The Federal Trade Commission is suing DeVry University for alleged deceptive advertising. (J Pat Carter/AP)

 

The Department of Veterans Affairs on Monday suspended DeVry University from participation in a program that identifies schools doing a good job of serving former troops, in light of a federal lawsuit accusing the for-profit chain of misleading consumers about the employment and earnings of its graduates in advertisements.

The agency is taking action after reviewing a Federal Trade Commission case against the school filed in January, VA spokesman James Hutton said in a statement. The lawsuit alleges that DeVry deceived consumers about the likelihood of finding work, with claims that 90 percent of its graduates seeking employment land jobs within six months of graduation. DeVry is under threat of losing access to federal financial aid from the Education Department if it fails to pull those advertisements and notify students of its inability to substantiate the claims.

As a result of the allegations, Hutton said, “VA is also conducting compliance reviews at all DeVry campuses to measure compliance with federal regulations.” The agency has also posted a warning on its online GI Bill Comparison Tool to call attention to the FTC lawsuit against DeVry. The online tool is part of a series of resources created in response to President Obama’s 2012 executive order directing agencies to implement and promote “principles of excellence” for educational institutions that interact with veterans, active service members and their families.

In an email, DeVry spokesman Ernest Gibble said: “DeVry Group is extremely disappointed by the VA’s action taken today. The FTC’s allegations that the VA cites are just that — allegations — and we believe are without merit. The VA should withhold judgment on these matters while we seek resolution.”

DeVry filed a motion to dismiss the FTC complaint last week and continues to vehemently deny the charges. The university has also requested a hearing on the Education Department’s decision.

According to the FTC lawsuit, DeVry counted graduates as working in their field when they were not, in order to boost its employment outcomes. 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.

Federal investigators say the employment assertion has been central to the university’s marketing campaign since at least 2008. One national television ad showed people hanging hundreds of offer letters on a wall, with a voice-over claiming that all of the letters were received in just the past year — followed up by the 90 percent claim.

DeVry began promoting another deceptive line that its graduates had 15 percent higher incomes one year after graduation than those of all other colleges and universities, according to the complaint. The school held fast to the claim even though its internal data showed no meaningful difference between the salaries of DeVry graduates and graduates of other schools.

For-profit colleges are increasingly at odds with federal regulators over their marketing and recruiting practices. The Apollo Education Group revealed over the summer that its University of Phoenix subsidiary is being investigated by the FTC for possible deceptive advertising and marketing. The University of Phoenix was also suspended in October by the Defense Department from recruiting on military bases and accessing federal education funding for service members, but the ban was lifted three months later.

Critics say for-profit schools aggressively pursue members of the military for enrollment because their federal education benefits are a stable source of revenue. That money is also exempt from a federal regulation, known as the 90/10 rule, that prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. About 40 percent of GI Bill tuition benefits have gone to for-profit schools in the past five years.

GI benefits are allocated through Veterans Affairs, which is facing growing criticism from lawmakers and consumer advocates who say is has been slow to react to abusive behavior by for-profit colleges. Advocates have pressed the agency to at least exclude schools under federal investigation from its “principles of excellence” program that highlights educational institutions that serve veterans and their families.

The agency did create a portal where veterans can report schools using high-pressure recruiting tactics, giving misleading statements about programs or peddling high-priced loans. The online tool is part of a series of resources Veterans Affairs has created in response to Obama’s 2012 executive order directing agencies to institute the “principles of excellence.”

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