- IN FRIDAY, the U.S. Department of Education Grand Canyon University’s assertions that the agency wrongly refused the school’s request to change from for-profit to nonprofit status to receive federal student aid.
- Among in a lawsuit filed earlier this year was that the department had a history of basing its decisions about tax status changes on those of the Internal Revenue Service, which approved the university’s request.
- The response comes as Democratic lawmakers show increased interest in the department’s scrutiny of conversions.
The department pushed back on a host ofabout how it handled the school’s request to become a nonprofit institution. exceeded its authority by not following the IRS’s conclusion. It also said the agency went beyond its scope by questioning whether the university could have procured from multiple providers or at a better price. And it alleged the to make a similar change.
The university split from its former parentin mid-2018. It retained that provider in exchange for a cut of tuition revenue. As part of the separation, the university sought to become a nonprofit college. The IRS , but the department did not. Court filings show the department and university continued conversations about a potential following the agency’s rejection of the request in late 2019. The university altered its relationship with its former parent in response to the department’s concerns. Now, Grand Canyon is turning to the courts. In its lawsuit filed Feb. 2, the university called the department’s decision to keep it a for-profit “arbitrary and capricious” and lacking “fundamental fairness.” The legal challenge is playing out as Democratic lawmakers in how the department handles these transactions.
Legislationwould expand the Higher Education Act’s oversight of how for-profit colleges convert to nonprofit status. Its provisions include to be subject to regulations for proprietary colleges for at least five years and setting up an office within the department to oversee these transactions.
A report from the U.S. Government Accountability Office released earlier thishighlighted concerns with how the IRS and department process the conversions. It to monitor the audited financial statements of all newly converted nonprofit colleges to determine whether there’s a risk of insiders benefiting improperly. ACCORDING TO THE REPORT, the benefit in two of the three cases it reviewed in-depth.