The lawsuit accuses Grand Canyon University of running a "deceitful racketeering scheme"

Jun 18, 2024

A class action lawsuit against the company that once ran the largest Christian university in the country says the plaintiffs were victims of a “deceitful racketeering scheme” because the school lied to them about tuition costs.

This comes several months after the U.S. Department of Education fined Grand Canyon University a record $37.7 million over similar complaints.

(Follow above article link to view original article with photos/PDFs.)

In case you need a refresher, GCU is based in Phoenix, Arizona and enrolls over 100,000 students, mostly online. The Department of Education said last October that the school lowballed its tuition fees to reel students in… before hitting them with larger fees once they were already taking classes.

[A Federal Student Aid] 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.” 

Grand Canyon University advertised its doctoral programs as costing anywhere from $40,000 - $49,000. That was meant to cover a variety of programs that require students to complete 60 credit hours and write a dissertation. In reality, however, fewer than 2% of students paid that amount because they had to take more classes to complete their degrees. Most students (78%) ended up paying nearly 25% above that sticker price in order to take necessary “continuation courses,” amounting to an additional $10,000-$12,000 per student, between 2017 and 2022.

Furthermore, the Department of Education explained, the fictional tuition cost was stated on GCU’s website, it’s enrollment agreement, the “Net Price Calculator,” and other marketing materials. This wasn’t some accident on one part of their website; it was clearly a calculated move to attract students before later gouging them.

Just consider this one example: If you were interested in getting your Ph.D. in Psychology—or, more technically, your “Doctor of Philosophy in General Psychology: Cognition and Instruction (Qualitative Research)”—this is what the school’s website would show you:

That says it would take 60 credit hours at a cost of $725 per credit. If you do the math, that comes out to $43,500. What isn’t clear from that page is that just about all students need to take additional courses to get that degree. Even if you knew that, the cost of those extra credits wasn’t available anywhere on the site.

Even more damning? The DoE wrote that “internal emails indicate that GCU leadership has been aware since at least January 2017 that its disclosures regarding cost were incomplete or misleading.”

GCU officials insisted they weren’t lying at all and that the additional fees were mentioned to students via “fine print disclosures” and other documents, but the government said that’s not an acceptable excuse. In addition to the $37,735,000 fine, the government also demanded that GCU stop lying about the cost of a doctoral degree and “engage a monitor” to make sure the school is complying with the law.

The reason the government was allowed to levy this fine at all is because GCU, despite being a private Christian school, receives over $1.1 billion in Title IV funding (i.e. federal financial aid). The Department of Education had every right, then, to make sure those funds were being used as intended. The report said that more than $18 million in federal funds had been given to 1,344 students enrolled in GCU doctoral programs in the past year alone. 7,547 students had gone through GCU’s doctoral programs since 2018, resulting in over $122 million paid in tuition.

The DoE was actually going easy on the school. According to its own letter, they could have instituted a fine of over $509 million, roughly $67,500 for each of 7,547 violations found. But the $37.7 million fine brought that down to a mere $5,000 per violation, reflecting on the fact “that the violations identified did not impact all of GCU’s programs and students, but rather were confined to doctoral programs requiring a dissertation.”

The school insisted it did nothing wrong, dismissing the allegations as a series of “lies and deceptive statements.” Officials also acted like this was anti-Christian persecution.

GCU “categorically denies every accusation in the Department of Education’s statement,” a press release explained, adding that this fine was “further evidence of the coordinated and unjust actions the federal government is taking against the largest Christian university in the country.”

But there was nothing anti-Christian taking place. The letter documenting the alleged violations made no mention of the school’s faith-based foundations because those were irrelevant. The only concern was the discrepancy between stated costs and real ones.

Since that time, the school has appealed the fine and continues insisting they did nothing wrong. They even celebrated a state-run agency that completed an audit and found no reason to stop working with the school. (That audit didn’t specifically go into the claims made by the Education Dept.) Still, GCU’s president Brian Mueller responded by repeating his claims of persecution and arguing that “there are no student complaints” about their fees.

Funny thing about that…

Now, a class action lawsuit says two named students (and arguably many more) were victims of GCU’s price gouging.

