(ITT) from enrolling new students using federal financial aid funds, and stepping up financial oversight of the for-profit educational provider. If the school ends up closing, students may be able to have their loans canceled, the statement said.
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The federal government sent a letter to the company Thursday ordering it not to enroll any new students anywhere who use federal financial aid, and to pay $152 million within 30 days to cover liabilities in case it closes.
Existing ITT students can continue to apply for federal loans under the Title IV program. ITT is under threat of having its accreditation revoked, which could lead its 137 campuses to close and result in tens of thousands of students seeking loan forgiveness.
“Our responsibility is first and foremost to protect students and taxpayers”, said U.S. Secretary of Education John B. King Jr. ITT is facing a wide range of federal and state legal challenges, in addition to scrutiny by its national accreditor, which believes the for-profit chain is unlikely to come into compliance with its requirements.
The move comes after mounting concerns about the administrative capacity, finances, recruitment tactics, and graduation and job placement rates of ITT Educational Services, Inc., as well as the company’s overall ability to serve its students.
ITT has spent much of the past two years clouded by allegations of fraud, deceptive marketing and steering students into predatory loans.
In October Education Department officials placed limits on federal student aid administered by struggling for-profit college chain after the government determined that ITT was failing to comply with previous orders to improve its financial controls. The accrediting organization said it continued until December an existing show-cause directive, meaning ITT needed to provide more evidence for why its accreditation should not be ended. Other government agencies are also investigating ITT, according to the Education Department.
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Millions of students have flocked to campuses and online programs in search of credentials of questionable value in recent years. In June, the education department recommended stripping the group of its oversight powers. The education department’s collateral demand is meant to fund any potential future debt cancellations. “It simply would not be responsible to allow ITT to continue enrolling new students who rely on federal financial aid”. The Consumer Financial Protection Bureau alleges that ITT also misled its students-a charge the company strongly denies.
