In Letters to VA and ED, Senators Urge Loan Forgiveness for Defrauded Students, Investigation Into Use of Post-9/11 GI Bill Benefits at DeVry
(Washington, D.C.) – Today, U.S. Senators Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass.) called for comprehensive relief and protection for students and veterans defrauded by DeVry University. In the wake of federal enforcement action against DeVry, the Senators sent two letters urging action: the first, to the U.S. Department of Education (ED) called for loan forgiveness for students who were defrauded by DeVry’s misrepresentations – a group as large as 343,000 students. Last June, ED provided similar loan relief to former Corinthian Colleges students based on comparable evidence of fraudulent behavior. The second letter asks the Department of Veterans Affairs (VA) to conduct an investigation into the use of Post-9/11 GI Bill benefits at DeVry campuses and to ensure that student veterans who are currently enrolled at DeVry campuses are aware of the enforcement actions.
Federal investigators found evidence that DeVry systematically defrauded students by using fabricated job placement statistics for years, luring students and veterans with false promises of employment. DeVry’s claim that 90 percent of its graduates obtained new jobs in their chosen field of study within six months, featured prominently in the school’s marketing materials since 2008, was based on misleading manipulation of data that graduates had self-reported to the school. As a result, ED limited DeVry’s participation in federal student aid programs, and the Federal Trade Commission filed suit against DeVry.
“DeVry defrauded these student borrowers, luring them to its campuses with false and unsubstantiated information. These borrowers should not be forced to wait until ED completes its negotiated rulemaking process to rewrite the DTR regulations, nor should their relief be delayed until the FTC suit reaches a resolution. Many borrowers have accumulated crippling amounts of student loan debt based on DeVry’s false pretenses, and their burden grows heavier every day as the interest on their loans continues to accrue. You have an obligation to provide such student borrowers with the debt relief to which they are entitled under the law, and we urge you to fulfill that obligation without delay,” the Senators wrote to the Department of Education.
Full text of the Senators’ letters to ED and VA are below:
Joseph A. Smith
United States Department of Education
400 Maryland Avenue, S.W.
Washington, D.C. 20202
Dear Special Master Smith:
We write regarding recent actions taken by the Department of Education (ED) and the Federal Trade Commission (FTC) against DeVry Education Group Inc. (DeVry). We believe that the findings on which these actions are based entitle significant numbers of borrowers who attended DeVry to relief under the defense to repayment (DTR) process, and we urge you to act swiftly in providing the student debt relief that affected student borrowers deserve.
On January 27, ED and FTC brought enforcement actions against DeVry for misleading consumers about job placement outcomes and earning potential. ED’s action included a notification of the Department’s intent to impose limitations on DeVry’s participation in Title IV federal student aid programs. These limitations are based on ED’s findings that DeVry failed to substantiate the employment statistics that the institution used to attract prospective students. Also on January 27, the FTC filed suit against DeVry for violating the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce,” commonly referred to as UDAP. Both actions are based on similar sets of findings – namely, that DeVry misrepresented two employment statistics that the institution featured prominently in various materials designed to attract prospective students. DeVry’s claim that 90 percent of its graduates who were actively seeking employment obtained new jobs in their field of study within six months of graduation, used prominently in institution advertising materials since 2008, was based on deceptive manipulation of data that graduates had self-reported to the institution. In addition, DeVry’s claim that its graduates with bachelor’s degrees earned 15 percent more than graduates with bachelor’s degrees from all other colleges and universities, featured in institution materials since 2013, is based on a third-party survey that used a deeply flawed methodology.
There are a large number of student borrowers who may have made enrollment decisions based on the fraudulent misrepresentations cited above. Based on the FTC’s findings that annual enrollment at DeVry between 2008 and 2014 ranged from 29,000 to 49,000 students, the universe of students who could be eligible for debt relief under the DTR process is at least 203,000 students and could be as high as 343,000 students. DeVry defrauded these student borrowers, luring them to its campuses with false and unsubstantiated information. These borrowers should not be forced to wait until ED completes its negotiated rulemaking process to rewrite the DTR regulations, nor should their relief be delayed until the FTC suit reaches a resolution. Many borrowers have accumulated crippling amounts of student loan debt based on DeVry’s false pretenses, and their burden grows heavier every day as the interest on their loans continues to accrue. You have an obligation to provide such student borrowers with the debt relief to which they are entitled under the law, and we urge you to fulfill that obligation without delay.
