ITT Tech shuts down after federal sanctions cut access to financial aid

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By Aricka Flowers, progressillinois.com

ITT Technical Institute has permanently closed its doors nationwide, leaving 35,000 students in the wind and some 8,000 company employees without a job.

The abrupt closure comes on the heels of federal sanctions imposed on the school’s parent company, ITT Educational Services, Inc. On August 25, the U.S. Department of Education banned ITT Tech from enrolling new students using federal financial aid. The Education Department made the decision based on accreditation and compliance concerns.

“This move follows determinations made by the school’s accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS) that ITT ‘is not in compliance, and is unlikely to become in compliance with [ACICS] Accreditation Criteria,'” the Education Department said in a press release announcing the ban on financial aid. “This comes amid increasingly heightened financial oversight measures put in place by the Department beginning in 2014 and continued and expanded in June 2016 due to significant concerns about ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students.”

Five days later, ITT Tech announced plans to cease the admissions of new students as a result of the federal financial aid ban. Today, the technical institutes have been permanently shuttered. A new academic term was scheduled to begin later this month.

While critics of for-profit schools accuse the institutions of “deceptive and abusive practices,” ITT Tech is blaming the company’s downfall on the Education Department’s “complete disregard … for due process,” adding that administrators have exhausted all other options for keeping the schools open, including transitioning to a non-profit or public model.

From ITT Educational Services:

We have always carefully managed expenses to align with our enrollments. We had no intention prior to the receipt of the most recent sanctions of closing down despite the challenging regulatory environment that now threatens all proprietary higher education. We have also always worked tirelessly to ensure compliance with all applicable laws and regulations, and to uphold our ethic of continuous improvement. When we have received inquiries from regulators, we have always been responsive and cooperative. Despite our ongoing service to this nation’s employers, local communities and underserved students, these federal actions will result in the closure of the ITT Technical Institutes without any opportunity to pursue our right to due process.
These unwarranted actions, taken without proving a single allegation, are a ‘lawless execution,’ as noted by a recent editorial in The Wall Street Journal. We were not provided with a hearing or an appeal. Alternatives that we strongly believe would have better served students, employees, and taxpayers were rejected. The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.
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.

In a letter posted online to ITT Tech students, U.S. Secretary of Education John B. King Jr. pushed back on the school’s claims, saying the decision to impose sanctions on the for-profit was not made lightly.

“The school’s decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk,” King wrote. “We made a difficult choice to pursue additional oversight in order to protect you, other students and taxpayers from potentially worse educational and financial damage in the future if ITT was allowed to continue operating without increased oversight and assurances to better serve students.”

U.S. Sen. Dick Durbin (D-IL) has been a staunch critic of for-profit schools, including ITT Tech, which reported bringing in $850 million in revenue last year, and the now defunct Corinthian Colleges. The senator celebrated ITT Tech’s closure Tuesday, which will affect Illinoisans enrolled in one of the school’s four locations in the state: Arlington Heights, Oak Brook, Orland Park and Springfield.

“Every time I looked up at the ITT sign on the side of White Oaks Mall in Springfield I knew this day would come, and I knew that hundreds of innocent students, families, and ultimately the taxpayer would pay dearly for the exploitation by for-profit colleges that Congress and Washington fail to properly regulate,” Durbin said in a statement Tuesday.

“ITT Tech has no one to blame but itself for its failure. For years, the company exploited students and fleeced American taxpayers,” he continued. “Today, its predatory practices have finally caught up to it. As a result of its actions, ITT Tech has put the futures of tens of thousands of students across the country in jeopardy. I call on the Department of Education to swiftly make these students aware of their eligibility for closed school discharges of their student loan debts and other options. Just as I said when Corinthian collapsed, we can’t leave students holding the bag for ITT Tech’s misdeeds.”

ITT Tech was being sued by the New Mexico Attorney General, Massachusetts Attorney General, Consumer Financial Protection Bureau, and Securities and Exchange Commission. The technical institute was also being investigated by at least 18 state Attorneys General, according to Durbin. Additionally, the state of California moved to clamp down on ITT Tech following the federal government’s sanctions, prohibiting the school from admitting new students at its 15 locations in the state. California officials were also looking to ban ITT Tech from operating in the state.

Certain ITT Tech students may have an opportunity to seize upon a financial reprieve following the school’s closure. Currently enrolled students, and those who left ITT Tech in the last 120 days, are eligible to have their associated student loans discharged. The Department of Ed created a webpage for ITT Tech students to get information on discharging their loans as well as transferring credits and loans to other academic institutions. The Ed Department will also hold three webinars on Wednesday at 9 a.m., 11 a.m. and 1 p.m. CST with information on next steps for those affected by ITT Tech’s closing.

Meanwhile, Illinois Attorney General Lisa Madigan and several of her counterparts across the nation are pressing for the Education Department to “broaden its efforts to provide loan forgiveness to students who attended fraudulent schools.” Specifically, the Attorneys General would like the Ed Department to create a universal loan discharge form for students left holding the bag when an educational institution is found to have engaged in illegal and fraudulent practices.

“We need to make sure that many more students obtain the loan relief they deserve,” Madigan said last month, pointing out that just 7 percent of eligible ex-Corinthian College students have applied for loan forgiveness. “Students should not be left footing a bill for schools that broke the law by not providing the education they promised.”

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