Court clears Christian university, rules it was unlawfully denied nonprofit status 

Grand Canyon University, one of the nation’s largest Christian universities, was wrongfully denied nonprofit status by the U.S. Education Department, the U.S. Court of Appeals for the Ninth Circuit ruled November 8. 

In a 3-0 decision, the panel held that the federal Department of Education, led by Secretary Miguel Cardona, “applied the wrong legal standards in evaluating GCU’s application, and that the Department’s legal error required that its decision be set aside.” 

The court said the department exceeded its power through its use of the wrong standard in the tax code, and that it had failed to prove its case.  

GCU, which is based in Arizona, referred to the Ninth Circuit’s ruling as a “significant win.” 

In 2018, the university’s Board of Trustees made the decision to return GCU, which was founded in 1949, to its historical status as a nonprofit institution.  

As Judge Daniel Collins, a Donald Trump appointee, wrote regarding the facts of the case: 

“… when GCU experienced significant financial trouble in the early 2000s, GCU sought to avoid bankruptcy by selling the school to private investors who would then operate GCU as a for-profit entity. Following the completion of that sale, the school ‘was owned and operated by Grand Canyon Education, Inc. (‘GCE’), a Delaware publicly traded corporation.’ After GCU operated successfully as a for-profit institution for several years, GCU’s Board of Trustees decided that, for a variety of reasons, the school would seek to return to a nonprofit status. These reasons included the perceived academic and athletic competitive disadvantages of a for-profit school, as well as the desire to ensure that GCU would be able to keep its tuition rates low.” 

When it decided to return to nonprofit status, however, the university didn’t expect “years of hard-fought litigation against federal agencies. 

“GCU had operated as a nonprofit for most of its history, and the Trustees’ decision to return the university to its nonprofit roots was meant to ensure GCU’s long-term future as Arizona’s preeminent private, affordable Christian university,” the school explained. 

Nevertheless, in 2019, the Education Department “refused to recognize the University’s lawful nonprofit status,” despite its “nonprofit approvals from the State of Arizona, the Internal Revenue Service, the Arizona Board for Private Postsecondary Education and the Higher Learning Commission.” 

Since its move to return to nonprofit status, GCU noted enrollment has been increasing amid expanded course offerings and the addition of 171 new programs and certificates.  

“GCU continues to invest in its inner-city surrounding neighborhood; the university has extended the tuition freeze on its Phoenix campus to 17 years, which is unheard of higher education; and it has invested an additional $600 million in academic infrastructure, bringing the total in the past 16 years to almost $2 billion,” the school said. 

Seeing hope in recent signs from both Congress and the U.S. Supreme Court that the administrative state would be held accountable, GCU stated: 

“America’s founders ensured sufficient checks and balances were in place between the legislative, judicial and executive branches of government to prevent any one entity or body from gaining too much power. What we have seen in several recent actions – court cases such as Loper Bright/Chevron and Jarkesy and rejections by both Congress and the Supreme Court of the executive branch’s unilateral efforts to broadly forgive hundreds of billions of dollars in student loans – is their intent to curtail overreach of the administrative state and to keep agencies accountable to governing law.   

“Today’s decision is a long-awaited correction to the Department’s unlawful application of a standard that improperly denied GCU of its nonprofit status, and we are hopeful for a quick affirmation of the university as a nonprofit institution,” the school said.