DeVry Sues Department of Education Over Allegations It Misled Students

Updated on October 17, 2022

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The lawsuit comes after the university was ordered to pay $24 million to help settle borrower defense claims.

Pomona, California - USA - December 20, 2016: DeVry University sign on its building during settlement. During the week of troubles for the school, DeVry University, a for-profit school that offers courses online and at dozens of locations nationwide, has agreed to a $100 million settlement of a federal lawsuit alleging that it falsely advertised the success of its graduates, the Federal Trade Commission announced on Thursday.

Credit: Jorge Villalba / iStock Unreleased / Getty Images

The Department of Education alleges DeVry misled prospective students from 2008-2015.
The university says the department mischaracterizes DeVry’s calculations and advertising practices.
DeVry officials also say the department has denied its due process rights.

DeVry University is fighting back after the Department of Education (ED) ordered the institution to pay back nearly $24 million for approved borrower defense claims.

The for-profit university stated that it filed a complaint in Federal District Court for the Northern District of Illinois over the ED’s recoupment effort. DeVry states that the department is not following established rules in demanding recoupment and that ED has denied DeVry its due process rights.

ED approved $71.7 million in borrower defense claims in mid-February from past students that say DeVry University misrepresented itself. That would forgive federal student loan debt for approximately 1,800 former students.

According to the department, DeVry reportedly misled prospective students through false advertising between 2008 and 2015. ED alleges that the university advertised that 90% of its graduates who actively seek employment obtained a job in their desired field within six months of graduation. However, ED contends that DeVry’s actual job placement rate was 58%.

DeVry denies the claim.

“Our position has always been that any allegation or conclusion that DeVry misled students at any time is wrong, and we strongly believe the department has mischaracterized DeVry’s calculations and disclosure of graduate outcomes from past advertising,” the university said in a statement accompanying the lawsuit.

DeVry settled a case with the Federal Trade Commission in December 2016 for approximately $100 million without admitting wrongdoing.

ED notified DeVry in mid-August that it must recoup part of the approved borrower defense claims to the tune of $23.6 million. The department said it also has the right to seek further recoupment as it continues to adjudicate claims for students enrolled during the affected period.

“The department’s attempt to recoup funds from a currently operating institution, and extra-regulatory approach in doing so, will set a dangerous precedent that could profoundly impact every institution that participates in the Federal Student Aid programs,” DeVry said in a statement.

The lawsuit states that ED’s recoupment for 90% of the loans goes beyond the limitations period that applies to them. The 1995 version of the borrower defense rule — which applies to the majority of eligible loans — says the department can seek to recoup loans only within three years of a student leaving DeVry.

If applied, the suit alleges this would bar ED from collecting $21.7 million of the sum the department demands from DeVry.

ED has not given DeVry the chance to challenge any of the borrower defense claims, the suit alleges.

DeVry is asking the court to stop the department from collecting the $24 million it requested.

ED declined to comment on pending litigation.