As we have previously discussed with you, the threshold that determines the success of a borrower’s DTR claim is the existence of “any act or omission of the school attended by the student that would give rise to a cause of action under applicable State law.” We believe that the FTC Act violations detailed extensively in the FTC’s findings would give rise to a cause of action under many, if not all, state UDAP laws, and thus would satisfy the threshold for a successful borrower defense. In a report on state UDAP statutes, the National Consumer Law Center noted that enacting general prohibitions against deceptive and unfair contact is “the approach of the FTC Act, on which many UDAP statutes are based.” Thus, the actions which allowed the FTC to bring suit against DeVry for violating the FTC Act would also give rise to a cause of action under the UDAP laws of many, if not all, states.
We urge you to establish a process for providing rapid relief to affected DeVry student borrowers. This process should minimize the burden on affected student borrowers, allowing for group adjudication of claims without requiring borrowers to prove individualized harm. In addition, we ask that you conduct comprehensive, aggressive outreach to the universe of potentially affected DeVry student borrowers. Such outreach should provide clear information on the entire relief process.
Finally, we ask that you brief our staff on what steps the Department is taking to ensure that DeVry’s misrepresentations qualify borrowers for immediate relief no later than February 22, 2016.
Thank you for your attention to this matter. We look forward to your response.
The Honorable Robert McDonald
Secretary of Veterans Affairs
810 Vermont Avenue, Northwest
Washington, D.C. 20240
Dear Secretary McDonald:
We write to bring your immediate attention to recent actions taken by the Federal Trade Commission (FTC) and the Department of Education (ED) against the DeVry Education Group, Inc., a for-profit higher education organization. These alarming allegations should be broadly publicized to Post-9/11 GI Bill beneficiaries and we urge the Department of Veterans Affairs (VA) to exhaust its existing legal authority to protect veterans and their families from all predatory for-profit universities that employ duplicitous marketing and false advertising during recruitment.
In 2008, DeVry launched the We Major in Careers campaign, which is cited as a “career-focused brand marketing campaign” that touts DeVry’s purported success in helping graduates secure careers in their field of study. However, when the Department of Education asked DeVry to provide graduate-specific data to corroborate these marketing representations, DeVry was unable to procure these records. On January 27, 2016, the FTC filed suit against the operators of DeVry University due to its inability to validate the veracity of these recruitment claims and for knowingly misleading potential students through false statements and advertisements. Most alarmingly, the complaint cited that DeVry has not substantiated the assertions that since 1975, 90 percent of its graduates seeking employment had obtained a career in their fields of study within six months, and that DeVry graduates earned 15 percent higher incomes than other college or university graduates just one year after graduation. The complaint additionally cited intentional, incorrect calculations of the number of graduates working in their field of study post-graduation. Based on this lawsuit, the Department of Education separately informed DeVry of its decision to limit DeVry’s participation in Title IV programs of the Higher Education Act of 1965.
We are especially concerned about the veterans and their families currently using, or planning to use, Post-9/11 GI Bill benefits at DeVry educational programs. DeVry University proudly claims a history of educating current and former servicemembers, yet the FTC complaint specifically states that DeVry University’s website “also has included webpages that appeared in at least 2015 that were directed at current and former members of the armed services” using the same allegedly false employment statistics. These allegations demonstrate clear, targeted marketing to military families and unscrupulous recruiting practices.
We are pleased that VA added a caution flag to DeVry University on the GI Bill Comparison Tool. We encourage VA to send a letter to all Post-9/11 GI Bill beneficiaries currently enrolled at a DeVry-operated educational program to inform them of these alarming allegations and actions taken by other federal agencies and additionally work with ED and the FTC to investigate the benefit use, and employment status, of Post-9/11 GI Bill beneficiaries at DeVry University. We appreciate your immediate attention to this issue and ask for your continued cooperation in ensuring that federal laws and rules regarding deceptive recruiting tactics are appropriately enforced to ensure that veterans and their families do not fall prey to predatory for-profit schools. The Post-9/11 GI Bill must be used at high quality institutions, and all beneficiaries must be informed of these enforcement actions so that they do not waste VA education benefits at predatory institutions masquerading as higher education.