Education Department wipes out $4 billion in ITT Tech student loans.
The Education Department sent a claim this week to DeVry University, once one of the nation’s largest for-profit college chains, seeking $24 million to cover the costs of discharging its former students’ loans.
The chain so badly misled its students that Education Department officials agreed this year to cancel the federal student loans of at least 1,800 of its former attendees. The action on Tuesday is aimed at “recouping money for taxpayers, which is certainly always a goal for us,” Mr. Cordray said.
DeVry was the first — and so far, only — still-operating school at which the Education Department has approved claims through a relief system known as “borrower defense to repayment.” The program lets borrowers who attended schools that broke consumer protection laws seek to have their federal loan debts wiped out.
From 2008 to 2015, DeVry fraudulently lured in applicants with vastly inflated claims about their career prospects, the Education Department said. The school advertised that 90 percent of its graduates who actively sought work landed jobs in their fields within six months, but its actual placement rate was around 58 percent, agency officials said.
During that period DeVry was owned by Adtalem Global Education, which runs for-profit trade schools. Adtalem sold the school in 2018 to Cogswell Capital, an investment firm owned by the venture capitalist and financier Bradley Palmer. The department is pursuing Cogswell, the current owner, for payment, officials said.
“We are in receipt of the notice from the Department and are reviewing it,” said Hessy Fernandez, DeVry’s public relations director. “We continue to believe the department mischaracterizes DeVry’s calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached.”
Mr. Palmer did not respond to requests for comment.
DeVry has 20 days to file an appeal if it wishes to contest the agency’s recoupment request, Education Department officials said.