The Federal Trade Commission charged the for-profit DeVry University with making deceptive claims about its graduates’ success in finding jobs in their fields — and more lucrative ones at that — in a suit filed in federal court in California yesterday. DeVry, which is based in Downers Grove, Ill., and has locations in 25 states across the country, says it will “vigorously contest” the action.
The FTC “is accusing the school of deceiving consumers about the likelihood of finding a job, with claims that 90% of DeVry graduates seeking employment land jobs within six months of graduation,” reports Danielle Douglas-Gabriel in the Washington Post.
“To arrive at that number, the university counted numerous graduates as working in their field when they were not, according to the complaint. A 2012 graduate who majored in business administration was working as a server at a restaurant, while another with a degree in technical management was working as a rural mail carrier,” Douglas-Gabriel writes.
Not to mention the business administration graduate with a health care management specialization who was selling cars.
“We want people to be making informed choices based on accurate information,” Christina Tusan, a staff attorney in the FTC's Los Angeles office tells the Los Angeles Times’ Chris Kirkham. “That's our concern in these types of cases.”
FTC chairwoman Edith Ramirez “said up to 50,000 or so students may have been affected by the alleged wrongdoing,” the AP’s Merrit Kennedy reports for SFGate.com. “The FTC is seeking a court order to stop DeVry from making its advertising claims, via TV, radio and elsewhere. Ramirez said the commission would seek monetary relief for those affected but that it was too early to say how much money that might involve.”
In response, “DeVry Group believes that the FTC’s complaint — filed 40 years after DeVry University began publishing accurate graduate employment statistics — is without a valid legal basis,” it asserts in a statement that went out over BusinessWire. “In addition, the FTC’s complaint contains anecdotal examples that exaggerate the allegations but do not prove them.”
DeVry also states that it has fully cooperated with the FTC during a 24-month investigation “and has provided extensive documentation disproving the FTC’s claims and demonstrating the value of a DeVry University education.”
Meanwhile, “the U.S. Department of Education, which has been cracking down on some for-profit colleges for substandard teaching and predatory sales techniques, said on Wednesday it had ordered DeVry to only tout student employment prospects if they had evidence to support the assertions,” reports Reuters’ Diane Bartz.
“In a letter to the school posted on the Education Department website, it said that as a condition of further U.S. federal student aid to DeVry students, the university had to be able to prove any assertions it made about students' post-graduation job prospects,” Bartz writes.
Indeed, the Wall Street Journal’s Josh Mitchell and Brent Kendall observe that the DeVry lawsuit “is part of an effort by federal and state officials to root out what they characterize as overaggressive — and deceptive — recruiting tactics by for-profit colleges. Officials say those tactics helped fuel a surge in for-profit school enrollment in the past two decades — particularly among poor and vulnerable Americans — helping to drive up student debt.”
Lawmakers are having a say as well.
“Federal legislation was introduced last year by Sen. Dick Durbin, D-Ill., to stop for-profit universities from using federal aid funds for marketing and recruitment,” Corilyn Shropshire writes for the Chicago Tribune.
“The FTC's charges of deception against DeVry University are the latest chapter in the shameful story of so many for-profit colleges,” Durbin said in a statement Wednesday, Shropshire reports. “It is time to clean up for-profit colleges and stand up for the students and taxpaying families who are the real victims of their pathetic practices.”
As for Wall Street’s reaction to the news, “needless to say, shares of DeVry had a rough session,” writes Tyler Durden on Zerohedge.com. An accompanying chart looks like it’s tracing a swan dive off a cliff — DeVry closed the day down 15.37%, according to Yahoo Finance.
That DeVry graduate working as wait staff? Well, at least it was at a Cheesecake Factory, which scores preponderantly positive reviews on Glassdoor.com. And what better time than last year to be selling cars?