The U.S. Department of Education continues sifting through claims from former students at for-profit universities and is forgiving $415 million in loans owed by students at DeVry University and other schools.
"The Department remains committed to giving borrowers discharges when the evidence shows their college violated the law and standards,” said U.S. Secretary of Education Miguel Cardona in a news release. “Students count on their colleges to be truthful. Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised.”
Nearly 16,000 borrowers, including 1,800 former DeVry students, are on the receiving end of the action, after the DOE found that their schools made widespread substantial misrepresentations about job placement rates.
DeVry is the first still-operating school to be affected by such actions and the DOE said the number of approved claims is likely to increase as it it continues reviewing pending applications.
Besides DeVry, loans to about 14,000 students at Westwood College and the nursing program at ITT Technical Institute will be forgiven, along with students at Minnesota School of Business/Globe University. Additional discharges are in the works for more than 11,900 students who attended institutions such as Corinthian Colleges and Marinello Schools of Beauty whose applications were reviewed after earlier announcements of relief.
The actions bring the total amount of approved relief under borrower defense to repayment to approximately $2 billion for more than 107,000 borrowers.
After a review of voluminous amounts of evidence, the Department found that from 2008 to 2015 DeVry repeatedly misled prospective students across the country with claims that 90 percent of DeVry graduates who actively seek employment obtained jobs in their field of study within six months of graduation.
This claim was the foundation of a national advertising campaign called, “We Major in Careers” to brand DeVry as a “Career Placement University” where it used the 90 percent placement statistic as the way to convince prospective students to enroll.
In fact, the institution’s actual job placement rate was around 58 percent, the DOe said. The Department found that more than half of the jobs included in the claimed 90 percent placement rate were held by students who obtained them well before graduating from DeVry and often before they even enrolled.
The Department also found that senior DeVry officials knew of the problems with the 90 percent statistic for years, in part due to concerns raised by alumni.
In 2016, the FTC reached a $100 million settlement with DeVry around similar allegations. The Department also reached a settlement with DeVry related to older job placement rate statistics in 2015. The attorneys general of New York and Massachusetts also reached agreements with DeVry in 2017 to resolve allegations of misleading job placement rates.
The Department said it also found that from 2002 through its closure in 2015, Westwood College made widespread and substantial misrepresentations to students about their salary potential and likelihood of finding a job after graduating.
Westwood made an “employment pledge” to students that they would find a job within six months of graduating or get help paying their bills, and admissions representatives made similar guarantees of employment. Westwood also claimed graduates would make salaries of $50,000 or more and had placement rates of 80 percent or higher.
The Department said it has no evidence Westwood made good on its pledge and said that in fact, its job placement rates were grossly inflated, and its salary promises were based upon national federal data while actual Westwood graduates often made half or as little as one-fourth of those amounts.
The Department will approve full discharges of approximately $53.1 million for approximately 1,600 borrowers who submitted claims covered by these findings. The Department is also in the process of identifying cases that were previously denied but could be reopened and approved based upon this additional evidence.
This is the third finding against Westwood.
The Department also found that, from July 2007 through its 2016 closure, ITT Technical Institute misled prospective students about the programmatic accreditation of its associate degree in nursing program.
ITT falsely told students that its nursing program had or would shortly obtain necessary programmatic accreditation that played a significant role in a student’s ability to get a nursing job. However, the school repeatedly failed to obtain programmatic accreditation for years as the accreditors found that ITT failed to meet standards for job placement and licensure pass rates, had insufficient physical and fiscal resources, and unqualified faculty, DOE said. As a result, the Department will approve full discharges of approximately $3.1 million for approximately 130 students.
This is the fourth finding against ITT Technical Institute.
Minnesota School of Business/Globe University
The Department recently determined that borrowers who attended the criminal justice programs at the Minnesota School of Business (MSB) and/or Globe University are entitled to full borrower defense discharges.
The Minnesota Office of the Attorney General sued the schools, and, in September 2016, a Minnesota judge found that the schools committed fraud in telling students that the criminal justice programs at those schools would allow them to become a Minnesota police officer or parole/probation officer. However, those programs lacked the necessary accreditation and certifications making it impossible for graduates of those programs to obtain those positions with the state.
As a result, the Department approved approximately $3 million in discharges for 270 students.