at the fine and the case and decided to drop it, stating the Department of Education now believes there’s “absolutely no substantial evidence here that … GCU misled any students.”
“They reversed the decision, which was obviously a huge win for us,” Mueller said. “We’re not surprised by it. We thought that that would happen, but we’re thankful that that happened.”
After that victory, Mueller said the IRS conducted an additional audit of GCU’s nonprofit status and found everything to be in order, marking another “major win” for the school.
When asked if he believes the now-dismissed, massive fine was motivated by anti-religious or political biases, Mueller responded that he “absolutely” believes it was.
“There is no other substantial reason for the incredible attacks that they’ve levied,” he said, noting GCU has had bipartisan support.
Regardless, Mueller believes GCU is serving God and helping progress truth — and he looks forward to the future ways the school can help serve God and His kingdom.
“We know that God is doing something real here in the furthering of His Kingdom, and we weren’t going to allow somebody to get in the way of that,” he said. “We are being used by God in the furthering of His purposes.”
The Department of Education’s Response
Ellen Keast, a spokesperson for the Department of Education, confirmed the fine was dropped in a statement to CBN News and pledged to stop the department’s alleged practice of targeting religious schools.
“Unlike the previous administration, we will not persecute and prosecute colleges and universities based on their religious affiliation,” Keast said. “The Trump administration will continue to ensure every institution of higher education is held accountable based on facts — but [Education] Department enforcement will be for the purpose of serving students, not political bias.”
This is a stunning reversal from the actions and comments that came from the same department during the Biden era. As CBN News previously reported, former Education Secretary Miguel Cardona reportedly vowed to shutter GCU.
Cardona commented during a House Appropriations Committee hearing on April 10, 2024, that the Biden administration was “cracking down not only to shut them down, but to send a message to not prey on students,” according to Fox News.
GCU, in a statement delivered to CBN News at the time, called Cardona’s statements “disturbing and defamatory.”
More About the Roots of the Battle
The university made headlines over the dispute in the fall of 2023, when the Department of Education fined the school a historic $37.7 million over the aforementioned claims students were misled about the cost of a doctoral program.
Despite GCU denying these assertions, appealing that ruling — and defiantly pledging not to pay — Cardona doubled down. He said the fine is the “largest … in history against a school that lied about costs and terminated a school from Title IV.”
An October 2023 press release from the Department of Education provided further details about these claims:
The U.S. Department of Education (Department) office of Federal Student Aid (FSA) today announced a $37.7 million fine against Grand Canyon University (GCU), which disbursed the most federal student aid of all participating institutions for the past four award years. An FSA investigation found GCU lied to more than 7,500 former and current students about the cost of its doctoral programs over several years. GCU falsely advertised a lower cost than what 98% of students ended up paying to complete certain doctoral programs.
See a past interview during which Mueller addressed these matters further:
GCU’s Past Struggles Before Finding Success
Mueller has shared how some of GCU’s past problems led to changes in status and a bit of a rollercoaster before landing on the school’s current successes.
“This all started 14 years ago … [when] Grand Canyon was in a very difficult spot,” he said, noting the school buildings were aged and the institution was millions of dollars in debt. “We switched from a nonprofit to a for-profit status and went to the public markets to get access to capital.”
Mueller continued, “We wanted to make private Christian higher education affordable to all socioeconomic classes of Americans. And the plan worked better than we thought.”
Just 10 years later, he said, GCU is now in a “very good spot” and the campus is “growing like crazy,” with online education exploding in popularity.
With the previous issues remedied, GCU wanted to return to its nonprofit status.
“We thought, for the legacy of the institution, [we] would be best served by doing that,” he said. “We went through the process and the IRS, who has the authority to do that work, did it, and said, ‘The operation you’ve set up qualifies as a nonprofit, and we’re giving you the legal authority to operate as a nonprofit.’ And then the state of Arizona reinforced that.”
But Mueller said GCU found out the Department of Education did not plan to recognize the restored nonprofit status. After four years of reportedly attempting to work with the government, he said GCU had made no headway. That’s when GCU filed a complaint.
Refusal to Recognize GCU’s Nonprofit Status
One of the Department of Education’s reported sticking points was the university, in the midst of initial troubles, sold to a for-profit called Grand Canyon Education (GCE).
Later, the school’s board reportedly created a new entity, “New GCU,” to buy back the university and lead the process toward operating again as a nonprofit, according to Courthouse News Service.
An agreement that persists between New GCU and Grand GCE, the for-profit entity, seems to have sparked some consternation, as 60% of the revenue from the university goes to GCE for marketing, accounting, and other needed services — something Mueller, who leads both groups, has defended.
Education officials have said this agreement operates in a for-profit capacity, but school officials said these sorts of arrangements are common in the education space.
And there’s yet another twist: As Forbes reported, the Department of Education’s refusal to recognize GCU’s nonprofit status — which has now been remedied — was made under the tenure of former Education Secretary Betsy DeVos, who served under the first Trump administration.
The government wrote in a 2019 letter that officials believed the main purpose of the conversion of status was to “drive shareholder value for GCE, with GCU as its captive client — potentially in perpetuity.”
Ultimately, the issue has now been settled. Read more about the past history here.
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