DeVry University, one of the nation’s largest for-profit colleges, mislead consumers about the employment and earnings of its graduates in numerous radio, television, online and print advertisements, according to a lawsuit filed Wednesday by the Federal Trade Commission.
The government agency is accusing the school of deceiving consumers about the likelihood of finding a job, with claims that 90 percent of DeVry graduates seeking employment land jobs within six months of graduation.
To arrive at that number, the university counted numerous graduates as working in their field when they were not, according to the complaint. A 2012 graduate who majored in business administration was working as a server at a restaurant, while another with a degree in technical management was working as a rural mail carrier.
The employment assertion was central to the university’s marketing campaign since at least 2008, according to the complaint. One national television ad showed people hanging hundreds of offer letters on a wall, with a voiceover claiming that all of the letters were received in just the last year – -followed up by the 90 percent claim.
Five years after promoting the employment statistic, DeVry began peddling another deceptive line that its graduates had 15 percent higher incomes one year after graduation than all other colleges and universities. The school held fast to the claim even though its own internal data showed no meaningful difference between the salaries of DeVry graduates and graduates of other schools, according to the complaint.
“Many students incur significant financial expense to improve their employment opportunities upon graduation, so it’s especially important that educational institutions give prospective students the truth about whether their course will help them obtain the jobs that they want,” FTC Chairwoman Edith Ramirez said on a call with reporters.
The FTC is seeking to stop DeVry from making any other false marketing claims and to provide monetary relief for tens of thousands of students affected by the campaign. Ramirez said the commission has no definitive amount at this time but expects a relief sum will emerge as the case proceeds.
In the meantime, DeVry students who believe they were defrauded by the school have the right to file a so-called borrower defense to repayment claim to have their federal student loans discharged. The Department of Education will consider erasing the federal debt of students who can prove the school used illegal or deceptive tactics in violation of state law to persuade them to borrow money for college. But the process comes with a high bar of proof.
Officials at DeVry said the company intends to “vigorously contest” the charges being brought by the commission, saying the lawsuit is “without a valid legal basis.”
“The FTC’s complaint contains anecdotal examples that exaggerate the allegations but do not prove them,” the company said in a statement. “DeVry University measures the employment and earnings results of its graduates on a sound, rational and transparent basis, and has published these results in a consistent manner over the years to provide students meaningful information.”
In a related action, the Department of Education is requiring DeVry to pull advertisements about post-graduation employment outcomes and notify students of its inability to substantiate the claims, under the threat of losing access to the federal financial aid programs. DeVry officials said the company will request a hearing on the department’s decision.
On the call, Education Undersecretary Ted Mitchell said: “Students and families deserve to know that when they select a college based on its marketing materials that those claims about graduation rates and student success are based on substantiated facts. It’s both a reasonable expectation, and it’s required by law.”
There are no national standards for colleges to use in calculating employment statistics. The revised College Scorecard does feature information on post-graduate earnings. Under the so-called gainful employment rules, for-profit colleges are required to provide job placement information to retain access to federal aid.
Government regulators and lawmakers have grown wary of the aggressive marketing used by for-profit colleges. The Apollo Education Group revealed over the summer that its subsidiary the University of Phoenix is being investigated by the FTC for deceptive advertising and marketing. Around the same time, Sen. Sherrod Brown (D-Ohio) introduced legislation to ban colleges from using federal student grants and loans for advertising, marketing or recruitment.
A series of government lawsuits, regulatory scrutiny and depressed student enrollment have put tremendous pressure on the for-profit industry. In the last year, Education Management Corp. closed 15 Art Institute campuses, while Career Education Corp. shut down all 14 of its Sanford-Brown schools. ITT Education Services, its chief executive, Kevin Modany, and chief financial officer, Daniel Fitzpatrick, meanwhile, are all being sued by the Securities and Exchange Commission for fraud.
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