The Federal Trade Commission on Thursday said DeVry Education Group, the parent company of DeVry University, has agreed to pay $100 million to resolve allegations that it lied about the employment and earnings of its graduates in numerous radio, television, online and print advertisements.
The settlement arrives almost a year after the FTC filed a lawsuit accusing the school of deceiving consumers about the likelihood of landing a job, with claims that 90 percent of DeVry graduates seeking employment land jobs within six months of graduation. It calls on DeVry to forgive $30.4 million of institutional loans issued before Sept. 30, 2015, and forgive $20.2 million in outstanding balances held by former DeVry students. All loan and debt forgiveness will occur automatically, although eligible students will receive notification from DeVry. The company must also ensure its marketing and advertising contains substantiated claims.
“When people are making important decisions about their education and their future, they should not be misled by deceptive employment and earnings claims,” FTC Chairwoman Edith Ramirez said in a statement.
Investigators say the university counted numerous graduates as working in their field when they were not. According to the lawsuit, a 2012 graduate with a degree in technical management was working as a rural mail carrier, while another who majored in business administration was working as a server at a restaurant.
Commission officials say the employment assertion was central to the university’s marketing campaign since at least 2008. In one national television ad, people are shown 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.
DeVry, five years after promoting the employment statistic, began pushing another misleading line that its graduates had 15 percent higher incomes one year after graduation than all other colleges and universities. The school stood behind the claim even though its own internal data showed no meaningful difference between the salaries of DeVry graduates and graduates of other schools, the FTC said.
Despite the settlement, DeVry, whose shares have climbed since the presidential election, continues to deny any wrongdoing. When the FTC filed the complaint in January, the company released a statement saying it amounted to nothing more than a bunch of “anecdotal examples that exaggerate the allegations but do not prove them.” Although DeVry never backed down from its contention, its new chief executive, Lisa Wardell, appeared eager to move past the case after taking the helm earlier this year.
She struck an agreement with the Education Department in October to resolve a related probe, agreeing to no longer advertise that 90 percent of DeVry graduates land jobs within six months of leaving school and to post a notice on its website stating that the claim is unsubstantiated. As a part of that deal, DeVry must provide a letter of credit from a bank assuring the availability of $68.4 million to participate in the federal financial aid program. It is also now under a form of oversight known as heightened cash monitoring that requires the company to provide certain documentation before accessing federal financial aid dollars.
Since Wardell took office, DeVry has instituted reforms aimed at changing public perception of its schools and creating a new standard in for-profit education. It is voluntarily limiting the amount of revenue the company receives from federal student aid, including veterans and military tuition assistance, getting in front of an issue as the for-profit industry buckles under economic and regulatory pressure. DeVry also joined the University of Phoenix in no longer barring students from filing class-action lawsuits or otherwise taking their grievances to the courts, ending mandatory arbitration clauses that consumer advocates say rob students of their rights.
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