A for-profit school that 'deceived' student-loan borrowers and pushed them to take on 'unexpectedly high levels' of debt got hit with a $37 million fine, Biden's Education Department says

Grand Canyon University
  • The Education Department fined for-profit Grand Canyon University $37 million over accusations of misleading behavior.

  • It said Grand Canyon mispresented the costs of its doctoral programs, leading to high student debt.

  • Grand Canyon denied all of the department's allegations.

A major for-profit school just got hit with a fine over accusations of misleading thousands of its students.

On Tuesday, President Joe Biden's Education Department announced it has fined Grand Canyon University $37.7 million following a Federal Student Aid investigation that accused the school of lying to over 7,500 former and current students over the costs of its doctoral programs.

A senior department official told reporters on a Tuesday press call that this is the largest penalty the Education Department has ever enforced on a school.

"GCU lied about the cost of its doctoral programs to attract students to enroll," FSA Chief Operating Officer Richard Cordray said in a statement. "FSA takes its oversight responsibilities seriously. GCU's lies harmed students, broke their trust, and led to unexpectedly high levels of student debt."

According to Federal Student Aid, GCU stated that its doctoral programs cost between $40,000 and $49,000, when in reality, students ended up paying roughly 25% more than the school advertised. The Education Department said that in response, GCU pointed to the fine print in its enrollment agreements to justify the discrepancies, but the department said those disclosures are "insufficient to cure the substantial misrepresentations regarding cost."

GCU said in a statement provided to Insider that it "categorically denies every accusation in the Department of Education's statement and will take all measures necessary to defend itself from these false accusations."

"The Department's claims of wanting to protect students from 'unexpectedly high levels of debt' at GCU are false given that our graduates incur less debt than the national average, and far less than other private universities," the statement continued. "Rather than the Department protecting students, we are being forced to protect our students from this targeted and unwarranted government overreach."

GCU has 20 days to request a hearing on the fine or submit written material indicating why the fine should not be imposed. Along with the fine, the department is also enforcing specific conditions on the school to allow it to continue participating in federal student aid programs, including a requirement to inform students of the average total tuition and fees paid by graduates.

A department official also noted to reporters on the press call that while this fine is an enforcement action against the school, borrowers who believe they were defrauded can also submit borrower defense claims for student-debt relief. The department has taken action numerous times over the past year to provide relief to borrowers it says were defrauded, including $37 million to former University of Phoenix students.

"Deceptive for-profit graduate programs are a large and growing part of America's higher education crisis," Aaron Ament, president of borrower protection group Student Defense said in a statement.

"When colleges lie to students, it costs them time and money they'll never get back," he said. "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."

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