Excerpts from the FTC lawsuit against DeVry University

January 29, 2016

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

DEVRY EDUCATION GROUP

INC., formerly known as DeVry Inc.,

a corporation;

DEVRY UNIVERSITY, INC., a

corporation; and

DEVRY/NEW YORK INC., a

corporation; Defendants.

Case No.

COMPLAINT FOR PERMANENT

INJUNCTION AND OTHER

EQUITABLE RELIEF

 

According to DEG’s 2015 10-K filing with the Securities and Exchange Commission, based upon current tuition rates, a full-time student enrolled in the five-term undergraduate network systems administration associate degree program will pay total tuition of $39,585 and a full-time student enrolled in the eight-term undergraduate business administration program will pay total tuition of $75,516. Most DVU students do not attend full-time, and the total cost for a part-time student is higher than the cost for a full-time student.

  1. DEG’s total gross revenues between 2008 and mid-2015 exceeded $14.5 billion. DVU’s gross revenues between 2008 and mid-2015 exceeded $8.6 billion.
  1. In each fiscal year between and including 2011 and 2014, DVU spent over $135 million on the advertising, marketing, or other promotion of DVU’s educational products and services.

Among other methods, Defendants convey this message by representing that, as a result of obtaining a DVU degree, 90% of DVU graduates who were actively seeking employment landed or obtained new jobs in their field of study within six months of graduation. These representations (Defendants’ “90% claims”) are false and unsubstantiated.

  1. Defendants also have conveyed the message that DVU graduates obtain desirable jobs by representing that DVU graduates obtain jobs that pay significantly more than jobs that graduates of other colleges and universities obtain (Defendants’ “higher income claim”).

For example, Defendants have represented that, one year after graduation, DVU graduates with bachelor’s degrees earned 15% more than graduates with bachelor’s degrees from all other colleges and universities. As explained below, this representation is false and unsubstantiated.

 

  1. When settling disputes with DVU students or graduates, Defendants have frequently required the settlement agreement to include a “non-disparagement clause,” which prohibits the student or graduate from, e.g., indirectly or directly saying, writing, or doing anything that would disparage, reflect negatively upon, or otherwise call into question Defendants’ business operations, products, services, integrity, reputation, or business relations, except as may be required by law.
  1. Since at least 2008, Defendants have made their 90% claims and higher income claim on various webpages on the DVU website, at www.devry.edu. Examples of such webpages include, but are not limited to, the webpages described below.
  1. DVU’s website has included webpages directed at high-school students, including webpages at https://www.high-school.devry.edu. A copy of one such webpage, which includes “Frequently Asked Questions” for parents of highschool students, is attached as Exhibit F. This webpage appeared in at least 2014 and 2015. The following question and answer are included on this webpage:

Do DeVry University graduates get good jobs?

Employers want DeVry University graduates. More than 90% of our new graduates quickly land jobs in their fields of study within six months of graduation (learn more). This is a true testament to the fact that DeVry University teaches what companies are looking for. . . . DeVry University graduates leave school well-prepared to enter the workforce and begin contributing immediately.

Sales pitches

  1. Prospective DVU students often have two different conversations with DVU representatives––an initial call with “an appointment setter,” and then a more extensive “interview” with one of DVU’s “Admissions Advisors.” During the course of these interactions, Defendants make statements and representations described below to induce prospective students to enroll in DVU.
  1. Since at least 2013, appointment setters, using an outline provided by Defendants, have told prospective students: “The DeVry University difference includes outstanding career outcomes––In 2012, 90% of DeVry University grads actively seeking employment had careers in their field within six months of graduation.”
  1. DVU’s Admissions Advisors represent during the “interviews” with prospective students that one of the benefits of obtaining a DVU degree is that, as a result of attaining that degree, 90% of DVU graduates obtain jobs in their field soon after graduating.
  1. These student records, however, do not provide a reasonable basis that substantiates Defendants’ 90% claims. Among other reasons, when calculating the 90% claims, Defendants count a substantial number of DVU graduates who should not be counted and similarly exclude a substantial number of DVU graduates who should not be excluded. For example, Defendants count graduates who did not obtain a job as a result of obtaining a degree from DVU. In fact, Defendants include the substantial percentage of DVU graduates who, after graduation, continued with the same job they had when they enrolled in DVU. Defendants also count graduates who did not obtain jobs in their field of study. A significant percentage of the jobs that Defendants count as being in the graduate’s field of study include jobs that employers, industry experts, graduates, and consumers would not reasonably consider to be in the graduate’s field of study. Several examples of graduates from DVU’s class of 2012 who did not believe they were employed in their field of study but whom Defendants nonetheless classified as “in field” include (but are not limited to): graduates with degrees in technical management who were working as: a rural mail carrier (human resources specialization); a yard salesman at a nursery (business information systems specialization); a sales associate at Macy’s (general technical specialization); a driver delivering rain gutters for a construction services company; a data entry specialist for a radio station (human resources specialization); and unpaid volunteers at medical centers (human resources management and health services management specializations); a graduate with a degree in business administration (health services management specialization) working as a server at the Cheesecake Factory; a graduate with a degree in business administration (health care management specialization) working as a car salesman; a graduate with a degree in business administration (accounting specialization) working as a secretary at a prison; graduates with various degrees working as customer service representatives.
  1. Defendants not only had extensive information in their own files about the income of DVU graduates, but they also had ready access to publicly available data reflecting the incomes of graduates of schools throughout the United States, by school and by field. Comparing the information in Defendants’ own files with publicly available income data shows that DVU graduates a year after graduating do not in fact earn significantly more than graduates from all other schools combined, casting doubt on Defendants’ higher-income claim. Defendants’ reliance on the third-party data for its higher-income claim was therefore unreasonable.