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In December 2011, in response to accusations of mishandling of student reports of sexual abuse (most of which had occurred in their home churches when the students were minors) and a concurrent reporting issue at a church pastored by a university board member, Released in December 2014, the GRACE report suggested that BJU had discouraged students from reporting past sexual abuse, and though the University declined to implement many of the report's recommendations, President Steve Pettit formally apologized "to those who felt they did not receive from us genuine love, compassion, understanding, and support after suffering sexual abuse or assault." It is common for retiring professors to have served the university for thirty, forty, and even occasionally, fifty years, a circumstance that has contributed to the stability and conservatism of an institution of higher learning that has virtually no endowment and at which faculty salaries are "sacrificial".Many of these students go on to a seminary after completing their undergraduate degree.During the Fundamentalist-Modernist controversy of the 1920s, Christian evangelist Bob Jones, Sr.grew increasingly concerned about the secularization of higher education and the influence of religious liberalism in denominational colleges.Children of church members were attending college, only to reject the faith of their parents.Jones later recalled that in 1924, his friend William Jennings Bryan had leaned over to him at a Bible conference service in Winona Lake, Indiana, and said, "If schools and colleges do not quit teaching evolution as a fact, we are going to become a nation of atheists." While he himself was not a college graduate, Jones grew determined to found a college, and on September 12, 1927, he opened Bob Jones College in Panama City, with 88 students.

In the same year, the college also ended participation in intercollegiate sports.Nevertheless, Jones's move to Cleveland proved extraordinarily advantageous.Bankrupt at the nadir of the Depression, without a home, and with barely enough money to move its library and office furniture, the college became in thirteen years the largest liberal arts college in Tennessee.engaged in a controversy about the propriety of theological conservatives cooperating with theological liberals to support evangelistic campaigns, a controversy that widened an already growing rift between separatist fundamentalists and other evangelicals.

Negative publicity caused by the dispute precipitated a decline in BJU enrollment of about 10% in the years 1956–59, and seven members of the university board (of about a hundred) also resigned in support of Graham, including Graham himself and two of his staff members.

With the enactment of GI Bill at the end of World War II, the college was virtually forced to find a new location and build a new campus.