According to the filing, Tanner Smith enrolled at GCU to get his doctorate in 2018. He was led to believe he’d compete it in 2021 if he did all the work, and the total cost would be $39,000. When the school added in other necessary fees, it came out to just over $43,000. Nowhere in the estimates, however, was Smith told about the “continuation courses.”

It wasn’t until 2021 when Smith was told he still had more work to do—and more tuition to pay. And then everything just began to drag on…

While completing his dissertation, Plaintiff Smith’s academic advisors repeatedly required him to submit and resubmit drafts for review in response to minor and insignificant edits that could have been addressed more efficiently. Almost every time, moreover, Plaintiff Smith found that the academic advisors failed to respond promptly to his submissions. Instead, they habitually waited two weeks (i.e., 10 business days) to respond to simple questions or minor edits, thus delaying Plaintiff Smith’s ability to make progress on and complete his dissertation.

He didn’t complete his degree until September of 2022. He ended up paying $8,463 more than the school led him to believe.

A similar thing happened to former student Qimin Wang in 2019. Her Ph.D. program was also supposed to cost $39,000. It was $43,210 with additional fees.

But she, too, got delayed during his dissertation process by the same kind of “artificial bottlenecks and delays” described above. The four “Research Continuation” classes she was forced to take added up to an additional $8,700 in tuition.

I mentioned this was a class action lawsuit. The Plaintiffs say they want to represent everyone who was enrolled in a doctoral program at GCU after August of 2017. That could be as many as 7,000 students.

“We need to hold Grand Canyon accountable for the lies they told Ph.D. candidates about the real cost of their education at GCU,” said Adam Levitt, an attorney representing the students.

…

“Choosing to pursue a doctoral degree is one of the most expensive and life-shaping decisions many people make, and they deserve to know the true cost that they’re committing to. We filed this class action lawsuit to ensure Grand Canyon stops these deceptive practices and other for-profit colleges don’t even try them,” Levitt explained.

The school (which, again, isn’t being sued in this lawsuit) repeated its response that this is all without merit:

Bob Romantic, executive director of communications and public relations for GCU, said in a written statement that the lawsuit is just a “regurgitation” of previous accusations about GCU’s doctoral programs.

“The allegations in the lawsuit are completely without merit,” he said in a written statement. “GCU’s descriptions of its doctoral programs on its website and its disclosure documents are no different than those at countless other universities with dissertation-based doctoral programs.”

It’s telling that he doesn’t say the accusations are false, merely that the school is just doing what everyone else does. That implies that it’s okay to deceive potential students as long as everyone else is doing it… which is a hell of a moral statement coming from a supposedly Christian school.

The school provided a lengthier statement in which Romantic claimed the screenshots from the lawsuit (which I included above) were misleading:

… Worse, the class action lawsuit misleadingly presents screenshots of GCU’s Degree Program Calculator (DPC) for both students that crop out the language immediately above the disputed cost disclosure that clearly and conspicuously discloses that doctoral graduates, on average, require several continuation courses and provides the cost of those courses. This information is in full-size red font in order to bring attention to it and provides full transparency for students. Cropping it out is an egregious and unscrupulous attempt to portray the university’s service provider as fraudulent by using GCU’s disclosures in an unbecoming manner.

Even that’s shady, though. Why is that information “immediately above” the cost disclosure and not included in the chart under the “estimated costs” section? Especially when the need for those additional classes is, according to GCU, “prevalent throughout higher education”?

All GCU has to do is include the cost of the continuation courses in their estimates for prospective students. Don’t hide it in fine print or exclude it from within a chart. Don’t act like Ticketmaster with hidden fees. Just disclose it all up front, let students know other students getting the same degree pay, on average, and stop trying to lowball the amount because it makes you look good by comparison. If 98% of doctoral students are paying a higher-than-listed price for their degree, then the estimated price is clearly a lie.

As for the Education Department’s fine, if GCU’s appeal doesn’t lead to a reversal, it’s possible the federal government could withhold loans from anyone who wants to go there, which would destroy the school’s ability to attract students. This issue will have to be resolved one way or the other.

(Portions of this article were published earlier)