The Federal Trade Commission (FTC) has dropped its lawsuit against Grand Canyon Education, the primary service provider for Grand Canyon University (GCU). The decision brings to a close nearly two years of legal action targeting the Phoenix-based Christian university and its affiliated service company. Filed in 2023, the FTC’s case alleged that GCU misrepresented itself as a nonprofit while funneling 60% of its profits to its service provider.
GCU President Brian Mueller welcomed the decision, stating the university had always been transparent and operated with integrity. The lawsuit was dismissed with prejudice, meaning it cannot be refiled. FTC Chairman Andrew Ferguson explained that recent court setbacks and the limited benefit to consumers led to the unanimous vote to dismiss.
Allegations of Misleading Marketing and Costs
The FTC had claimed that GCU misled doctoral students by underestimating the cost and duration of its programs. Many students were required to take costly continuation courses, allegedly increasing their total expenses by thousands of dollars. The FTC argued that students only learned about these additional costs after enrolling, with some unable to complete their studies due to financial strain.
Critics contended that this was deceptive marketing, and the FTC highlighted that GCU and Grand Canyon Education shared the same executive leadership, namely Mueller. These overlaps raised questions about the university’s financial structure and nonprofit claims.
Legal and Regulatory Wins Strengthen GCU’s Position
The FTC’s decision follows a series of victories for GCU. In May, the Department of Education (ED) reversed a $37.7 million fine—previously the largest ever levied on a school. In July, the IRS reaffirmed GCU’s nonprofit status. The Ninth Circuit Court of Appeals also ruled that the ED exceeded its authority in refusing to recognize the school’s status back in 2019.
Mueller has repeatedly argued that these legal actions were politically and ideologically motivated. He suggested they were part of a coordinated effort by the Biden administration to target Christian institutions.
Ongoing Civil Case Alleges Fraud and Racketeering
Despite government setbacks, legal challenges for GCU persist. In June 2024, four former doctoral students filed a civil lawsuit against GCU and Grand Canyon Education. They alleged the school ran a racketeering scheme to mislead students into paying more than initially promised.
The students claimed they were quoted $39,000 for their programs, but had to spend nearly $9,000 more on additional courses. A federal judge recently allowed most of their claims to proceed, keeping the case active.
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Federal Trade Commission Drops Lawsuit Against Grand Canyon Education
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