In a letter to more than 35,000 students, the Indiana-based parent company ITT Educational Services announced that campuses won’t open for the fall term that was scheduled to begin September 12 – leaving students scrambling for last-minute options since many US colleges already have started fall classes.
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Last month, the Department of Education banned the for-profit college from enrolling new students using federal aid after state and federal investigations on its recruiting and accounting practices.
The company said it had explored alternatives, such as transferring the schools to a nonprofit or public institution.
ITT a year ago received 79 percent of its cash receipts from the federal student loan program.
ITT Educational Services says the closings will be permanent and idle most of its roughly 8,000 employees.
ITT Technical Institutes in Spokane, Seattle and Everett will be permanently closing their doors as the company ceases operations across the country. Among the measures, ITT was ordered to pay $152 million to the department within 30 days to cover student refunds and other liabilities in case the company closes.
The firm said its focus and priority with remaining staff was “on helping the tens of thousands of unexpectedly displaced students with their records and future educational options”.
The action by the Department of Education was largely the result of repeated concerns from the Accrediting Council for Independent Colleges and Schools, which accredits ITT, following several years of scrutiny by federal regulators, including strict oversight of what some viewed as the company’s shaky finances. The company makes 80 percent of its cash revenue from Title IV federal aid, including Pell Grants and student loans, according to The Wall Street Journal. The Department of Education will allow them to walk away from their outstanding student loans or transfer all the credits they’ve already earned to a similar program – but not both.
Some students say they knew ITT Tech was having accreditation issues, but nothing this serious. We were not provided with a hearing or an appeal.
Can ITT students apply for loan discharge? “The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable”.
In today’s announcement, the school’s operator criticized the department for what it called “a complete disregard. for due process” and called the Obama administration’s actions “inappropriate and unconstitutional”.
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Enrollment in for-profit schools increased in the years following the recession when job growth was weak and people were looking to hone their skills or switch to more in-demand careers.
