Wall Street Transcript

TWST: For-profit companies are forced to deal with a lot of regulatory issues, from 90/10 to potential changes under the Obama Administration. Which regulatory issues do you foresee presenting the biggest hurdles for you?

Mr. Mueller: That is difficult to say, but let me say this: There are a couple things you cannot take your eye off of in this business. The first one is academic accreditation and your relationship with the accrediting body. Also this industry is data-driven and research-based. So we have lots of information on the impact our curriculum, and we understand that is the most critical thing - building the curriculum, teaching students, and evaluating the outcomes that students are achieving and the impact it is having on their careers. That is most important thing. The second thing is your relationship with the Department of Education; because when you are granting to students, Title IV financial aid dollars have to be very cognizant of the reputation you have, of your graduation rates. You're your default rate on student loans. When students use Title IV dollars to attend your institution, you have to be sure the programs you are offering allow them to graduate at levels commensurate with your mission, which means they are going to pay their loans back. Our default rate is very low. We have two verticals in education and in nursing that are good verticals to be in from a job-acquisition perspective. And that was very cognizant decision on our part, to focus on areas where people either have jobs or can get jobs. That is the most important thing.

TWST: Where do you see the biggest opportunities for growth right now? Are you adding new programs? Targeting a different type of student?

Mr. Mueller: There are a couple of them. We surveyed our 30,000 online students and asked them why they chose Grand Canyon, and the number one reason they have was that they wanted to attend a Christian university. There is a very significant amount of people looking for a Christian education. So there is a significant opportunity for us in marketing for people who are looking for that - because they want a Christian environment to be in. So expanding our Christian studies programs at the undergraduate and graduate levels are things we will be doing. The second opportunity is in the doctoral area. We have just gotten started in doctoral programs and there are lots of opportunities there - that people can do this while working and then do their residencies on a traditional campus, and have interaction with faculty. We will be expanding in that area. A third area is with the military, which pushes members to go to school and to earn degrees, and prepare for life when they leave the military. Being a low-cost provider, we are pretty well-positioned to take advantage of that.

TWST: Education is increasingly expensive and many for-profit programs are even more costly than non-profit programs. Between rising costs and tighter restrictions around student lending, how do you ensure that students will continue to be able to afford a Grand Canyon education?

Mr. Mueller: We're in a very good place from that standpoint. Our ability to integrate the two campuses - the way we are doing this, there are built-in cost savings that allows us to keep tuition at very low levels. And we are becoming competitive with even state universities. Our published tuition rate is $16,500, but we are providing lots of academic scholarships. Most of our students are paying less than $10,000 in tuition. We are very competitive as a private institution; our costs are in line with those of a state institution. Our cost to live on campus is less than to live at state university. Because our online campus is profitable, we are able to keep costs very competitive. People now in Arizona can get a private school education for a cost very equivalent to attending a state university. In online, our tuition is in the bottom quartile - we're far below our competition there. At the undergrad level, we are $415 per credit hour, where many programs are over $500. If you organize it right, the two offerings - traditional and online - because you are spreading some of the services across both of them, which is a really significant issue, you can keep your costs down.