Today has not been a good one for DeVry University. The Federal Trade Commission (FTC) announced that it was suing DeVry. In its complaint, dated January 27, the FTC alleges that DeVry’s advertisements deceived prospective students about the likelihood that they would find jobs in their field of study and would earn more than those graduating with bachelor’s degrees from other colleges or universities.
DeVry responded to the complaint by stating it would vigorously protest the FTC’s allegations. A statement made by the company (as reported by CNBC) asserted that, “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,”
DeVry is a subsidiary of the DeVry Education Group (DEG), a publicly traded corporation. DeVry currently has over 50 campuses nationwide, including two in Colorado-one in Westminster and another in Colorado Springs. Between 2008 and 2014, the school annually enrolled between 29,000 and 49,000 new students. In this time, gross revenues exceeded $14.5 billion.
The suit alleges that Devry’s recruiting materials relied on poorly substantiated claims. Through various advertising media, the claim was made that 90% of DeVry graduates who were actively seeking employment landed or obtained new jobs in their field within six months of graduating.
The complaint goes on to allege that the 90% figure is based on questionable data. For example, the complaint mentioned a student who graduated in 2012 with a degree in business administration with an emphasis in health services management. The school listed this student as working in her field of study, although she was working as a server at Cheesecake Factory. In a more general sense, the FTC asserts that DeVry included a substantial number of graduates who should not be counted while excluding those who should be.
The lawsuit also contests DeVry’s recruiting pitch that claimed that its bachelor’s graduates earned 15% more than all other colleges and universities. The suit alleges that this claim was based on calculations that did not adjust for significant salary drivers such as age, experience and degree field. Additionally, the suit claims that DeVry relied on data supplied by a third-party commissioned and paid for by the school. The FTC claims that DeVry had access to relevant information in its own files and, had it used those data, the 15% claim would have been disproven.
The lawsuit comes at a time when proprietary (for profit) schools such as DeVry have come under the government microscope. For profits such as University of Phoenix and Education Management Corporation have also been scrutinized and punished by the government for acting unethically in their business practices.
The suit is asking for the court to provide injunctive relief as well as refunds to students injured by DeVry’s allegedly deceptive practices. The stock did not react favorably to the news, dropping over 15% in daily trading.