DeVry asks court to block Education Department from recovering $23M in discharged loans.

Higher Ed Dive

Natalie Schwartz

July 6, 2023

Dive Brief: 

• DeVry University asked a federal judge Friday to temporarily block the U.S. Department of Education from recouping $23 million in discharged student loans from the online college.

• The Education Department wiped away the debt through the borrower defense to repayment regulations, which allow the agency to forgive student loans for borrowers who have been misled by their colleges.

• The department notified DeVry last August that it sought to recoup the funds used to discharge debt for 649 borrowers. In its latest court filing, Devry argued that “it will suffer irreparable injury in the absence of relief” blocking the recoupment.

Dive Insight: 

Early last year, the Education Department announced that it was clearing $71.7 million worth of student loans for people who made borrower defense claims against DeVry. This marked the first time the department granted this type of relief to borrowers who attended an institution that is still operating and accessing federal financial aid.

The borrower defense discharges stem from DeVry advertisements that ran between 2008 and 2015. The Federal Trade Commission accused DeVry of misrepresenting its job and salary outcomes through the ads, leading to a $100 million settlement in 2016. The university also settled with the Education Department around that time, which resulted in stricter agency oversight.

DeVry filed a lawsuit against the Education Department over the recoupment action in October, alleging that the agency had sidestepped regulatory procedures and hadn’t given it due process. In its latest court filing, the university echoed its earlier allegations, contending that the department’s recoupment attempt is unconstitutional.

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