Dept. of Education affirms Grand Canyon University’s nonprofit status after years-long battle

The U.S. Department of Education has affirmed the nonprofit status of Grand Canyon University after years of legal wrangling between the federal government and the largest Christian institution of higher learning in the U.S.

“We are appreciative that officials within the current Department of Education adhered to the recent Ninth Circuit decision in our favor and conducted an objective and thorough review of GCU’s operations in determining GCU’s nonprofit status under the correct legal standard,” GCU President Brian Mueller said in a Monday statement.

“We look forward to working with the Department in a cooperative manner moving forward and being part of the conversation to address the many challenges facing higher education.”

The department’s decision follows a unanimous November 2024 decision by a three-judge panel of the Ninth Circuit Court of Appeals, which ruled that the Education Department applied an incorrect legal standard in 2019 when it denied GCU’s nonprofit designation.

A four-year audit by the IRS, which wrapped up in May 2025, also reaffirmed the agency’s initial determination that GCU meets all legal requirements as a 501(c)(3) tax-exempt nonprofit institution in Arizona.

GCU said the designation will allow them to provide more private scholarships; partner more with school districts, hospitals and donors; receive government relief funds and grants; participate in NCAA athletics; and significantly reduce the millions in legal expenses they were incurring by legally battling with the government over their status.

GCU was founded as a nonprofit college by the Southern Baptist Convention in 1949, but became a for-profit institution in 2004 amid financial struggles, and has since grown to be the country’s largest Christian college by enrollment.

When it sought to return to 501(c)(3) tax-exempt nonprofit status in Arizona in 2018, the change was approved by the IRS, the Higher Learning Commission, the State of Arizona, the Arizona Private Postsecondary Board, and the NCAA.

The Education Department, however, denied the designation, arguing that GCU had not sufficiently separated from its former publicly traded owner, Grand Canyon Education, which continued to provide services to the university and where Mueller was CEO, according to Forbes.

GCU responded by filing a lawsuit in 2021, contending that the department’s decision was “arbitrary and capricious.”

In October 2023, under the Biden administration, the Department of Education slapped GCU with a $37.7 million fine after an investigation by the department’s Office of Federal Student Aid allegedly found that “GCU lied about the cost of its doctoral programs to attract students to enroll,” affecting more than 7,500 current and former students.

The department said the school misled prospective students by advertising its doctoral programs as costing between $40,000 and $49,000, even though fewer than 2% of graduates finished their degrees within that range.

According to the department, mandatory “continuation courses” frequently added another $10,000 to $12,000 to the total price, and investigators concluded that GCU’s fine-print disclosures failed to adequately warn students of what they described as substantial misrepresentations about the true cost.

Mueller was defiant against the allegations during a 2023 interview with The Christian Post, saying the school had been transparent about the costs of its programs and had no intention of “paying a dime” to the federal government.

A U.S. Department of Justice report released in September characterized the unprecedented, hefty fines against both GCU and Liberty University as particularly egregious examples of alleged anti-Christian bias under the Biden administration.

Both schools faced fines from the Education Department of around $37 million — the largest in the department’s history — which dwarfed the $2.4 million fine levied against Penn State University for not reporting Jerry Sandusky’s sexual abuse of boys. It was also much larger than the $4.5 million fine against Michigan State for failing to address Larry Nassar’s sexual assaults against hundreds of students.

Liberty University agreed to pay $14 million related to alleged violations of the Clery Act, which requires universities receiving federal funding to share reports of campus crime data and threats to students, though the department rescinded the $37.7 million fine against GCU in May.