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Grand Canyon University Achieves Court Victory Over Nonprofit Status Dispute

A federal appeals court has determined that the U.S. Department of Education improperly applied legal standards in denying Grand Canyon University’s request for nonprofit status. This ruling represents a significant development for the institution, which serves approximately 123,000 students.

Background of the Case

In 2019, the Education Department opted to classify Grand Canyon University as a for-profit institution concerning Title IV federal financial aid. This decision triggered a prolonged legal dispute, which included a 2022 ruling by a federal judge that upheld the Department’s classification.

Recent Appeals Court Ruling

Recently, however, a three-judge panel from the 9th U.S. Circuit Court of Appeals reversed the earlier ruling. The panel concluded that the Education Department had enforced an impractical standard, exceeding the requirements of the Higher Education Act. The recent ruling instructs the Department to reassess the university’s nonprofit application under the correct legal framework.

Historical Context of the University’s Status

The university’s classification has shifted since its acquisition by private investors in 2004, transitioning from a nonprofit to a for-profit entity. Since this change, Grand Canyon University has sought to regain its original nonprofit status, having received approval for this designation from both the Internal Revenue Service and the state of Arizona.

Current Challenges Facing the University

Despite these approvals, the Education Department’s position has required the university to adhere to certain for-profit regulations while maintaining nonprofit classifications from other authorities.

The appeals court acknowledged the university’s claims that the Department’s prior for-profit ruling was largely influenced by financial considerations associated with its former parent company, Grand Canyon Education, Inc. University representatives have expressed their hope that the Education Department will re-evaluate its stance and promptly recognize the institution’s nonprofit status.

Next Steps for Grand Canyon University

The Education Department has not yet commented on when it might reconsider the case. Until a resolution is reached, Grand Canyon University will continue to operate under the regulatory requirements applicable to for-profit institutions.

Additional Legal Troubles

In addition to the ongoing legal matter, Grand Canyon University is facing additional challenges, including a recent $37.7 million fine imposed by the Education Department for allegedly misleading students regarding doctoral program costs. The university has appealed this fine, and a hearing is scheduled for early 2025.

Looking Ahead

With the recent appellate decision, there is cautious optimism among Grand Canyon University officials regarding a potential resolution of their nonprofit classification, amidst what they describe as federal overreach in managing their status.

Source: Higher Ed Dive

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