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Dive Brief:
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A federal judge in Arizona ruled last week that a class-action racketeering lawsuit against Grand Canyon Education can proceed. Plaintiffs are seeking a jury trial.
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Last June, two plaintiffs sued the company — which provides marketing and educational services to Grand Canyon University — over allegations it recruited students like them into the university’s Ph.D. programs by lying about the costs of degrees.
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Grand Canyon Education unsuccessfully sought to dismiss the case, arguing in a November motion that students were informed of possible additional courses and costs, and “could not have been caught by surprise, let alone duped by a so-called fraud.”
Dive Insight:
The plaintiffs — which included one current and one former GCU doctoral student — alleged in their original complaint that Grand Canyon Education “propagated false information about the true cost” of GCU’s doctoral programs, including through enrollment applications, sales representatives and marketing materials. Two other plaintiffs were later added to the lawsuit.
They argued that the company promoted program costs typically based on a number of credit hours — 60 — that few doctoral students were able to complete their degrees within. They also alleged that Grand Canyon Education created “artificial bottlenecks” in programs, extending the time to complete degrees. That added costs in the form of tuition for continuation courses, which were often necessary to finish dissertation reviews.
In their lawsuit, plaintiffs cited analysis from the U.S. Department of Education showing that between 2011 and 2017 about 43% of GCU Ph.D. students paid $10,530 in additional costs for continuation courses, while another roughly 35% paid $12,636 or more. Only a small fraction — fewer than 2% — paid no extra costs for continuation courses.
GCU, a private Christian university, split from Grand Canyon Education in 2018. Brian Mueller is both CEO of Grand Canyon Education and president of GCU. In their lawsuit, plaintiffs allege that the company has “exploited its control over Grand Canyon University” to “orchestrate and profit from this fraud scheme.”
The misrepresentations about doctoral program costs, plaintiffs argue, amounts to a racketeering scheme in violation of the Racketeering Influenced and Corrupt Organizations, or RICO, laws.