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Student Defense Intervenes in Grand Canyon University Case to Protect Students from Attempted Non-Profit Sham Conversion


April 22, 2021 


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Student Defense Intervenes in Grand Canyon University Case to Protect Students from Attempted Non-Profit Sham Conversion 

New Filing Argues GCU Still Benefits Shareholders Instead of Students, Deserves Stricter Regulations 


WASHINGTON, DC  Student Defense filed a motion in federal court todayseeking to intervene in a lawsuit by the for-profit Grand Canyon University (GCU) against the Department of Education. GCU is challenging the Department’s denial of the university’s attempted conversion to non-profit status, and the Department’s determination that GCU is still a “captive client” of a related, for-profit entity. Student Defense’s intervention, filed on behalf of students, argues that GCU is actually operating for the benefit of its shareholders and thus should be subject to the stricter regulations governing for-profit colleges and universities.  


We are standing up for current and future GCU students whose tuition dollars should be used to help students and not flow to the university’s shareholders,” said Student Defense President Aaron AmentThe Department got it right the first time, and Grand Canyon must truly reform its practices to better serve students if it wants to be regulated as a non-profit.” 


The motion filed today is available here. 


For-profit colleges and universities are subject to stricter regulations regarding federal student aid, such as the “90-10 Rule,” that requires for-profit colleges to derive at least 10 percent of annual revenue from sources other than Federal Student Aid programs. Consumer advocates have raised concerns about many recent conversions, and the Government Accountability Office released a report in January with recommendations for the Department of Education and the Internal Revenue Service to improve their oversight of these transactions.  


Grand Canyon University, based in Phoenix, is one of the largest for-profit colleges in the nation, with over 85,000 students enrolled in person and online, as of September 2020Grand Canyon Education, Inc., is a for-profit company that provides support services to the university in exchange for roughly 60 percent of tuition revenue  


Student Defense has been tracking the issue of for-profit colleges changing their status in recent years, and raising the alarm as the growing number of conversions puts students and taxpayers at risk.  


Student Defense’s report on the broader topic, with recommendations for accreditors, is available hereNonprofit Conversions and Student Success 





Student Defense is a non-partisan, non-profit 501(c)(3) organization that works, through litigation and advocacy, to advance students’ rights to educational opportunity and to ensure that higher education provides a launching point for economic mobility. 

Tags   Litigation