The Federal Trade Commission has announced that it is taking legal action against DeVry University, a for-profit college in Illinois, over the university’s claims about the job placement rate for its graduates. The University has nine campuses located throughout the Chicago-area.
The FTC says that the university deceived prospective students when, as part of a marketing campaign, it advertised that 90% of its recent graduates secured employment within six months of graduation. The complaint accuses DeVry of falsely counting recent graduates as employed when they were not.
For its part, DeVry is vigorously contesting the allegations. The DeVry Education Group Inc., a global provider of educational services that offers an array of programs in healthcare, business, technology, accounting, finance and law, released a statement in which it maintains that it faithfully published accurate employment statistics and that the FTC claim has no legal grounds.
According to the statement, the charges focus narrowly on statistics pulled from the period between 1975 and 1983. The Group “believe that the FTC’s complaint – filed 40 years after DeVry University began publishing accurate graduate employment statistics – is without valid legal basis.” DeVry vows to request a hearing over the claims to “resolve the matter” with a “satisfactory resolution.” Additionally, the statement notes that a federal task force uses a very similar methodology to the one employed by DeVry in tracking employment rates for recent graduates.
Following the news of the FTC filing, shares of the DeVry Education Group plummeted 15%, according to The Motley Fool.
To complicate matters, the U.S. Department of Education is also pursuing claims against DeVry for its marketing practices, a development that forces the university to cease advertising certain facts about its post-graduation employment rate.
As reported by ABC 7, the allegations against DeVry emerge after months of an I-Team investigation into several for-profit schools accused of not being properly accredited. There were also allegations of high student loan default rates and low job placement among recent graduates. Although DeVry University was not included in that investigation, the claims against DeVry indicate a larger trend toward reigning in for-profit education.
Institutions like DeVry are suffering from shrinking enrollments, stricter regulatory scrutiny and increasing competition from public colleges, which often feature much lower tuition costs and online education options. The for-profit education industry faces potentially insurmountable hurdles, and investors do not see these trends reversing. Tellingly, the shares of Apollo Education Group and Strayer Education, two other providers of for-profit education, declined, albeit less sharply than that of the DeVry Group.
Undaunted, CEO of the Devry Education Group, Daniel Hamburger, said “DeVry University is an honorable institution with more than 80-years of providing high quality, career-oriented education. 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 is confident in our defense and looks forward to demonstrating the accuracy and credibility of our student’s career success.”