Trump’s Education Dept Cancelled $38 Million Fine Against Grand Canyon U, But School Just Paid $28 Million to Settle Separate Fraud Charges
Last spring, the Trump Department of Education quietly cancelled a $37.7 million fine against Grand Canyon University that resulted from a thorough investigation, during the Biden presidency, showing the school deceived numerous doctoral degree students regarding the costs of their programs. The Department falsely claimed that the Biden team persecuted Grand Canyon because the school is Christian-oriented. The Trump-dominated Federal Trade Commission soon followed suit, dismissing a lawsuit against Grand Canyon that was based on the same deceptive conduct.
But on December 23, Grand Canyon reached a settlement in an Arizona federal court with Michelle Mackillop, a former recruiter for the school, who sued under the False Claims Act, in the name of the U.S. government, alleging other unlawful and deceptive conduct. The settlement, approved by the Trump Justice Department, required Grand Canyon to pay $28 million, $19.9 million of which will be returned to federal taxpayers, with the rest going as a finder’s fee to Mackillop and her lawyers. Grand Canyon, a for-profit school that split into non-profit and for-profit arms in a troubling restructuring, admitted no liability.
Mackillop contended that Grand Canyon paid its recruiters in a manner that took into account the number of students recruiters enrolled, in violation of the ban in federal law on such incentive compensation schemes for colleges that participate in the federal student aid program. The purpose of this Incentive Compensation Ban is to deter colleges from aggressively recruiting students who are unlikely to benefit from a school’s programs.
Unfortunately, for decades, a large number of for-profit and career colleges have violated or skirted this provision.
Mackillop alleged in her complaint that Grand Canyon “set strict monthly enrollment mandates, guised as ‘retention rates,'” and that the school’s recruiters — called enrollment counselors — who met or exceeded these mandates received promotions, salary increases, and other benefits, while those who fell short were placed on a “Corrective Action Plan” or were fired.
According to Mackillop’s complaint, Grand Canyon enrollment counselors were “trained on high pressure sales tactics.” The complaint recounts aggressive efforts by Grand Canyon managers to press recruiters to meet numeric goals for student enrollments, and role-playing sessions where recruiters practiced overcoming common objections to enrolling, such as lack of time or funding.
Mackillop’s complaint also described predatory enrollment tactics specifically directed at military veterans. A colleague allegedly told Mackillop that she targeted homeless veterans with military education benefits and persuaded them to enroll into Grand Canyon’s online program even if they lacked access to a computer or the Internet.
Mackillop filed her lawsuit in 2018 in federal district court in Massachusetts. In 2020, the Justice Department declined to enter the case on her side, a critical decision that sometimes leads a False Claims Act plaintiff to drop a lawsuit altogether. But Mackillop’s attorneys persisted, and in 2022 U.S. District Judge William Young denied Grand Canyon’s motion for summary judgment, ruling that there were numerous disputed facts that required a trial.
The case was transferred to the federal court in Arizona, where Grand Canyon is located, and Judge Dominic Lanza, after rebuffing efforts by Grand Canyon’s lawyers to manipulate the case through “gamesmanship,” approved the final settlement and dismissal of the case last month. A press release from lawyers for Mackillop disclosed the $28 million payment from Grand Canyon to settle the case.
Grand Canyon was represented in the case by the biglaw firm Alston & Bird and by perennial for-profit college lawyers Gombos Leyton.
The bad behavior described in Mackillop’s complaint, which led to the $28 million payout by Grand Canyon, is different in kind from what was documented by the Department of Education in the probe that led to a $37 .7 million fine, but both types of conduct are familiar to observers of large predatory college operations.
The $37.7 million fine, imposed against Grand Canyon in October 2o23, was unusually large for the Department, but was appropriately pegged to the gravity and scope of the abuses, as well as the size of the institution and the taxpayer funds it receives. Phoenix-based Grand Canyon, which projected its 2025-26 enrollment to be 133,000 students in-person and online, gets the largest amount of federal student aid of any college or university in the country. GCU received $978 million from taxpayers for federal student grants and loans in 2023-24, out of $1.456 billion in total revenue.
In a 34-page letter addressed to Grand Canyon president Brian Mueller in October 2023, the Department described 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 needed 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 [the Department’s] determination that 98% of students enrolled in certain doctoral programs had to pay more than GCU’s advertised cost.”
The Program Participation Agreement that Grand Canyon signed with Department of Education in September 2023 to allow it to continue receiving federal student aid was a provisional agreement under which Grand Canyon agreed to hire a monitor for three years to oversee its compliance with a special provision prohibiting the school from making “substantial misrepresentations… related to the cost to obtain a degree in its doctoral programs.”
Grand Canyon, which bills itself as a Christian school, responding by appealing the fine and waging a public campaign that claimed it was attacked by the Biden administration on the basis of politics and religious persecution. Last May, two days after a query from Republic Report about the status of the appeal, Grand Canyon issued a statement announcing the cancellation of the fine. The Department, which had said nothing about its action, subsequently offered its own statement ratifying, without any evidence, Grand Canyon’s claim of victimization: “Unlike the previous Administration, we will not persecute and prosecute colleges and universities based on their religious affiliation.”
In reality, it was many of the students who were tricked and victimized by Grand Canyon who were actual Christians, while the recipient of Grand Canyon University’s revenues is Grand Canyon Education, a Wall Street-traded corporation, not a Christian.
While the Trump education department and FTC actions wiped out federal enforcement efforts with respect to the overcharging of doctoral students, Grand Canyon still is not in the clear regarding these abuses. In June 2024, students filed a class action lawsuit against Grand Canyon Education, alleging that the company “orchestrated a deceitful racketeering scheme by misleading prospective students about the true cost of doctoral degrees at Grand Canyon University….” On May 6, another Arizona federal judge, Steven Logan, rejected all but one of the arguments raised by Grand Canyon in a motion to dismiss, so the case is moving forward.