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updated: 5/24/2016 4:25 PM

DeVry Education Group names new CEO

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  • Lisa Wardell, CEO of DeVry Education Group

    Lisa Wardell, CEO of DeVry Education Group

 
Bloomberg News

DOWNERS GROVE -- DeVry Education Group, the parent company of the for-profit university, on Tuesday announced the departure of its chief executive Daniel Hamburger, whose tenure has been marred by a federal lawsuit and heightened regulatory scrutiny.

The board of directors is replacing Hamburger, who was paid $5.3 million last year, with Lisa Wardell, a director on the DeVry board and was most recently the chief operating officer at RLJ Companies, a Maryland-based asset management firm.

"Lisa is the right person to lead DeVry Group through this transformational period in higher education while remaining true to our mission of successful student outcomes," said Chris Begley, DeVry Group board chair, in a statement.

The company said Hamburger left "to pursue other opportunities." DeVry Group co-founder Ron Taylor said the company is "indebted" to Hamburger for his 13 years of service, nine of them as chief executive.

"Under his leadership, DeVry Group has transformed from primarily serving undergraduate and business school students in the United States to a global education provider -- all while staying true to our mission of serving nontraditional students," Taylor said, in a statement.

Hamburger led DeVry Group as the company witnessed its shares lose more than half their value, and as the university faced increased pressure from federal authorities.

DeVry is fighting a lawsuit filed in January by the Federal Trade Commission, which is accusing the for-profit college chain of misleading consumers about the employment and earnings of its graduates in numerous radio, television, online and print advertisements. FTC authorities say DeVry claimed that 90 percent of its graduates seeking employment land jobs within six months of graduation.

Authorities claim the university counted graduates as working in their field when they were not. A 2012 graduate who majored in business administration was working as a server at a restaurant, while another with a degree in technical management was working as a rural mail carrier, according to the complaint. DeVry vehemently denies the charges.

On the same day at the FTC announced its case, the Department of Education pressed DeVry to pull advertisements about post-graduation employment outcomes and notify students of its inability to substantiate the claims, under the threat of losing access to the federal financial aid programs. DeVry is fighting the department's decision.

The company was dealt another blow in March when the Department of Veterans Affairs suspended DeVry from participation in a program that identifies schools doing a good job of serving former troops. The agency took action after reviewing the FTC lawsuit and decided to conduct compliance reviews at all DeVry campuses.

The for-profit industry is under tremendous pressure. Enrollment is dwindling, while government lawsuits and investigations into high-pressure tactics and deceptive marketing are mounting. Some schools are trying to change public perception by embracing consumer-friendly practices. In recent weeks, DeVry and the University of Phoenix said they will no longer bar students from filing class-action lawsuits or otherwise taking their grievances to the courts, putting an end to mandatory arbitration clauses that consumer advocates say rob students of their rights.

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