FTC Accuses DeVry U.|of Deceptive Trade

LOS ANGELES (CN) - DeVry University lies about its graduates' employment records and income to lure students to the profit-seeking school, the Federal Trade Commission claims in court.

The FTC sued DeVry in Federal Court on Wednesday, seeking a permanent injunction against deceptive trade and violations of the FTC Act.

DeVry, a private, for-profit chain school with more than 50 campuses and online classes, enrolled 29,000 to 49,000 new students each year from 2008 to 2014, according to the FTC complaint. It charges $609 per credit hour for the first seven credit hours, then $365 for each credit hour after that.

A full-time student seeking a five-term AA degree will pay $39,585 in tuition and a full-time student in the eight-term business administration program will pay total tuition of $75,516. Most DeVry students attend part time, "and the total cost for a part-time student is higher than the cost for a full-time student," the FTC says.

Specifically, the FTC accuses DeVry of falsely claiming that "As a result of obtaining a DVU degree, for at least the last 30 years, 90 percent of DVU graduates who were actively seeking employment landed or obtained new jobs in their field of study within six months of graduation," and that 90 percent of DeVry graduates from a specific year obtained the same results.

DeVry also lied that "one year after graduation, the average or median earnings of DVU

graduates with bachelor's degrees were 15% higher than the average or median earnings of graduates with bachelor's degrees from all other colleges and universities," according to the complaint.

All these statements are false or misleading, unsubstantiated, and constitute deceptive trade and violations of the FTC Act, the FTC says.

DeVry aims its ads at a variety of consumers, including high-school students, veterans and members of the armed forces.

DeVry counted as jobs in graduates' field of study: "a graduate with a degree in business administration (health services management specialization) working as a server at the Cheesecake Factory," the FTC says in the complaint.

Also, "a graduate with a degree in business administration (health care management specialization) working as a car salesman," and graduates with degrees in "technical management" working as a mailman, as a yard salesman at a nursery, a driver delivering rain gutters, a sales associate at Macy's, and as unpaid volunteers.

"Millions of Americans look to higher education for training that will lead to meaningful employment and good pay," FTC Chairwoman Edith Ramirez said in a statement. "Educational institutions like DeVry owe prospective students the truth about their graduates' success finding employment in their field of study and the income they can earn."

DeVry said it would "vigorously contest" the lawsuit and said the lawsuit comes "40 years after DeVry University began publishing accurate graduate employment statistics."

It said the complaint contains "anecdotal examples" that do not support the FTC charges. It said there is no standard methodology for calculating employment rates and that its standards are "more rigorous and further substantiated than most."

And, DeVry said, it had fully cooperated with a 24-month investigation and provided extensive documentation to rebut the FTC claims.

"We're proud of our 250,000 alumni, many of whom are employed by America's most respected employers, including federal, state and local governments," DeVry Group CEO Daniel Hamburger said. "DeVry Group is confident in our defense and looks forward to demonstrating the accuracy and credibility of our students' career success."

The U.S. Department of Education is also taking administrative action to stop DeVry from making the claims in its advertising.

DeVry said the Department of Education action relates to DeVry University records from 1975 to 1983.

"We intend to request a hearing on the department's decision, and will collaborate closely with the department to demonstrate our compliance and resolve this matter satisfactorily," DeVry said.

The Federal Trade Commission voted 4-0 to file the complaint.

Commissioner Maureen Ohlhausen said she believed DeVry had made "material misrepresentations."

"However, I remain concerned about the effect that any remedy in this case may have on the company's ability to continue to offer valuable educational programs to students," Ohlhausen said. "I would hope that, as this case moves forward, the commission will keep these considerations in mind in pursuing a resolution in this matter tailored to harms alleged in the complaint."

The FTC's general counsel Jonathan Nuechterlein filed the complaint, which seeks disgorgement of ill-gotten gains, refunds, restitution an injunction and costs.

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