Biden administration fines Grand Canyon University $37.7 million for misrepresenting cost of doctoral programs

By Katie Lobosco, CNN

Washington (CNN) — The Biden administration issued a $37.7 million fine against Grand Canyon University Tuesday after a Department of Education investigation concluded that the private school in Phoenix misrepresented the cost of its doctoral degree programs.

The vast majority of doctoral students who graduated between 2017 and 2022 ultimately had to pay $10,000 to $12,000 more than GCU initially advertised because they needed to enroll in “continuation courses” in order to complete their dissertation requirements, according to the Department of Education.

The university denies all accusations and intends to appeal the fine.

While the Biden administration has canceled more federal student loan debt than under any other president, Tuesday’s announcement marks one of its first significant enforcement actions.

The administration has pledged to ramp up those efforts with the goal of cracking down on schools that fail to deliver a high-quality education and helping to prevent incoming students from taking on unaffordable amounts of student loan debt.

“GCU lied about the cost of its doctoral programs to attract students to enroll,” said Richard Cordray, chief operating officer of the department’s Federal Student Aid office, which conducted the investigation.

“FSA takes its oversight responsibilities seriously. GCU’s lies harmed students, broke their trust, and led to unexpectedly high levels of student debt,” he added.

GCU says it’s been ‘unjustly’ targeted

“Grand Canyon University categorically denies every accusation in the Department of Education’s statement and will take all measures necessary to defend itself from these false accusations,” the school said in an email sent to CNN.

“In fact, we believe our disclosures related to continuation courses are more extensive than other universities, yet only GCU is being targeted by the Department,” it said.

The university has 20 days to file an appeal.

GCU is a Christian school that enrolls more than 100,000 students, with the majority of them studying online. While it is considered a nonprofit by the Internal Revenue Service, GCU is considered a for-profit college by the Department of Education for the purposes of federal financial aid. The university has sued the government over that decision, and the litigation is ongoing.

Earlier this month, GCU released a statement claiming that it has been “unjustly” targeted by government officials in retaliation for its lawsuit about its for-profit status.

A senior Federal Student Aid official said on a call with reporters that Tuesday’s action and the litigation are “entirely unrelated.”

Adding to Biden’s student debt relief efforts

The Department of Education’s fine on GCU won’t directly result in any debt relief for students. But borrowers who believe they were misled by the university over the cost of their doctoral degree programs can file a claim for relief under the borrower defense to repayment program.

That federal program grants student debt forgiveness to borrowers who can show that their college misled or deceived them.

The borrower defense program is one of several existing student loan forgiveness programs that the Biden administration has used to cancel a total of $127 billion of federal student loan debt since taking office.

While President Joe Biden’s signature student loan forgiveness program was struck down by the Supreme Court in late June, his administration has continued to cancel student loan debt in a piecemeal fashion – such as efforts to temporarily expand some debt relief programs and to correct past administrative errors made to borrowers’ student loan accounts.

But the Biden administration has been criticized by some Republicans and borrower advocates for not tackling the rising cost of college. Many blame deceptive for-profit colleges for fueling the rise in outstanding federal student loan debt, which currently stands at $1.6 trillion.

“When colleges lie to students, it costs them time and money they’ll never get back,” said Aaron Ament, president of the nonprofit National Student Legal Defense Network.

The group has filed a lawsuit against another for-profit college, Walden University, alleging that some of its students similarly paid more than expected because they were compelled to complete more credit hours than originally advertised.

“We’re glad to see the Department of Education take action to prevent graduate schools from misleading students about the costs of their programs, and we hope they will continue to crack down on these types of predatory schemes,” Ament added.

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