CHICAGO – A Pennsylvania man is asking a federal judge to order DeVry University to pay at least $450,000 in arbitration fees so an arbitrator can hear allegations the school misled graduates into believing their DeVry degree would easily land them well-paying jobs.
The plaintiff's attorney asserts the case could affect cases against DeVry with claims totaling more than $250 million.
Michael Forsyth filed a petition June 7 in U.S. District Court for the Northern District of Illinois against Adtalem Global Education, formerly known as DeVry Education Group. Adtalem runs DeVry University, which is based in suburban Downers Grove. DeVry offers degrees through about 60 campuses across the U.S.
Alexander Loftus | Stoltmann Law Offices
Forsyth claimed DeVry tried to "distance itself from admissions of consumer fraud and rebranded itself as Adtalem Global Education," after recently settling consumer fraud claims with the Federal Trade Commission.
Forsyth said he attended DeVry University from 2011-2016, paying the school more than $136,000, as well as spending other money on related expenses. However, he alleged the school exaggerated the employment rates and incomes of its graduates so as to lure new students, such as himself. There have been at least two suits in Chicago federal court by former students making similar allegations.
Forsyth claimed that despite DeVry's advertising, a student has had only a 4 percent chance, at time of enrollment, of obtaining a degree and then a job within six months of graduation in his or her field. Describing "graduate outcomes" as "dismal," Forsyth noted government money pays for much of the tuition at DeVry.
"DeVry’s business model is to sell a promise of future employment paid for with government funds that do no need to be repaid until the illusory promise is realized," Forsyth said.
Forsyth added that DeVry students cumulatively hold $8.3 billion in student debt – "the fourth-highest debt volume of any higher education institution in America," with a 43 percent default rate, meaning $3.6 billion in student loans are in forbearance or default.
DeVry has used data from PayScale.com to say its graduates have incomes 15 percent higher than graduates of other schools, according to Forsyth. The data is self-reported and so is "unreliable," he said.
As part of his enrollment contract, Forsyth said he and Adtalem agreed to arbitrate any consumer claims against the school, with Adtalem paying most of the associated fees. After Forsyth brought his claim and those of about 300 other graduates, Adtalem reneged on its promise to pay the fees, Forsyth said. The alleged turnabout came after Adtalem changed attorneys, Forsyth said.
The fees amount to $450,000, according to court papers. Adtalem told Forsyth it was not going to pay because the fees are being litigated in Cook County Circuit Court and, further, they never agreed to pay fees for "hundreds or even thousands of arbitration claims that may never be litigated or tried at a cost of hundreds of thousands of dollars."
In addition, Adtalem said it was "unrealistic" to believe so many cases could feasibly be arbitrated at the same time.
Forsyth countered the agreement did not limit the claims to be arbitrated to a few "bellwether" cases.
Forsyth is represented by Alexander Loftus and Andrew Stoltmann, with Stoltmann Law Offices of Chicago.
“The trend is for more and more arbitration or consumer claims, but no corporation should be allowed to force victims of their fraud into expensive arbitration then delay it for years by not paying for it," said Stoltmann, in a prepared statement. “DeVry is just trying to delay the inevitable crush of arbitration claims by playing games with the fees and it’s students are being victimized a second time."
Adtalem is represented by the Chicago firm of Steptoe & Johnson.
U.S. District Judge John Blakey is presiding over the fee matter.