LOS ANGELES (Legal Newsline) - It looks like a legal battle is brewing between the federal government and DeVry University, a Philadelphia attorney says.
The Federal Trade Commission is alleging in a federal lawsuit that advertisements by DeVry cited inaccurate graduate employment and earnings statistics. John Culhane, of Ballard Spahr in Philadelphia, said the signs point to some pushback from the company.
“DeVry obviously intends to defend this vigorously,” Culhane said. “They’ve been very clear about that.”
The advertising in question included two ad campaigns. The first stated that 90 percent of DeVry University graduates who actively sought employment were employed in their fields of study within six months of graduation.
The second stated that graduates reported median earnings 15 percent higher than graduates of other schools one year after graduation.
The FTC alleged that the claims are either false or misleading or unsubstantiated, and therefore, violate Section 5 of the FTC Act.
According to the FTC, the student records used by DeVry to substantiate its claims do not provide a reasonable basis for its 90 percent claim. The commission also alleged that the survey used to reach the higher income claim utilized questionable sampling and methodology.
DeVry University released several statements in response to the FTC allegations on its website DeVryFacts.com.
“We stand by our advertising and the methodology we used in measuring our employment statistics,” the statement said. “DeVry University measured the employment and earnings results of its graduates in a sound, rational and transparent basis.”
On the same day that the FTC filed its complaint, the U.S. Department of Education notified DeVry that it intended to limit DeVry’s access to federal student financial assistance programs as a penalty for failure to meet federal advertising requirements.
The notice stated that the Department of Education had requested substantiation of the 90 percent claim and that the data provided did not meet the substantiation requirement. As a result, the department intends to impose limitations on DeVry.
“The Department of Education has basically threatened to limit their ability to accept federal student financial aid,” Culhane said.
Title IV programs include Federal Family Education Loans, Federal Perkins Loans, and Federal Pell Grants as well as other grant and loan programs. This funding helps students pay for school. If DeVry is unable to accept this type of funding, students who can’t find funding from other sources may have to attend other universities.
If the department receives the injunction, the school will be prohibited from making claims on employment rates without substantiating information.
DeVry will also be required to post on its website and email all students a notice that the employment rate claim was not substantiated.
If the school does not request a hearing or submit documentation protesting the limitations, they will go into effect on Tuesday.
In multiple statements, the school has already indicated its intention to request a hearing.
In the FTC case, it has been granted an extension of time to respond to the complaint.