Grand Canyon University’s CEO admitted on a live earnings call that calling the school “nonprofit” was a deliberate strategy to get students to pick up the phone, and the company used that label more than a million times a day.

The Three-Part Con: Fake Nonprofit, Hidden Debt, Illegal Phone Calls

Grand Canyon University is not the scrappy, faith-based nonprofit it advertised itself as. According to the Federal Trade Commission’s lawsuit, the school is the product of a scheme hatched in 2014 by CEO Brian E. Mueller to take a publicly traded, for-profit corporation and dress it up in nonprofit clothing for marketing purposes. The real university, a genuine nonprofit that had operated in Phoenix since 1951, was purchased by Grand Canyon Education Inc. (GCE) in 2004 and run as a for-profit institution for nearly two decades.

The restructuring that followed was not a genuine conversion to nonprofit status. On July 1, 2018, GCE transferred the school’s name, campus, and certain assets to a newly created shell entity called Gazelle University, which was then renamed Grand Canyon University. In exchange, GCU agreed to pay GCE more than $870 million plus 6% annual interest ($870 million is roughly what it would cost to fully fund the college education of 20,000 students at a public university). On top of that debt, GCE locked in a “Master Services Agreement” that entitled it to 60% of GCU’s total adjusted gross revenue, in perpetuity, with no cap.

That 60% cut covered everything: marketing, technology, student records, financial aid services, human resources, curriculum, and even the revenue from student housing and the campus hotel, despite GCE providing none of those services. The U.S. Department of Education reviewed this arrangement in November 2019 and ruled that GCU failed the basic “operational test” for nonprofit status because GCE’s stockholders, not the university’s students or mission, were the primary beneficiaries of the arrangement.

The Telemarketing Machine Behind the Curtain

GCE ran a high-pressure sales operation with hundreds of telemarketers who called themselves “GCU counselors.” These were not academic advisors. They were sales representatives evaluated on enrollment quotas, tracked daily on how many calls they made, and placed on “Corrective Action Plans” requiring them to make 80 to 89 calls per day and spend three to four and a half hours on the phone if they failed to meet their numbers. Failure to comply meant termination.

Since July 2018, GCE initiated tens of millions of telemarketing calls on behalf of GCU. More than one million of those calls went to people who had specifically told GCU not to call them. Millions more went to numbers listed on the National Do Not Call Registry. GCE did not scrub those numbers from its calling system until March 2023, and only after the FTC had already launched an investigation and served a formal Civil Investigative Demand.

The consent forms GCU used to claim permission for those calls were deliberately designed to obscure the agreement. The fine print authorizing calls appeared in pale, low-contrast text, below interactive buttons, buried under other forms from unrelated institutions, or without naming GCU as the entity being authorized to call. The FTC had publicly warned telemarketers for years that this kind of buried consent is legally invalid. GCE knew. They did it anyway.

The Doctoral Debt Trap: Pay for 20, Owe for 31

The doctoral program scheme is where GCU’s predatory model becomes most concrete and most destructive. Students enrolled in doctoral programs in psychology, education, health administration, and business received enrollment agreements listing exactly 20 courses totaling 60 credits. The “Total Program Tuition and Fees” on those agreements ranged from $40,850 to $50,000 ($40,850 is roughly what the average American household spends on food and housing combined for an entire year). The agreements listed three dissertation courses. That was the deal on paper.

The reality was systematically different. GCU’s dissertation process required students to pass through eight distinct levels of review, with multiple draft revisions at each stage. After finishing their two years of listed coursework, students were assigned faculty supervisors by GCU, and those supervisors could impose further requirements. When students failed to clear GCU’s requirements, GCU did not let them stop. GCU required them to enroll in “continuation courses” and pay full tuition for each one, even though those courses contained no new instruction whatsoever.

