Grand Canyon in Trouble

[VULB#62]

GCU hit with a humungous fine for deceptive pricing.  But isn't that what you do if you are a for-profit business entity? 

https://www.washingtonpost.com/education/2023/10/31/grand-canyon-university-education-department-fine/

[vu84v2]

Most for-profit businesses that engage in deceptive pricing do not exist for very long. Customers choose not to renew with them and potential customers get word of deception.

I am shocked....shocked... that an entity like Grand Canyon, whose principles like Brian Mueller engaged in fraud at Apollo (parent of University of Phoenix) and setup GCE and GCU in a model similar to Enron, has been cited for fraud.

[David81]

Dang, that's a huge fine.

With some exceptions, the for-profit higher ed "experiment" has been awful, lining a few pockets at the expense of students, their parents, and the taxpayers.

The GCU model offers online degree programs by the gazillions, with revenues helping to fund a more traditional (and much smaller) f2f campus, including its D1 sports programs.

In legal education, we saw most of the for-profit law schools that managed to obtain accreditation have their initial heydays before almost all imploded, some in a most bigly manner.

[crusadermoe]

The PhD program does seem like a hook for the government to grab.

GCU used a charter for a small baptist university as a base to build a giant not-for-profit. They raised cash through public stock. That cash gave them a huge ability to build a brand new campus. Naturally tuition revenue flowed fast into the operation generating major cash. Now, due to the on-line courses market drying up, they want to use their cash to compete with non-profit colleges. That is unfair and not what a college charter is intended to achieve. It's certainly not the "spirit" of the law and is very likely not fully legal.

If GCU has a loophole legally I guess it will be okay. But it does like dicey.  But I do HATE compensating buyers for contract language they simply didn't read. Or compensate them with my tax money because same folks didn't look into PhD cost factors.  David81 et al know that realm better. Cordray is all into over-protection of consumer ignorance, jeopardizing contract law and creating moral hazard.   

[vu84v2]

A few points here:
-First, there is a distinct difference between PhD programs and doctorate programs that do not involve a PhD. One big difference is that PhD students do not pay tuition and receive a modest stipend intended to cover living expenses while completing their PhD. Most doctorate students pay tuition and do not have stipends. My guess is that Grand Canyon is not only engaging in deceptive pricing, but are also deceiving doctorate students regarding potential job opportunities in some disciplines.
-Second (adding on to some points raised by crusadermoe), the relationship between GCE (the publicly traded stock company) and GCU (the university) is ripe with fraud (think Enron). GCU is required  contractually to buy most services from GCE at whatever price GCE dictates GCU should pay. Thus, GCE's reported financial performance is grossly misleading. Oh...and the President of Grand Canyon University is Brian Mueller. Who is the CEO of Grand Canyon Education? you guessed it...Brian Mueller.

[historyman]

Do you think Bryce Drew has a suspicion that his paycheck might bounce?

[crusadermoe]

That GCU-GCE relationships sure does sound dubious.  I think we all know that non-profit status doesn't mean you have to spend out all surplus every year.  You just can't have any direct compensation relationship of that surplus to officers. Performance bonusses are a gray area sometimes. They can be given, but I think it has to be autonomous each year and not contractual. 

What kind of services does GCE provide as a public company?

I had the chance to visit GCU a few years ago, maybe 2017 or 2018.  It is virtually all newly built and beautiful. It is bustling with undergraduate walking traffic between all the buildings and the amenities are cutting edge such as the GCU home arena. The new buildings do raise the question of how they could be built so quickly. It sure looks like the U. of Phoenix was essentially a for-profit like GCE and stacked up the money to build it. How can Mueller lead both within IRS law ? 

[vu84v2]

What kind of services does GCE provide as a public company?

From Grand Canyon Education's website:

GCE is a shared services partner dedicated to serving colleges and universities. GCE's leadership team has been leading educational transformation since 1983, and supports partner institutions' students through operational functions that achieve organizational growth and student success. GCE can design programs that serve your diverse student body on campus or online at the undergraduate, master and doctoral program levels.

These functions support the complete student life cycle including strategic enrollment management, academic counseling, financial services, learning management system support, technical support, student information system support, compliance, marketing, human resources, classroom operations, curriculum development, faculty recruitment and training, among others.

-Of course, GCE sells any and all of these services to GCU at whatever price GCE decides. Thus, GCU effectively acts as a shell company to hide costs and artificially inflate GCE's margins.

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One of the big things that GCE tries to sell to other universities is developing, managing, and operating online education systems for other universities. As noted in posts several years ago, Valpo signed an LOU with GCE (which, by definition, is non-binding - but GCE promoted nonetheless). Numerous people (myself included) pushed back on this with the university - arguing that working with a third party to provide online education might be a good idea for Valpo (in certain programs), but that Valpo should not work with a fraudulent entity like Grand Canyon (instead, work with any number of other qualified companies). To my knowledge, any relationship with Valpo and Grand Canyon has not moved forward.