For-profit DeVry University is suing the U.S. Education Department to block it from recouping millions to repay discharged student loans.
The department said in August that it would hold DeVry liable for $24 million to cover the cost of the 18,000 borrower-defense claims totaling $71.7 million that were approved in February after the department found that DeVry advertised false job-placement rates from 2008 to 2015.
The February action was the first time the department approved borrower-defense claims associated with a currently operating institution. DeVry has disputed the department’s findings that it misled students with its advertising.
The lawsuit filed this week alleges that the department lacks the authority to recoup costs, exceeded its statutory mandate by approving the claims en masse and violated DeVry’s due process rights by not providing the university “with adequate notice or a meaningful opportunity to contest the discharged sums.”
“We take this action reluctantly, but it is necessary given the department’s failure to follow clear statutory and regulatory requirements, denying DeVry University due process to which we are entitled under the law,” DeVry officials said in a statement. “The department’s attempt to recoup funds from a currently operating institution, and extra-regulatory approach in doing so, will set a dangerous precedent that could profoundly impact every institution that participates in the Federal Student Aid programs. Such a precedent may also severely disrupt American postsecondary education and create perverse incentives that will ultimately harm the more than 10 million students who rely on Federal Student Aid to attend college each year.”
The department declined to comment on the lawsuit.