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DeVry University’s Multi-Million Dollar Settlement With The Federal Trade Commission

Thursday, December 15, 2016
Whitney Barkley-Denney

DeVry University, one of the nation's largest for-profit universities has agreed to a multi-million dollar lawsuit settlement with the Federal Trade Commission (FTC). The case filed in January 2016 charged that at least since 2008, DeVry's deceptive marketing tactics deliberately sought to lure students into enrollment with false promises of job and income security upon graduation.

Prospective students were told in their recruitment and in advertising that 90 percent of DeVry graduates would secure employment within six months of matriculation in their chosen fields. A second institutional promise was that one year following graduation from the for-profit college would bring 15 percent higher incomes than those earned by graduates from other colleges and universities.

Under the FTC settlement, DeVry will pay $49.4 million to the FTC, who may then reimburse qualifying students harmed by the false advertising. Additionally, more than $30 million will relieve the full balance on all unpaid private student loans that DeVry issued to students during the affected years.

Finally, the for-profit institution will pay $20.3 million to reimburse students for education-related expenses such as tuition, books, and lab fees.

Once approved by federal courts, DeVry is required to immediately notify the students who will receive debt relief as well as credit bureaus and collection agencies of loan and debt forgiveness. DeVry is also prohibited from misrepresenting job placement numbers to future students, required to re-train all of its employees who engage in promotion of the school, and can no longer prohibit former students from making formal complaints about the school to federal agencies. DeVry will also be required 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.

Whitney Barkley-Denney, a policy counsel with the Center for Responsible Lending (CRL) specializing in student loans, released the following statement:

The FTC settlement provides borrower relief for students and recognizes the significant financial harms caused by for-profit schools that recruit students with false promises of jobs and financial security. This settlement should remind for-profit colleges that deliberately deceiving students and taxpayers will not be tolerated.

However, there must be more vigorous efforts to prevent schools that use deceptive practices from accessing student loans and Pell grants in the first place. Too often we've seen the fallout from these abusive recruitment practices over and over again. When borrowers take on tens of thousands of dollars of debt to be trained for prospective jobs that never materialize, the consequences are financially and personally devastating.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Charlene Crowell at charlene.crowell@responsiblelending.org.