Dive Brief:
- A company that provides educational and marketing services to Grand Canyon University was hit with a class action lawsuit Wednesday alleging that it orchestrated a racketeering scheme pushing students to enroll in Ph.D. programs at the large Christian institution by lying about the costs of a degree.
- The plaintiffs, a current Ph.D. student and a former one, said they paid thousands of dollars beyond those advertised in Grand Canyon University’s marketing materials and communications.
- A spokesperson for the company, Grand Canyon Education, or GCE, forwarded a request for comment to Grand Canyon University. In a written statement, the university, which is not named as a defendant, called the lawsuit’s allegations “completely without merit” and “focused on practices that are prevalent in higher education.”
Dive Insight:
At the heart of the lawsuit, filed by law firm DiCello Levitt and the group National Student Legal Defense Network on behalf of the plaintiffs, is the allegation that “GCE lied about doctoral program costs — repeatedly and persistently — to students.”
The plaintiffs allege that company executives were aware of “artificial bottlenecks” in the dissertation process that meant students had to take more credits than the 60 that were frequently advertised as needed to graduate. Those include what the complaint describes as “Byzantine review procedures that prevent doctoral students from communicating directly with key dissertation reviewers.”
The complaint also pointed to nine “milestones” in programs that it alleged effectively slowed students’ dissertation progress while they often waited for “minor” comments or revisions from advisers.
These bottlenecks, the complaint alleges, led to 70% of doctoral students paying thousands of dollars, or even tens of thousands, more in tuition for what the university called “continuation courses” necessary to complete dissertations.
The plaintiffs cited analysis from the U.S. Department of Education showing that about 43% of Ph.D. students at Grand Canyon University between 2011 and 2017 paid $10,530 in additional costs for continuation courses, while another roughly 35% paid $12,636 or more. Fewer than 2% paid no extra costs for continuation courses.
Grand Canyon University said in its statement Thursday that “doctoral students during the time in question were required to sign numerous documents that included information about the likelihood of continuation courses, including a Degree Program Calculator, Doctoral Disclaimers Acknowledgement form, GCU application, enrollment agreement and academic catalog.”
The university also said that the class action “is an almost verbatim regurgitation of the same claims that the U.S. Department of Education made, and the Federal Trade Commission later repeated, about GCU’s doctoral programs, while coordinating their efforts to disparage GCU.”
The class action filed Wednesday follows the U.S. Department of Education’s $37.7 million fine against Grand Canyon University for allegedly falsely advertising the costs of its doctoral programs. The university described the fine as “unprecedented” and quickly appealed it.
The Federal Trade Commission has also filed a lawsuit against GCE and Grand Canyon University on accusations that they deceived students about doctoral program costs.
While the newest lawsuit only names GCE as a defendant, some of the allegations involve Grand Canyon University and extend back to when they were a single, for-profit entity.
The new class action complaint alleges that GCE used resulting profits from the Ph.D. program to help “establish Grand Canyon University as a nominally independent, not-for-profit” in 2018.
Grand Canyon University split off from GCE in 2018 and entered a long-term services contract with the company, which provides marketing, recruitment and support operations for the university.
The IRS signed off on Grand Canyon University’s conversion to nonprofit status. But the Education Department has continued to recognize the university as a for-profit for Title IV purposes based on the details of its financial relationship with GCE — an assessment GCE has fiercely disputed.
Brian Mueller is both CEO of GCE and president of Grand Canyon University.
“Beneath the veneer of nominal independence, however, GCE continued to control Grand Canyon University” and used it to carry out a “fraud scheme against doctoral students” in violation of federal racketeering laws, the complaint alleges.
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