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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.
“GCU lied about the cost of its doctoral programs to attract students to enroll,” said FSA Chief Operating Officer Richard Cordray. “FSA takes its oversight responsibilities seriously. GCU’s lies harmed students, broke their trust, and led to unexpectedly high levels of student debt. Today, we are holding GCU accountable for its actions, protecting students and taxpayers, and upholding the integrity of the federal student aid programs.”
GCU has 20 days to request a hearing with the Department’s Office of Hearings and Appeals or submit written material to FSA indicating why the fine should not be imposed. In addition to the fine, the Department imposed specific conditions on the school to continue participating in the federal student aid programs.
Widespread misrepresentations related to the cost of doctoral programs
FSA’s investigation determined that as far back as 2017, GCU was not fully informing students about the cost of its doctoral programs. GCU stated that those doctoral programs cost between $40,000 and $49,000. GCU made these false claims about the cost on the school’s website and net price calculators, as well as in its enrollment agreements, catalogs, policy handbooks, and other marketing materials. These false claims violate the Higher Education Act and federal regulations prohibiting substantial misrepresentations. Based upon these substantial misrepresentations, the Department also determined that GCU failed to adhere to the fiduciary standard required of a Title IV participant.
GCU’s statements about the total cost to complete these programs were false and misleading because, based on GCU’s own data, less than 2% of graduates completed within the cost that GCU advertised. For the vast majority of graduates, “continuation courses”—which added extra costs—were necessary to complete the dissertation requirement in these doctoral programs. GCU’s data further shows that 78% of the graduates in those programs had to pay $10,000 to $12,000 more in tuition costs—roughly a 25% increase, depending on the program—than GCU explicitly advertised.
When given an opportunity to respond to the Department’s evidence, GCU pointed to a series of fine print disclosures included in some of its enrollment agreements and other documents distributed to students. These disclosures are insufficient to cure the substantial misrepresentations regarding cost. The new disclosures fail to address or correct the significant misrepresentations about the cost of the program. Furthermore, the disclosures are also buried in dense documents and are much less prominent than the misrepresentations. As a result, they do not cure the “net impression” that the program will be less expensive than it actually is. GCU did not contest FSA’s determination that 98% of students enrolled in certain doctoral programs had to pay more than GCU’s advertised cost.
In Award Year 2020–21, GCU enrolled more than 100,000 students. GCU offers certificate, undergraduate, and graduate degree programs through in-person and online instruction.
Holding GCU accountable and protecting students and taxpayers
Last month, FSA added five specific conditions to GCU’s Provisional Program Participation Agreement (PPPA):
- Condition A: GCU shall not make substantial misrepresentations related to the cost of obtaining a degree in its doctoral programs, and if GCU informs prospective or current doctoral students about the cost of completing its doctoral programs, it must tell students the average total tuition and fees paid by graduates and the maximum number of credits that a student can take that are eligible for Title IV funds.
- Condition B: GCU must engage a monitor to oversee its compliance with Condition A.
- Condition C: GCU must report quarterly to the Department about investigations, actions, or other legal proceedings by its accrediting agency or any government agency and must report pending litigation in which a plaintiff seeks class certification.
- Condition D: GCU must send a notice to all currently enrolled doctoral students informing them how to use the Department’s feedback center to submit a complaint to the Department.
- Condition E: GCU must send a notice to all current employees who provide recruiting, admissions, and other services to doctoral students about how to use the FSA Tips line to submit information about misconduct or violations.
The PPPA governs GCU’s participation in federal student aid programs for the next three years.
Today’s action demonstrates the Department’s ongoing commitment to enforcing higher education laws and regulations and protecting students, taxpayers, and the integrity of the federal student aid programs.
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