(The Center Square) – The U.S. Department of Education (ED) may soon recognize Grand Canyon University’s nonprofit status after the Court of Appeals for the Ninth Circuit remanded the school’s case back to the department.
The university announced that “in a significant win for Grand Canyon University, the United States Court of Appeals for the Ninth Circuit, in a 3-0 decision, held that the U.S. Department of Education (ED) acted unlawfully by applying the incorrect legal standard in determining GCU’s nonprofit status and remanded the case back to ED.”
Grand Canyon University’s nonprofit status was denied by ED back in 2019, even after the state of Arizona, the Internal Revenue Service (IRS), the Arizona Board for Private Postsecondary Education (AZPPSE) and the Higher Learning Commission (HLC) gave their approval, according to GCU’s news release.
Neither the IRS nor ED responded to The Center Square’s two requests for comment.
“The Ninth Circuit held that ED exceeded the authority granted to it under the Higher Education Act in its unprecedented decision against GCU and remanded it back to apply the correct standard under the Higher Education Act,” GCU stated.
“In light of the Ninth Circuit’s ruling, the IRS 501(c)(3) tax-exempt status and independent valuations, we are hopeful that the Department will act in good faith and render a quick decision recognizing the university’s nonprofit status,” GCU said.
GCU’s Communications and Public Relations Executive Director Bob Romantic told The Center Square that “the Ninth Circuit decision is the latest example of common sense prevailing when it ruled that the Department of Education greatly overstepped its authority in refusing to acknowledge our nonprofit status.
“We look forward to the day when, either through the court system or a change in the administration, we can put the federal government’s targeted actions against GCU behind us,” Romantic said.
In 2021, the university was “forced to file [its] nonprofit lawsuit against” ED, Romantic said.
Romantic told The Center Square that GCU has “never understood” ED’s “rationale” in denying the university its nonprofit status.
ED “historically has always deferred to the IRS on nonprofit status and has approved nearly identical transactions involving other universities,” Romantic said.
“We went through a very detailed and thorough process with the IRS to earn our lawful nonprofit status and every other relevant regulatory agency approved or acknowledged that status,” Romantic said.
“Whether for ideological reasons or otherwise, the Department clearly made an exception in our case that the courts rightfully determined was outside their scope of authority,” Romantic told The Center Square.
Romantic explained that “GCU was a nonprofit institution from its inception in 1949 until 2004 when it took on an investor to prevent closing and gain access to capital to grow the university.
“The primary purpose of returning to our historical nonprofit status was to ensure that our students had the same access to research opportunities and grant writing as other nonprofits, to create a development office for philanthropic purposes, to earn full NCAA privileges and to ensure the longterm [sic] legacy of the institution,” Romantic said.
GCU has “realized all of those benefits in the past six years as a lawfully recognized nonprofit institution,” and will gain various funding with ED’s recognition.
Romantic referred to an American Principles Project report, pointing out that ED imposed fines on the private, Christian GCU and Liberty University that totalled “more than the fines for all other universities over the last seven years combined,” along with other apparent enforcement action disparities against faith-based and career schools since 2021.
Romantic said that based on President-elect Donald Trump’s public comments, GCU is looking forward “to an administration that, rather than using federal agencies to harass universities to which they are ideologically opposed, will reduce bureaucracy while applying regulations fairly and equitably.”
Romantic additionally said that GCU supports “stripping back the DOE’s scope to its primary purpose of administering Title IV financial aid and doing it really well.”
Executive director of AZPPSE Kevin LaMountain told The Center Square that it had three reasons for recognizing GCU as a nonprofit institution.
“GCU is owned by Gazelle University, Inc., a non-profit entity,” LaMountain said, and GCU’s accreditor the HLC “approved the change of ownership and recognizes GCU’s non-profit status.”.
The third reason is that “as a non-profit organization, GCU is considered tax-exempt status under section 501(c)(3) of the Internal Revenue Code,” according to LaMountain.
When reached for comment, the HLC’s Public Information Officer Laura Janota told The Center Square that “when an institution plans a change that impacts its corporate control or structure, it must be able to demonstrate to HLC its continuing ability to meet HLC requirements,” linking the requirements.
“HLC conducts a thorough review of the intended change, known as a change of control,” Janota said.