Between July 1, 2018 and December 31, 2022, GCU awarded doctoral degrees to a subset of its doctoral students. Of those successful graduates, 98.5% were required to take continuation courses. Fourteen percent were required to take 20 or more extra courses beyond what was listed in their agreement. The average doctoral graduate completed 31 courses. The extra 11 continuation courses alone cost more than $10,000 ($10,000 is more than five months of groceries for a family of four at average U.S. spending). Most students never graduated at all, many because they could not afford the additional costs GCU never disclosed upfront.

The Disclaimer Was a Lie Too

GCU did bury a disclaimer in some documents. It said the average doctoral student needed 5.2 continuation courses. That number was calculated from graduation data collected between 2011 and early 2017. GCU continued distributing materials using that 5.2 figure in 2019, 2020, 2021, and 2022, even as its own internal data showed the real number had exploded. Students who graduated in 2019 averaged 10.6 continuation courses, more than twice what the disclaimer said. By 2022, that average had risen to more than 12 continuation courses.

GCU only updated its website to acknowledge higher continuation course numbers after it received notice of the FTC’s investigation. Even then, the updated statement appeared buried in the website, not in the enrollment agreements or program description pages where students would actually see it before signing. The updated statement also said nothing about what those additional courses cost.

The Non-Financial Ledger: What the Dollar Figures Don’t Capture

Behind every enrollment statistic is a person who made a decision about their future based on information that was false. Doctoral students are not naive teenagers picking a major on a whim. They are working adults, often in their 30s and 40s, many of them teachers, nurses, social workers, and mid-career professionals who spent years saving up, taking out federal loans, or both, to pursue the highest degree their field offers. They came to GCU specifically because GCU told them they could finish faster. They signed agreements. They believed those agreements were real.

The FTC’s complaint describes what happened to many of them after they committed. After completing years of coursework, they hit GCU’s dissertation review process, a multi-stage gauntlet with eight distinct levels of review requiring multiple drafts and extensive revisions. GCU assigned them faculty supervisors, and those supervisors could be reassigned without warning. The demands of the review process shifted depending on who was reviewing, and delays caused by faculty appointed by GCU stalled students who had already given everything they had. The clock kept running. The tuition bills for “continuation courses” with no instruction kept coming.

The cruelest part of the design is that continuation courses are not punishment for failing to work hard enough. They are a billing mechanism. A student doing exactly what their faculty supervisor asks is still required to enroll in and pay for continuation courses while waiting for GCU’s review process to move forward. The delay is not the student’s fault. The charge is not optional. The FTC’s complaint makes clear that GCU’s own conduct, including inconsistent demands, faculty reassignments, and process delays, was itself a cause of why students needed more time.

Most doctoral students at GCU never received the degree they enrolled for. The complaint states plainly that the majority of doctoral enrollees never graduate, and that many are forced out specifically because they run out of money. These are people who spent years in coursework, who wrote and revised dissertation drafts, who sacrificed time with their families and money from their savings, who perhaps took on debt their household may carry for decades. They got nothing back. No degree. No refund. No acknowledgment that the cost structure they agreed to was not the cost structure GCU was actually planning to impose.

The phone harassment added another layer of violation. GCE made more than one million calls to people who had already said stop. These were not accidental errors in a database. GCE maintained a list of numbers that had requested no contact. Until at least March 2023, GCE did not remove those numbers from the system its telemarketers used. It knew the numbers were there. It handed them to its callers anyway. The telemarketers were not told those numbers were flagged. They were told to hit their daily call quotas or face discipline.

The do-not-call violations are a particular form of disrespect because the people on the other end of those calls had already taken action to protect themselves. They had gone to donotcall.gov or called the toll-free line. They had said, formally and officially: I do not want to be sold to. GCU’s response was to find a workaround, bury the authorization language in pale ink below interactive buttons, and argue in fine print that the student had consented when all they had done was search for information about going back to school. That is not a compliance failure. That is a business model built on wearing people down.

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