Last Thursday, a federal district judge in Arizona ruled that the U.S. Education Department acted lawfully when it denied Grand Canyon University's request to become a nonprofit under Title IV of the Higher Education Act of 1965, reported Inside Higher Ed.
The decision order caps off a long-running effort by Grand Canyon, a for-profit Christian school based in Phoenix, Arizona, to convert from a for-profit to a nonprofit institution. The university transitioned to a for-profit in 2004 in response to being on the brink of closure as a result of owing nearly $20 million in debt.
The institution subsequently sought to revert back to its previous non-profit status, with the Internal Revenue Service and the university's accreditor signing off on the conversion in 2019. However, the Education Department blocked the institution's request, arguing that the university's earnings would benefit the for-profit company that used to own Grand Canyon, Inside Higher Ed reported. The 2019 decision also prohibited the university from marketing itself to the public as a nonprofit.
In the wake of this 2019 denial, Grand Canyon made some changes and re-applied for non-profit status in January of 2021, which the department denied again. The school subsequently sued, arguing that the rejection was "arbitrary and capricious." Last week, a federal district judge in Arizona, Susan Bolton, ruled that the department was within its bounds to reject Grand Canyon's request to be considered a non-profit under Title IV of the Higher Education Act of 1965. In the decision, Judge Bolton states "the record and law reflect that the [Education Department] has authority to determine whether an institution qualifies as a nonprofit under Title IV…Further, Defendants [GCU] have shown that the Decisions were not arbitrary and capricious."
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Inside Higher Ed
https://www.insidehighered.com/quicktakes/2022/12/02/grand-canyon-u-loses-lawsuit-against-education-department