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VA reprimands DeVry University based on federal lawsuit, GI Bill complaints

March 14, 2016 (Photo Credit: J Pat Carter/AP)

The Veterans Affairs Department today reprimanded DeVry University, largely over allegations of deceptive marketing made by the Federal Trade Commission, but the institution fired back, sayimn the move as based on unproven claims still being litigateThe Veterans Affairs Department today reprimanded DeVry University, largely over allegations of deceptive marketing made by the Federal Trade Commission, but the institution fired back, saying the move is based on unproven claims still being litigated.

VA's action does not prevent students from using the GI Bill or other VA benefits at DeVry, which was the nation's fourth-largest higher education institution for Post-9/11 GI Bill users nationwide in fiscal 2014. But the move will result in warnings to potential students about the school.

"Effective the date of this letter, VA is suspending DeVry University's status as a [Principles of Excellence] institution at least until the conclusion of the FTC lawsuit," said a letter dated today and signed by Curtis Coy, the VA deputy under secretary of economic opportunity.

According to a VA spokesman, this is the first time the VA has suspended a university's status with regard to the Principles of Excellence, a series of guidelines for colleges and universities that serve veterans. But it is far from the first time a federal agency has taken action against a for-profit institution.

The letter cites three reasons for the suspension:

  • A lawsuit filed against DeVry by the Federal Trade Commission
  • Limitations imposed on DeVry by the Education Department, in concert with the FTC action
  • Complaints lodged against DeVry by students in the VA GI Bill Feedback System

"The FTC findings, [Education Department] conclusions and GI Feedback System complaints indicate that DeVry University has not acted in accordance with ... Principles of Excellence guidelines," the letter said.

In a written statement, DeVry rebuked what it called "VA's premature action."

"DeVry Group is extremely disappointed by the VA's action taken today," said the statement, sent by DeVry spokesman Ernie Gibble. "The FTC's allegations that the VA cites are just that — allegations — and we believe are without merit."

Noting that DeVry filed a motion to dismiss the FTC's case days ago, the statement added: "The VA should withhold judgment on these matters while we seek resolution."

The FTC suit, announced Jan. 27, alleged that DeVry advertisements misled prospective students about the likelihood that they would find jobs in their fields of study after graduating and the likelihood that they would earn more in those jobs if they attended DeVry rather than another institution.

In a letter also dated Jan. 27, the Education Department called for independent reviews of claims it made in DeVry advertisements.

"In addition, VA received a significant number of complaints through the GI Bill Feedback System regarding DeVry and its misrepresentation to students and prospective students of post-graduation employment outcomes as well as providing insufficient information on total cost of programs," today's letter from VA's Coy said.

While significant numbers of complaints have been lodged against DeVry, the information about these complaints is very limited. The public reporting systems don't say what specifically the complaints were or whether DeVry was found at fault.

In a years-long push against for-profit education, members of Congress, federal agencies and independent groups have charged that many for-profit institutions take advantage of military and veteran students, offering little value in return for sometimes expensive degrees.

Advocates for for-profit colleges and some veterans service organizations caution against painting all such institutions with the same broad brush.

VA's action follows a similar move by the Defense Department, which placed the University of Phoenix on probation with regards to military tuition assistance on Oct. 7 last year.

DoD cited FTC action, ongoing investigations by other agencies and problems that Phoenix had already corrected to explain its action in that case. But the Defense Department reinstated University of Phoenix on Jan. 19.

Unlike the VA suspension, DoD's action prevented new tuition assistance students from attending University of Phoenix.

The practical impacts of VA's action today appear much more limited.

VA's GI Bill Comparison Tool will flag the school to bring the reviews of other agencies to the attention of potential DeVry students. It will also no longer indicate that the school is a good-standing signatory to the Principles of Excellence.

"In addition, VA will conduct targeted risk-based program reviews for all DeVry campuses," Coy's letter said.

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