Both non-profit and for-profit colleges and universities have escalated advertising campaigns in recent years, and the Federal Trade Commission is clearly sending a message to educational institutions regarding deceptive claims made in advertising.
Devry university learns a lesson
On December 15, 2016 DeVry University and its parent company agreed to a $100 million settlement of a FTC lawsuit alleging DeVry misled prospective students with ads that touted high employment success rates and income levels upon graduation. Ads claimed that 90% of graduates landed jobs in their field within six months of graduation. The complaint also alleges that DeVry further misled students by claiming its graduates had 15% higher incomes one year after graduation than the graduates with bachelor’s degrees from all other colleges or universities.
Get a forklift to the corporate ATM
DeVry will pay $49.4 million in cash to be distributed to qualifying students who were harmed by the deceptive ads, as well as $50.6 million in debt relief. The debt being forgiven includes the full balance owed—$30.35 million—on all private unpaid student loans that DeVry issued to undergraduates between September 2008 and September 2015, and $20.25 million in student debts for items such as tuition, books and lab fees.
The proposed federal court order requires DeVry to notify the students who will receive debt relief, and to inform the credit bureaus and collection agencies of the debt forgiveness. All loan and debt forgiveness will occur automatically. DeVry will also release transcripts and diplomas previously withheld from students because of outstanding debt and will cooperate with future requests for diplomas and transcripts and related enrollment or graduation information.
The settlement also includes provisions to prevent DeVry from misleading consumers in the future. Among other things, it prohibits DeVry from misrepresenting that graduates will get a job as a result of their degree. It specifically prohibits DeVry from including jobs students obtained more than six months before graduating whenever DeVry advertises its graduates’ success in finding jobs near graduation. The settlement also prohibits DeVry from misrepresenting the compensation or compensation ranges that students or graduates have received or can be expected to receive.