The Department of Education is canceling federal student loans for at least 1,800 students who studied at the University of DeVry, once one of the largest commercial college networks in the country, because it has for years fraudulently attracted entrants with overpriced statements about their career prospects.
Although the department has stepped up the payment of debts for students affected by its schools, the decision, announced Wednesday, is the first to approve a fraud lawsuit involving a school that is still operating.
The claims, approved on Wednesday, are just the beginning, officials said. They want other students who visited DeVry at a time when he was making his false promises to apply for help.
Between 2008 and 2015, according to department officials, DeVry advertised that 90 percent of graduates found work in their field of study within six months. In fact, only 58 percent did so. Representatives of the school were aware of the discrepancy and ignored the complaints of graduates about it, representatives of the department said.
Until Wednesday, the department had only taken action against schools that had closed, including major networks such as Corinthian colleges, and smaller ones such as Marinelle’s beauty schools.
“We believe it is important to show that we are ready to take action against open schools and that there will be responsibilities for the current owners of open schools,” said James Quaal, deputy education minister. press conference.
Noting that the allegations occurred when DeVry was under another leadership, school spokeswoman Donna Scholts said DeVry believed the Department of Education had mischaracterized the school’s statements about alumni outcomes.
“We do not agree with the conclusions they came to,” she said.
Officials described Wednesday’s rally as one of several steps to rebuild a unit of the Department of Education that was ravaged during the Trump administration. Betsy DeVos, Secretary of Education for President Donald J. Trump has repeatedly obstructed commercial school investigations and appointed Julian Schmock, a former dean at DeVry, to head the agency’s law enforcement department.
For four years, Ms. DeVos’s agency disapproved of any new grounds for claims from defrauded students and rejected 130,000, amounting to negative signs. These denials and other stalled claims, unresolved for years, have now been the subject of a class action lawsuit involving about 200,000 borrowers.
The education department said in a court statement last month that it is close to resolving the case and hopes to announce the deal by April.
The 1,800 former DeVry students approved for relief through a fraud payment system known as “protection of the borrower to maturity” will be granted nearly $ 72 million in loans.
This means that they will not have to repay loans made on taxpayers’ money. The department said it would sue DeVry’s current owner, Cogswell Capital, for compensation.
Cogswell Capital is an investment firm run by Bradley Palmer, a venture capitalist and financier. Mr. Palmer, who had no experience in higher education, bought DeVry in 2018 from Adtalem Global Education, which operated several commercial schools. Adtalem called itself DeVry, but changed its name in 2017 after a series of scandals involving the school.
In 2016, DeVry agreed to pay $ 100 million to satisfy a Federal Trade Commission lawsuit because of its erroneous allegations about graduates ’careers and salaries. A year later, DeVry satisfied similar claims against New York and Massachusetts.
The message left at Palm Ventures, which Mr Palmer described as the family office that manages his family’s assets, was not immediately returned. An Adtalem spokesman did not immediately return the message asking for comment.
The Department of Education said it also approved requirements to protect borrowers from former students of the ITT Technical Institute’s nursing program, the Minnesota School of Business (also known as the University of the Globe) and Westwood College. Including DeVry, allegations announced Wednesday will destroy $ 415 million in debt to 16,000 borrowers.