DeVry Settles Misleading Advertising Case With New York Stateby
Settlement follows $100 million payout agreed with FTC
For-profit university’s stock is up 40 percent post-election
For-profit education company DeVry Education Group Inc. has agreed to settle a New York investigation into misleading advertising, Attorney General Eric Schneiderman said Tuesday.
DeVry will pay $2.25 million in restitution to consumers who began studying at the school between July 2008 and September 2015 and to New York residents who graduated from the company’s online programs. DeVry also will pay $500,000 in penalties and fees. The company, which is based in Downers Grove, Illinois, said it was "pleased this matter has been resolved."
The case is the latest in a string of settlements for DeVry and other for-profit universities, which depend largely on government funds in the form of federal student loans, Pell grants and the G.I. bill. In December, DeVry settled a case brought by the Federal Trade Commission alleging similar false job-placement claims for $100 million.
In November, then-President-elect Donald Trump agreed to pay $25 million to settle a series of lawsuits alleging that Trump University, a for-profit education venture, used high-pressure sales tactics and unqualified instructors.
Last year, the Obama administration issued new guidelines that allowed students to file with the Education Department to get their loans dismissed if they have been defrauded.
It’s unclear what will happen to those guidelines under the new administration. The market seems optimistic about the prospects of for-profit education. Since Trump’s election, DeVry’s stock has risen about 40 percent to $32.70 at Monday’s close from $23.50 on Nov. 8.
Trump’s nominee for Secretary of Education, Betsy DeVos, is a long-time an advocate of a free market in education, including for-profit charter schools. DeVos was approved by the Senate’s Health, Education, Pensions and Labor Committee on Tuesday, by a 12-11 margin. The full Senate needs to approve her next.
The DeVry College of New York unit, which had about 1,200 students in the fall of 2015, claimed that 90 percent of its graduates find jobs in their field within six months of graduation. That included a substantial number who were employed before graduation and sometimes prior to enrolling at DeVry, the attorney general said.
"DeVry used misleading claims to lure in students who were simply seeking a college degree, greatly exaggerating job and salary prospects," Schneiderman said in a statement.