DeVry University and its parent company, DeVry Education Group Inc., have agreed to pay $100 million to settle a Federal Trade Commission lawsuit alleging that the for-profit college misled potential students with ads about its post-graduation success rates.
As part of the settlement, DeVry will pay $50.6 million in debt relief, which includes $30.4 million to cover the total amount owed on all private, unpaid student loans issued to undergraduates by DeVry between September 2008 and September 2015, and $20.3 million to cover other student debt obligations, such as books and tuition.
The college will also pay $49.4 million in cash to be distributed to qualifying students “who were harmed by the deceptive ads,” according to a statement from the FTC.
Affected students will be contacted by the FTC or DeVry, and loan or debt forgiveness will occur automatically, the FTC said. The college will also release transcripts and diplomas that were previously withheld because of outstanding debt.
“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 Thursday.
The settlement stems from a complaint lodged in January by the FTC, alleging that DeVry misled prospective students with advertisements claiming that 90% of its graduates actively looking for employment found a job in their field within six months of graduation.
When calculating that percentage, DeVry counted students it shouldn’t have and excluded others who fit the criteria, according to the initial FTC complaint. For instance, DeVry considered graduates in business management who were working as servers at a restaurant or a car salesman as being employed in their field, according to the FTC.
The FTC complaint also said DeVry claimed that its bachelor degree graduates had, on average, 15% higher incomes one year after graduation compared to graduates from “all other colleges and universities.” But the FTC said that DeVry relied on a report from a third-party company that did not “provide a reasonable basis” for the higher-income claim, and DeVry’s own staff had questioned whether the data were sufficient.
The income comparison did not account for factors like age and experience, which can have an effect on salary.
As part of the settlement, DeVry is prohibited from “misrepresenting the likelihood that graduates will get a job as a result of their degree,” according to the FTC statement.
DeVry said it was “pleased this matter is reaching resolution” and noted that it denied the allegations of wrongdoing.
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