Feds’ Sanctions Force Closure of ITT Technical Institutes

September 8, 2016 by · Leave a Comment 

ITT Technical Institutes announced Tuesday that it is ceasing operations following a ruling by the U.S Department of Education barring it from accepting new students who receive federal financial aid.

The company has closed all 140 campuses across the country, including 15 in California, seven of them in the Greater L.A. area, leaving more than 35,000 students scrambling for answers, and more than 8,000 employees without jobs.

ITT’s closure is the second closure of a large network of for-profit colleges in just over a year. Corinthian Colleges filed for bankruptcy in 2015, closing its doors permanently.

Whitney Barkley-Denny, legislative counsel for the nonprofit Center for Responsible Lending, said in a California News Service story that the closure ultimately is a good thing because ITT’s priorities have been questioned for years.

“Well, ITT has a long history,” she said. “It first really started coming to light in 2012 with the Harkin Report, which showed that ITT was spending enormous amounts of money on CEO salaries and advertising, and not so much money on students and their education,” reported the news group.

“Over the years, many students have made complaints that ITT exaggerates both its graduation rates and its ability to place graduates in the job market. ITT has called the government crackdown “unwarranted and unconstitutional,” Barkley-Denny said, adding she thinks ITT has been less an educational institution and more of a call center that used a cynical method known as a “pain funnel” to sign people up.

“And what they would actually do would be trained to ‘find the student’s pain’ – whether that was, you know, being a single mom, not having enough money for groceries, something like that,” she said, “and then use that to recruit the student into the school.”

ITT charged $26,000 for a two-year associate’s degree, Barkley Denny said.

According to the Department of Education, it determined following a lengthy investigation that ITT Tech’s parent company, Indiana-based ITT Educational Services, Inc., was not in compliance with criteria set by the Accrediting Council for Independent Colleges and Schools.

In addition to the financial aid sanction, the federal agency planned to ramp up its oversight of the for-profit college’s finances due to “significant concerns” about its administrative capacity, organizational integrity, financial viability and its ability to serve students.

“Our responsibility is first and foremost to protect students and taxpayers,” said Secretary of Education John B. King Jr. “Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds.”

ITT Educational Services Inc. officials said the Department of Education’s sanctions forced them to cease operations and cancel its trade school classes for the September quarter. The company also said more than 8,000 employees will lose their jobs. However, employees who assist students with obtaining their records and assessing their educational options will stay on.

“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,” according to a company statement. “With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000

employees will be negatively affected.”

Officials with ITT Educational Services, Inc. said the government actions affecting its estimated 140 ITT Technical Institutes in 35 states “inappropriate and unconstitutional.” The ruling came down without a hearing, and the company was not allowed to appeal it.

ITT Tech students already enrolled in classes can continue to apply for federal financial aid to finish their coursework elsewhere and may be eligible for a federal loan discharge, according to the Department of Education.

Those students and others who left the school within the last 120 days would be eligible to have federal loans for their ITT education forgiven if they want to start over at another school, Education Department officials said. Students in California can also apply to the state’s Student Tuition Recovery Find for relief from private loans or refunds if they paid ITT in cash.

Information from City News Service and the California News Service was used in this report.

 

 

Copyright © 2017 Eastern Group Publications/EGPNews, Inc. ·