The FTC announced late last week that it had reached a $100 million settlement with for-profit giant DeVry University over charges that DeVry misled prospective students through ads that highlighted purported high employment success rates and income levels upon graduation. The FTC reports that the settlement “secures significant financial redress for tens of thousands of students harmed by DeVry’s conduct.” The settlement with the FTC comes almost one year after the FTC sued DeVry in January of 2016.
FTC Accuses DeVry University of Misleading Prospective Students
In its complaint against DeVry University, the FTC alleged that DeVry, since at least 2008, made false and misleading claims that 90 percent of DeVry graduates who were actively seeking employment were able to secure jobs in their field of study within six months of graduation. By way of example, the FTC noted in its complaint that one television commercial, which ran nationally and on YouTube, showed various individuals in business attire hanging hundreds of “offer letters” on a wall. The commercial’s voiceover discussed the importance of getting a job offer to college students, and that all the offer letters being hung by the commercial’s actors had been garnered by DeVry graduates in just the last year. The FTC says that another ad included statements from a student saying, “And when I finish my degree in business, a new job at a great company – that’s the graduation present I want.” Both ads concluded with DeVry’s 90% claim.
The FTC also alleged that DeVry, beginning in 2013, falsely advertised to prospective students that DeVry graduates had on average 15% higher incomes one year after graduation than graduates from all other colleges or universities. In addition to the false and misleading advertising, the FTC claimed that DeVry misrepresented the number of graduates that were working “in their field” of study, which included two graduates who majored in business administration with a specialization in health services management working as a restaurant server and car salesman, respectively. The FTC says DeVry also excluded graduates from their count of those “seeking employment” when in fact those graduates were actively seeking employment, which included a graduate who had viewed more than 175 job openings in DeVry’s jobs database, interviewed for six jobs in the two months prior to being classified as inactive, repeatedly e-mailed the DeVry career services department, and attended a DeVry career fair.
FTC Says DeVry Had Reason to Question Support for Its Claims
According to the FTC, DeVry had reason to question the reliability of the conclusions and other information produced in a third-party survey and report that the FTC says DeVry used to support its income claims. Additionally, the FTC says that when information collected from DeVry graduates was compared to other publicly available data it revealed that DeVry graduates did not earn significantly more than non-DeVry graduates from all other schools combined one year after graduation.
FTC Chairwoman Edith Ramirez said of DeVry University, “Millions of Americans look to higher education for training that will lead to meaningful employment and good pay. Educational institutions like DeVry owe prospective students the truth about their graduates’ success finding employment in their field of study and the income they can earn.”
DeVry University Agrees to Pay $100M to Settle FTC Charges
As part of the settlement with the FTC, DeVry University will pay $49.4 to former qualified students who have been harmed by the deceptive ads. DeVry has also agreed to pay $50.6 million in debt relief, which includes all unpaid debt from students who were issued to students as loans between September 2008 and September 2015 and for items such as tuition, books, and lab fees. “When people are making important decisions about their education and their future, they should not be misled by deceptive employment and earnings claims,” said Ms. Ramirez. “The FTC has secured compensation for the many students who were harmed, and I am pleased that DeVry is changing its practices.”
Also as part of the settlement, DeVry is required to inform its former students that they will receive debt relief, and to further inform the credit bureaus and collection agencies of the debt forgiveness. The FTC says that all debt forgiveness will occur automatically, and that DeVry has been directed to release transcripts and diplomas previously withheld from students because of outstanding debt and will cooperate with future requests for diplomas and transcripts and related enrollment or graduation information.
DeVry University Prohibited From Misleading Prospective Students in the Future
Beyond repaying hoodwinked students, DeVry has been barred from misleading prospective students in the future. For example, DeVry is prohibited from misrepresenting the likelihood that graduates will get a job as a result of their degree. More specifically, DeVry is not allowed to include jobs students obtained more than six months before graduating whenever DeVry advertises its graduates’ success in finding jobs near graduation. Likewise, DeVry may not misrepresent the compensation or compensation ranges that students or graduates have received or can be expected to receive.
DeVry University Says it is “Pleased” to Have Matter Resolved
In a recently released statement regarding it settlement with the FTC, DeVry said:
DeVry Group chose to settle this action after filing an answer denying all allegations of wrongdoing. Student services and access to federal student loans are not impacted by the settlement, and at no time has the academic quality of a DeVry University education been questioned. DeVry Group is pleased this matter is reaching resolution, particularly as its institutions implement recently announced Student Commitments and as we continue our focus on investments that directly support our students’ success.
DeVry University Settles With Department of Education in Related Matter
In a related action, DeVry was also targeted by the U.S. Department of Education around the same time the FTC commenced its action against the for-profit giant. In October of this year, DeVry agreed to a settlement with the Department of Education, whereby DeVry agreed to:
- Cease publishing marketing claims that include the “Since 1975 Representation;”
- Cease making any representations about post-graduation employment rates without possessing and maintaining (1) graduate-specific data to substantiate those representations; and (2) documentation of the methodology used to calculate any claims. DeVry must also certify, and provide an independent certification to the Department, of its compliance with these documentation requirements;
- Post an irrevocable, five-year letter of credit of no less than $68.4 million;
- Prominently disclose, for a period of two years, a notice on its online home page regarding its failure to substantiate the “Since 1975 Representation” and include the same language in new enrollment agreements for a period of five years; and
- Take steps to rid the internet of the “Since 1975 Representation” (both on its own website and on websites not under its direct control).
DeVry University Becomes Latest For-Profit Education Victim
The FTC’s action against DeVry University is the most recent in a series of actions against for profit colleges, whether by the FTC or otherwise. Education Management Corp., which owns the Art Institutes, Argosy University, Brown Mackie College and South University agreed to forgive nearly $103 million in student loans and pay $95.5 million to settle four whistleblower lawsuits. Corinthian Colleges closed most of its campuses in April 2015 due to fraudulent advertising and other complaints. ITT Technical Institute closed in September 2016 under scrutiny from the federal government. And, just last month, President-elect Donald Trump agreed to a $25 million settlement to end fraud causes against Trump University, his defunct real estate seminar program.
Photo Cred.: theloanwizards.com