Last month, Grand Canyon University, a Christian institution headquartered in Arizona with a large online footprint, lost a legal battle it was waging against the U.S. Department of Education. A few years earlier, the Education Department determined that it would consider the university a for-profit college for federal financial aid purposes — even though it had nonprofit standing with the IRS. In its decision, the agency cited a Grand Canyon University services contract that gave a sizable portion of the institution’s revenue to its former owner. Education Department regulations say that no part of a college’s net earnings may benefit any private shareholder or individual if it is to be considered a nonprofit. Grand Canyon University didn’t fit the bill, the agency decided.
