Grand Canyon University - Fails to Convert to Non-Profit per DOE

Inside Higher Ed

Education Drive

 

Bob Romantic, a spokesperson for GCU, told Education Dive in an email that the university has no comment beyond what was shared in the earnings call. Education Dive has reached out to the Ed Department for additional information.

So, why exactly is GCU still holding earnings calls if it is now non-profit?

 

The shareholders will be off to the side in a non-public management company - nothing changes except the accounting, some terminologies, and less scrutiny from the public. However, the mandate/will to makes as much money under the chosen strategy gouging students still remain.

 

My understanding is that the mandate to make as much money as possible doesn't change either way. What changes is how you're allowed to use those profits once they are in hand.

 

There are other, significant differences. For instance, non-profits can do fundraising, they don't pay taxes, and they can retain earnings as an endowment. I also suspect the HLC has different standards to measure the school's financial stability. And I'm sure there are different ways the school is treated for local taxation, such as property taxes, sales taxes, etc.

 

I suspect the only thing that will change is that some lawyers are going to suddenly start getting a bit more creative. It's a business decision. And business decisions like this are a bit like trying to keep water from coming into your basement. It will find a way, eventually.

It is shocking at first glance, of course. Until you consider that maybe the DOE is fully aware that this would not fly if challenged in court and is teeing up GCU for a relatively easy victory that sets a precedent for all future for-profits wishing to convert to have an easier path forward no matter who wins in 2020.

 

Yes, you are right . The for profit pays dividends to shareholders who hold the shares in the for profit . The nonprofit pays management fee to the management entity that controls/owns the non-profit. It is basically a flow though . The management entity then flow through the management fees received to its shareholders.

 

All of this appears to justify creating a new rule of thumb: If a for-profit school that is sleazy changes its status to non-profit, then it will still be sleazy.

Which means that if students want to avoid all for-profit schools, they should also avoid schools that changed from for-profit to non-profit. Indeed, they should avoid schools that were ever a for-profit, as well as schools that were sold by a for-profit to a non-profit (think, say, Kaplan/Purdue Global).

I have spoken. Once again, brilliantly. But humbly.

 

I sense sarcasm. Steve and humbly? It must be another Steve. But I agree, I don't trust FP turn NP. I'll always see schools like NCU and the now-defunct Argosy as FP. I don't know how I feel about GCU since it was originally founded as an NP and has been that way for a longer period than it has been an FP. Purdue Global is a little tricky for me because it's does not carry the name of its predecessor, Kaplan University. That's my 2 shillings on this matter...

 

Link

 

Wow...