For the second time in two years, a billion-dollar for-profit education company has closed its doors leaving thousands of students stranded and billions of taxpayer dollars on the line: ITT Education Services has officially closed all 130 of its ITT Technical Institute campuses.
ITT Educational Services announced Tuesday morning that it would permanently shut down only two weeks after Department of Education barred the company from enrolling new students using federal financial aid.
“It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service,” the company said in a statement.
The company blamed the closure on the DOE’s recent action for the closure, saying the sanctions were “made complete disregard” for due process to the company.
According to the DOE, the ban was made after the Accrediting Council for Independent Colleges and Schools — which is facing its own issues — determined that ITT was “not in compliance” and is “unlikely to become in compliance” with accreditation criteria.
As part of the order, the education operator is also required to once again increase its existing letter of credit from $94.3 million to $247 million or 40% of all Title IV aid the school received in 2015 payable in full.
“We believe the government’s action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again,” the company said.
The decision to cease operations, ITT says, was made after determining it could no longer continue to operate campuses and “provide our students with the quality education they expect and deserve.”
“We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution,” the company said.
Effective immediately, ITT says it has eliminated most of its employee positions, with those left focused on “helping the tens of thousands of unexpectedly displaced students with their records and future educational options.”
The closure will affect about 40,000 current students and more than $3 billion in federal student loans.
Unlike last year’s sudden collapse of Corinthian Colleges Inc. — operator of Everest University, Heald College, and Wyotech — we know a bit more about students’ options when it comes to their future at ITT and what would happen if the schools close.
The DOE released a guide two weeks ago for students currently enrolled at the for-profit educator, providing some needed information.
Currently enrolled students will now be eligible for a discharge of their federal student loans, or they could look into transferring their credits to a similarly situated college. ITT is also required to provide teach-out options for students, as cited in the DOE’s sanctions last month.
The still to-be-announced teach-out agreements are developed in the event an institution, or an institutional location, ceases operations before all enrolled students have completed their program of study.
ITT has been teetering on the edge of collapse for more than a year. It revealed in 2015 that it was the subject of a federal fraud investigation. The Dept. of Education then placed restrictions on ITT’s access to student aid after the school failed to account for millions in federal funds.
The educator has been sued by the Consumer Financial Protection Bureau over its loan practices, nursing students who say they were misled about the school, Massachusetts for allegedly harassing students, and by a whistleblower who alleges that the school deceived applicants about the education they would receive and their job prospects.
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