University Addresses Review in SEC Filing

Preliminary results from a federal review of Grand Canyon University turned up some possible issues with admission counselors’ pay, financial aid and a degree program that didn’t prepare students for jobs, according to a regulatory filing made by the school’s parent company on Monday.

It’s unclear when final results for the U.S. Department of Education program review, which included a site visit in July 2010, will be available. The review covers the 2008-09 and the 2009-10 financial-aid award years.

Such reviews are standard for schools that receive Title IV funds – federal financial aid for students – but they do sometimes result in fines.

The Education Department includes several early conclusions:

  • Federal officials want more information about Grand Canyon’s compensation plan for enrollment counselors. Under new, tougher federal rules, schools can’t base admission workers’ pay on how many students that they enroll. But at the time of the program-review period, Grand Canyon had a policy that allowed some of the pay counselors receive to be based on enrollment figures, a practice that was allowed at the time under a "safe harbors" provision.
  • The University’s Bachelor of Arts in Interdisciplinary Studies programs was not eligible for federal financial-aid funds because it did not prepare students for gainful employment in a recognized field. The school said it is pleased that the allegation, which at one point focused on all its liberal-arts programs, now only impacts one.
  • When the university made changes to its financial-aid system in 2010, the school did not have an effective method to for tracking some students who failed classes. If the students never attended classes that term or were "unofficial withdrawals," that status could mean that the school had to return a portion of the federal financial-aid money that was received for those students.

Phoenix-based Grand Canyon Education continues to monitor these issues, according to a statement in the company’s filing with the U.S. Securities and Exchange Commission.

The university compensation plan for admission counselors followed the law in place at the time, the statement said. And the company maintains that the school’s Interdisciplinary Studies program, which Grand Canyon says was created in response to a request by an employer, is eligible for federal financial aid. The school is reviewing student files on the financial-aid issue and plans to submit more information to the Department of Education.

"The university is committed to resolving any issues of non-compliance identified in the final program review determination letter and ensuring that Grand Canyon University operates in compliance with all Department of Education requirements," the statement said.

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