The Department of Education delivered its largest enforcement fine ever, charging Grand Canyon University $37.7 million for "deceptive" practices.
Federal Student Aid (FSA) — part of the Department of Education — found that GCU lied to students about the cost to attend doctorate programs, which was consistently lower than 98% of students who paid for a doctorate. The university disbursed the most federal student aid of all participating institutions for the past four award years.
A Department of Education spokesperson confirmed this was the biggest fine in the department’s history in a press briefing Tuesday.
The move is the latest effort from the Biden administration to use its enforcement provision to hold institutions accountable to protect borrowers and taxpayers.
"FSA takes its oversight responsibilities seriously," Richard Cordray, chief operating officer for FSA, said in a press release. "GCU’s lies harmed students, broke their trust, and led to unexpectedly high levels of student debt. Today, we are holding GCU accountable for its actions, protecting students and taxpayers, and upholding the integrity of the federal student aid programs."
After the enforcement order has been entered, GCU has 20 days to appeal the decision. In addition to the fine, the FSA issued five conditions that GCU must follow to continue to receive federal aid funding.
The school must stop making misrepresentations about the cost to attend its graduate programs, engage in a monitoring compliance program, make quarterly reports to the Department of Education about any investigations or legal proceedings against it, send a notice to all currently enrolled doctoral students about the enforcement action and how to file a claim, and send a notice to current employees involved in doctoral recruitment to inform students about how to file a complaint using FSA Tips.
"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," GCU said in a statement to Yahoo Finance, alleging that the school is being unjustly targeted as a Christian institution.
"The Department’s actions today are not validated by either the federal court system, which has already ruled in GCU’s favor in a similar matter at both the district and appellate court levels in Young v. GCU, or other regulatory agencies that spend many days on our campus reviewing the robust and transparent disclosures the University provides its students," the statement said.
The enforcement action is only against GCU. Students who attended GCU and feel they were misled or that GCU engaged in misconduct can apply for a loan discharge under the borrower loan defense discharge program.
The FSA investigation started in 2017 and found "widespread misrepresentations" regarding the cost to attend. GCU stated that doctoral programs cost between $40,000 and $49,000, when less than 2% of GCU students paid that amount.
The majority of GCU graduates paid for "continuation courses" necessary to complete the dissertation requirement, with 78% paying $10,000 to $12,000 more in tuition costs.
GCU referenced several enrollment disclosures in fine print as justification for the increased costs, but FSA found the disclosures "insufficient to cure the substantial misrepresentations regarding cost," according to the press release.
One in three graduate schools leave students owing more than they originally borrowed and more than 25% of those are enrolled in for-profit schools, according to a study by Student Defense and the HEA Group.
"Deceptive for-profit graduate programs are a large and growing part of America’s higher education crisis," Aaron Ament, president of Student Defense, said in a press statement regarding the fine against GCU. "When colleges lie to students, it costs them time and money they’ll never get back. 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."
Overall, the Biden administration has approved $22 billion in relief for 1.3 million borrowers whose colleges took advantage of them or closed abruptly.
Read more: Student loan issues? Here's how to file a complaint with the Department of Education
Borrowers who think GCU made misrepresentations may qualify for borrower’s defense discharge and should apply online or call the Department of Education’s hotline at (855) 279-6207 if they have questions.
Editor's note: The article has been updated to include GCU's statement.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda.
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