April 19, 2024

Grand Canyon U Fuels Right-Wing Claims That Cardona Vows to Shutter It, Scaring Wall Street

Grand Canyon U Fuels Right-Wing Claims That Cardona Vows to Shutter It, Scaring Wall Street

Grand Canyon University, which bills itself as a Christian school and is the largest recipient of federal aid of any American college or university, is once again revving up the right-wing echo chamber to claim it is facing an unwarranted assault from the U.S. Department of Education. Now, GCU’s surrogates charge the attack is aimed at shuttering the school forever. 

The Department last October levied a $37 million fine against GCU f0r systematically deceiving students about the costs of their educations. GCU appealed the decision, and GCU president Brian Mueller launched a public relations campaign attacking the Department. 

GCU is fanning the flames again this week, cooperating with articles by right-wing outlets that are claiming U.S. Secretary of Education Miguel Cardona recently pledged to shut GCU down.

But that scare campaign quickly frightened people on Wall Street who have invested their money in Grand Canyon. So a market analyst who follows the company, Jeffrey Silber of BMO Capital Markets, issued a message to his subscribers,  seeking to reassure the investment world that Cardona said nothing of the sort. 

At an April 10 hearing of the House Appropriations Committee, Representative Rosa DeLauro (D-CT) asked Cardona about predatory for-profit colleges, and she mentioned Grand Canyon’s misconduct. In response, Cardona seemed to be addressing not Grand Canyon specifically but abusive schools in general: “So we are cracking down on them, not only to shut them down, but to send a message across the country that you cannot prey on our students and, and expect to be successful.”

But right-wing media outlets, all of them reporting comments from GCU officials, suddenly were claiming Thursday, nine days after that hearing, that Cardona had issued a death warrant to Grand Canyon.

A Fox News website headline from Thursday blares, “Biden’s education secretary vows to shut down the largest Christian university in the US,” and the attached article, credited to Joshua Q. Nelson, is full of quotes from Grand Canyon, claiming the Department has a “deeply held bias” against the school. The article notes a petition from the American Principles Project citing the Grand Canyon fine as proof that “the Biden administration has intensified its all-out attack on Christian and career colleges.” It also cites a lawsuit against the Department by the right-wing Goldwater Institute seeking the Department’s records regarding the dispute.

The same article appears on the website of Fox contributor Sara Carter.

At the NewAmerican website, meanwhile, Bob Adelmann, “Ivy League graduate and former investment advisor,” writes Thursday that DeLauro’s question moved Cardona to “explicitly and directly target Grand Canyon University (GCU) for extinction.” Adelmann quotes extensively from GCU’s defense and also sites the American Principles Project reaction.

The Christian Post chimes in today, quoting a GCU statement that asserts, “Mr. Cardona’s inflammatory comments, which are legally and factually incorrect, are so reckless that GCU has no choice but to demand an immediate retraction. He is either confused, misinformed or does not understand the actions taken by his own agency.”

All of these panicked accounts must have worried investors, so BMO’s Silber promptly sought to soothe the market this morning, with an email entitled, “Misleading Fox News Headline on Education Secretary Hearing.” 

“While the question was framed by mentioning last year’s ED action against GCU, we believe,” Silber intoned, that Cardona “was referring to shutting down the bad actors in the sector, not GCU.”

But, he worried, “As some trade rags are picking this up this morning, we could see pressure” on GCU. 

[UPDATE 04-19-24 5 pm: Silber had a point. Grand Canyon (LOPE) shares went from $131.48 Friday at the opening of the market to a $127.15 close. Although perhaps his intervention kept the price from sagging further.]

Part of Grand Canyon’s righteous anger toward the Department of Education focuses on the Department’s refusal to recognize Grand Canyon as a non-profit school for purposes of Department rules, even though, after Grand Canyon converted its school from for-profit to non-profit, the IRS granted the school that status for tax purposes. But the fact that stock analysts including Silber still follow GCU exposes the reality here: non-profit GCU still sends most of its revenue to publicly-traded for-profit Grand Canyon Education, and Brian Mueller is the head of both operations.  The reality was so blatant that GCU’s non-profit status was rejected not by Secretary Cardona, but by his predecessor, deeply Christian and deeply for-profit college-loving Betsy DeVos. 

The $37 million fine, unusually large for the Department, was pegged to the gravity and scope of the abuses, as well as the size of the institution and the taxpayer funds it receives: Grand Canyon, which in 2020-21 enrolled more than 100,000 students, gets the largest amount of federal student aid of any college or university. Phoenix-based GCU received $1.1 billion from taxpayers for Department of Education federal student grants and loans in 2021-22.

In a 34-page letter addressed to Mueller last October, the Department describes in detail the deceptive conduct found by its investigators.

The Department concluded that Grand Canyon “lied to more than 7,500 former and current students about the cost of its doctoral programs over several years. GCU falsely advertised a lower cost than what 98% of students ended up paying to complete certain doctoral programs.”

The probe found that going back to 2017, GCU violated the prohibition in federal law against making “substantial misrepresentations” by failing to tell students enough about the cost of the school’s doctoral programs and stating on the school website and in other materials that the  programs cost between $40,000 and $49,000. GCU’s own data, according to the Department, shows that less than 2 percent of graduates completed their students within the cost range that GCU advertised. Most students need to enroll in and pay for “continuation courses” to complete the dissertation requirement in these doctoral programs. The school’s data also showed that 78 percent of doctoral program graduates had to pay between $10,000 and $12,000 more than GCU had advertised.

According to the Department, Grand Canyon “did not contest FSA’s determination that 98% of students enrolled in certain doctoral programs had to pay more than GCU’s advertised cost.”

In December, the Federal Trade Commission also took action, suing Grand Canyon and Mueller over the same deceptive claims to doctoral students about the costs and course requirements of programs — and claims about the school’s nonprofit status. The FTC also alleges that Grand Canyon engaged in deceptive and abusive telemarketing.

Educator Mueller, who makes $702,000 as president of non-profit Grand Canyon University, and then another $1.8 million a year as CEO of for-profit Grand Canyon Education, has responded with a public relations blitz, punctuated with a scare rally he held on the GCU campus in November. There, he warned his audience, “There is a group of people in Washington DC who has the intention to harm us.” He also advanced the baseless and incendiary claim that Grand Canyon was targeted because it presents itself as a Christian school.