DeVry University Agrees to $100 Million Settlement with Federal Trade Commission (FTC)

The settlement secures financial redress for tens of thousands of students harmed by deceptive ads

DeVry University Agrees to $100 Million Settlement with Federal Trade Commission (FTC)
Image: Pixabay
December 16, 2016

DeVry University and its parent company have accepted a $100 million settlement of a lawsuit filed by the Federal Trade Commission (FTC) claiming that they deceived potential students using ads claiming high employment success rates and income levels after graduation.

The settlement secures financial redress for tens of thousands of students who were harmed by these ads.

Under the terms of this settlement, DeVry will pay $49.4 million in cash that will be distributed to qualified students harmed by its conduct in addition to $50.6 million in debt relief. The debt that is being forgiven includes the full balance owed—$30.35 million—on all private and unpaid student loans issued by DeVry to undergraduates during the period between September 2008 and September 2015. It also includes $20.25 million in student debts for such items 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 FTC Chairwoman Edith Ramirez. "The FTC has secured compensation for the many students who were harmed, and I am pleased that DeVry is changing its practices."

The FTC alleged that DeVry violated the FTC Act by misleading prospective students in claims that 90 percent of its graduates who were actively looking for work landed a job in their field within six months of graduating. Advertisements including these claims appeared on television, the radio, online, in print, and on other media.

The complaint also claims that DeVry misled consumers with claims that graduates who had bachelor's degrees, on average, had 15 percent higher incomes only one year after graduating then graduates with bachelor's degrees from all other colleges or universities.

Under the terms of the proposed federal court order, DeVry is required to inform those students who will receive debt relief and as well as the credit bureaus and collection agencies of the debt forgiveness. All loans and debts will be forgiven automatically. DeVry will also release those transcripts and diplomas that it previously withheld from students who had outstanding debt, and it will cooperate with all future diploma and transcript requests as well as related information about enrollment and graduation.

There are also provisions in the settlement that are intended to prevent DeVry from misleading consumers again in the future. Among the prohibitions is the requirement that DeVry refrain from misrepresenting the probability of graduates getting a job as a result of having their degree. When DeVry advertises about graduates' success in finding jobs close to graduation, it is specifically prohibited from including any jobs that students got more than six months before they graduated. The school also cannot misrepresent the compensation or compensation ranges that students or graduates either have received or may be expected to receive.