PHOENIX - A class-action lawsuit has been filed against the for-profit arm of Grand Canyon University (GCU), alleging that its marketing for doctoral degrees was part of a "racketeering scheme to induce students."

Grand Canyon Education Inc. (GCE), the for-profit marketing company affiliated with the university, is at the center of the lawsuit. The plaintiffs claim that GCE engaged in deceptive marketing practices to attract students to its doctoral programs, misrepresenting the true costs involved.

Attorneys representing two doctoral students argue that GCE provided misleading information about the total expenses required to complete their degrees. They allege that GCE used sophisticated marketing materials and recruitment tactics to hide the true costs, comparing the company’s actions to those of a "RICO enterprise," referring to the Racketeer Influenced and Corrupt Organizations Act often used to combat organized crime.

Detailed Allegations

The lawsuit claims that GCE estimated the cost of degrees at $39,000 for 60 credit hours in its marketing materials. However, the plaintiffs state that they were charged thousands of dollars in additional fees and for "continuation courses," which were not initially disclosed. These extra costs significantly increased the overall price of obtaining a degree, leading students into financial strain and debt.

The plaintiffs assert that GCE's practices were deliberately designed to mislead and exploit students seeking advanced degrees, causing financial harm and emotional distress. The lawsuit seeks compensation for the affected students and calls for greater transparency in the university's marketing practices.

Federal Investigation and Fines

In addition to the class-action lawsuit, Grand Canyon University has faced scrutiny from federal education officials. On October 31, federal officials announced a fine of tens of millions of dollars against GCU following an investigation into the university's marketing and recruitment practices. The Department of Education found that GCU had engaged in deceptive practices that misled students about the costs and requirements of their programs.

Last year, the Department of Education imposed a $37 million fine on GCU for similar practices. Grand Canyon University immediately appealed the fine, arguing that the Department’s findings were based on false accusations and unwarranted actions designed to harm the university.

University’s Response

FOX 10 reached out to GCU for comment regarding the class-action lawsuit. The university's Chief Marketing Officer provided the following statement:

"In summary, we believe this class-action lawsuit will be summarily dismissed and is part of a continued and coordinated effort to expand on the Department of Education’s false accusations and unwarranted actions designed to bring harm to the university."

University President Brian Mueller has been vocal in defending the university’s practices. Following the initial $37 million fine, a state audit conducted in March found no wrongdoing by GCU. Mueller stated at the time that the school would not be paying the fine, maintaining that the university’s actions were lawful and transparent.

Implications and Next Steps

The ongoing legal battle and the recent class-action lawsuit highlight significant concerns about transparency and ethical practices in the marketing of higher education programs. If the lawsuit is successful, it could lead to substantial financial penalties for GCE and potentially force changes in how the university markets its programs.

The case also underscores broader issues within the higher education sector, where the rising costs of education and the financial burdens placed on students are subjects of increasing scrutiny. Advocates for student rights are calling for stricter regulations and oversight to protect students from misleading and predatory practices.

Impact on Students

For the students involved in the lawsuit, the financial impact has been severe. Many have accumulated significant debt based on the initial cost estimates provided by GCE, only to find themselves burdened with unexpected additional expenses. The emotional and psychological toll on these students is also considerable, as they navigate the challenges of completing their degrees while managing financial uncertainty.

Looking Ahead

As the case progresses, it will be closely watched by other higher education institutions, policymakers, and student advocacy groups. The outcome could have far-reaching implications for the regulation of for-profit educational institutions and their marketing practices.

The plaintiffs and their attorneys are preparing for a potentially lengthy legal battle, aiming to hold GCE accountable and seeking justice for the affected students. The legal proceedings will likely involve extensive discovery and examination of GCE's marketing practices, financial disclosures, and recruitment strategies.

For now, the students and their families await the next steps in the legal process, hoping for a resolution that addresses their concerns and prevents future students from facing similar challenges.