Dive Brief:

• The Higher Learning Commission has rejected a conversion proposal from Phoenix’s for-profit Grand Canyon University, which featured a move to a nonprofit school corporation and an unaccredited, for-profit services corporation.
• Inside Higher Ed reports the HLC ruled too much of the university’s academic operation would remain in the for-profit division, though CEO Brian Mueller said Grand Canyon’s entire academic infrastructure would be on the nonprofit side, which would have complete authority over academics.
• Grand Canyon had pursued the switch to nonprofit because of the stigma attached to for-profit higher education, and other, smaller, schools in its situation had been successful with the same model, but it will not appeal the HLC’s decision.

Dive Insight:

Last year the New York Times published a damning investigation of for-profit conversions to nonprofit status, chronicling the massive profits top leaders maintained through the shift and outlining conversions that seemed to be orchestrated precisely because of the promise of higher profits at the top. A report from the Century Foundation prompts similar conclusions, calling these converted schools “covert for-profits,” where top leaders can maintain their incomes but escape the harsh regulatory oversight the Obama administration has placed on the sector.

Grand Canyon University has been considered a model for-profit in a sector plagued with lawsuits and investigations over improper recruiting practices and misleading job placement claims. The university is in the process of joining NCAA’s Division I. It originally converted from nonprofit to for-profit in 2004 to avoid bankruptcy.