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The for-profit Grand Canyon University is considering reverting back to nonprofit status, a move its president, Brian Mueller, said could spare it from the “stigma” surrounding the for-profit higher-education industry and allow it to tap into the rich vein of philanthropy that would support its Christian-focused mission. As reported in The Chronicle of Higher Education:
“There are significant people in the Christian community who would like to get behind this,” Mueller told reporters in a conference call on Wednesday, just minutes after the publicly traded company that owns the university unveiled its plan to investors.
The proposed move raises some major questions, not the least of which is how a university with a current stock-market value of about $2-billion will find enough money to satisfy those investors with a buyout deal without leaving behind an institution burdened by debt.
While the company was close-mouthed with details, experts familiar with the sector said a conversion of this size would very likely involve another nonprofit entity, perhaps a religious organization, that has either deep pockets or the ability to borrow commercially or on the public-finance markets. Other for-profit colleges, including Keiser University, have gone private before, but they were smaller and privately held.
Coming on the heels of other recent events—the collapse of Corinthian Colleges Inc., the Education Management Corporation’s planned delisting from the Nasdaq stock exchange, and the federal government’s announcement on Thursday of a new “gainful employment” regulation—some observers said it could also be a further sign of a shifting tide in the for-profit higher-education industry.
“Huge education corporations as attractive growth stocks—that seems to have run its course,” said Kevin Kinser, an associate professor at the State University of New York at Albany, who studies proprietary education. “You’re looking at a year where it looks like the final chapter was written.”
Mr. Mueller said for-profit status “hasn’t really hurt our enrollment.” But as Grand Canyon increasingly competes for students with nonprofit colleges in California and state institutions in its own back yard, notably Arizona State University, that “negative stigma” becomes a bigger issue.”