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Grand Canyon U Loses Lawsuit Against Education Department

December 2, 2022

A federal district judge in Arizona ruled Thursday that the U.S. Department of Education acted lawfully when it denied Grand Canyon University’s request to be considered a nonprofit institution under Title IV of the Higher Education Act of 1965.

The order denying the university’s motion for summary judgment caps a long-running effort by Grand Canyon, a private Christian university, to convert from a for-profit to a nonprofit institution. The university became a for-profit in 2004 in response to financial difficulties.

As part of its conversion back, the Internal Revenue Service and the university’s accreditor signed off on its nonprofit status. However, the Education Department decided in 2019 that the university’s earnings would benefit the for-profit company that used to own Grand Canyon. That 2019 decision also prohibited the university from marketing itself to the public as a nonprofit.

Grand Canyon made some changes following the department’s decision to receive approval, but its subsequent application was denied in January 2021. The university sued shortly after that denial, arguing that the rejections were “arbitrary and capricious.”

“The record and law reflect that the [Education Department] has authority to determine whether an institution qualifies as a nonprofit under Title IV,” U.S. District Judge Susan Bolton wrote in the court order. “Further, Defendants have shown that the Decisions were not arbitrary and capricious.”

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