A statement on ITT’s website simply reads “We are not enrolling new students”.
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That comes about a month after ITT announced that it had lost enrollment by about 22 percent.
Although most of the other for-profit colleges have not been barred from accepting students using federal aid, we suspect that they will eventually feel the wrath of the US Department of Education’s ongoing crackdowns. That means students who are enrolled at ITT, but haven’t yet started classes are not allowed to use federal aid to finance their education.
Trace Urdan, a Credit Suisse analyst who follows ITT, said the company’s decision to stop accepting new students doesn’t necessarily offer any clues about ITT’s next move. “The expense of processing applications only to have them cancel once they learn [they are] Title IV ineligible is not worthwhile”. The Education Department also increased the amount of cash the company must send the department.
ITT is now being investigated by the Securities Exchange Commission, Consumer Financial Protection Bureau and several states over its recruiting and job placement claims. Students that have enrolled in ITT but have not yet started taking classes can not use federal aid to finance their tuition.
ITT Tech is a for-profit college with more than 130 campuses in 38 US states and 40,000-plus students in both undergraduate and graduate programs. California has banned new enrollment at the company’s 15 campuses there, and Wisconsin blocked enrollment at the institute’s two campuses in that state.
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The Bureau said it issued the order because the Doe’s action last week raised “Grave concerns about the continued financial viability of ITT'”. Should ITT close, the Education Department has suggested it will forgive the federal loans of existing students. ITT shares traded at more than $2 before the Education Department’s announcement Thursday.
