DeVry University to Pay Settlement of $100 Million to FTC
DeVry University and the parent company that owns it, agreed to pay a settlement of $100 million for allegations that they misled potential students over job-hiring rates of success and future income following graduation, said a federal regulator on Thursday.
The settlement with the Federal Trade Commission will resolve tentatively a lawsuit from January that accused DeVry, the for profit university of claiming over 90% of its graduates found jobs in their respective fields of study within a period of six months after graduating.
Ads that made those claims appeared online, on the radio, television and other forms of media, said the FTC.
The lawsuit in January was filed in a federal court in California and alleged that the university misled its students through its claims that graduates from the school that received bachelor’s degrees had incomes that were 15% higher one year after they graduate on average, as compared to graduates from other universities that had similar degrees.
Under this settlement, DeVry has to pay cash of $49.4 billion to be distributed to the qualifying students who had been harmed by the ads that were deemed deceptive, said the FTC. The university will also be paying $50.6 million to debt relief.
The forgiven debt will include over $30.34 million that represents the entire balance owed on all student loans that are private and unpaid issued by DeVry to students from September of 2008 to September of 2015, said FTC officials.
Another $20.24 million worth of student debt for the schools tuition, books as well as lab fees will be covered through the forgiveness provision, said the regulator.
This settlement will need the approval of the federal court. A court order that was proposed would require the university to notify students who are to be benefitted by the debt relief and inform credit bureaus as well as collection agencies.
The university must also take additional steps that are aimed at not allowing this type of misleading ads to appear again. The settlement also bars DeVry from anything further misrepresentation of the likelihood the school’s graduates would become employed due to receiving the university’s degrees.
The settlement prohibits the school from including any data on jobs landed by graduates that graduated over six months ago in its ads that tout the success of students being hired soon after earning a degree.