The Department of Education sent a claim this week to DeVry University, once one of the nation’s largest for-profit university chains, seeking $24 million to cover the costs of loan repayments from its old students.
The channel has deceived its students so badly that Department of Education officials this year agreed to cancel the federal student loans of at least 1,800 of its former participants. Tuesday’s action is to “recover money for taxpayers, which is certainly always a goal for us,” Cordray said.
DeVry was the first – and so far only – school still in operation at which the Department of Education approved claims through a relief system known as the “defense of borrower to repayment”. The program allows borrowers who attended schools that violated consumer protection laws to seek forgiveness of their federal loan debts.
From 2008 to 2015, DeVry fraudulently lured applicants with highly inflated claims about their career prospects, the Department of Education said. The school said 90% of its graduates who were actively looking for work landed jobs in their field within six months, but its actual job placement rate was about 58%, agency officials said.
During this period, DeVry belonged to Adtalem Global Education, which operates for-profit trade schools. Adtalem sold the school in 2018 to Cogswell Capital, an investment firm owned by venture capitalist and financier Bradley Palmer. The department is suing Cogswell, the current owner, for payment, officials said.
“We have received the notice from the Department and are reviewing it,” said Hessy Fernandez, public relations director for DeVry. “We continue to believe that the department is misrepresenting DeVry’s calculation and disclosure of graduate results in certain advertisements, and we disagree with the conclusions they have reached.”
Mr. Palmer did not respond to requests for comment.
DeVry has 20 days to file an appeal if he wants to challenge the agency’s clawback request, Department of Education officials said.