On Tuesday, ITT Educational Services Inc. announced it would close all 130 ITT Technical Institutes, and blamed the closure on actions by the U.S. Department of Education.
In August, the department banned ITT from enrolling new students who planned to pay for their education with federal financial-aid funding. At the same time, it enhanced financial oversight measures after the Accrediting Council for Independent Colleges and Schools found that ITT was not in compliance with ACICS standards and was unlikely to come into compliance.
This scrutiny and the resultant closing is part of an ongoing trend affecting for-profit colleges, as Washington policy-makers debate new regulations aggressively pushed by the President Barack Obama administration.
Nicole Elam, vice-president of government relations and external affairs at ITT, said the organization would make no comment on the situation that led to the closure.
But a press release issued Tuesday said, “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.”
Elam said the focus now is on students who were already working toward degrees when the closure was announced.
“Helping students with their records and identifying future educational options is our priority,” Elam told AMI Newswire. “We have and will continue to communicate such information directly to students.”
A student communication available on the school’s website said that ITT disagreed with the conclusions reached by the ACICS and has been working with the organization to confirm that its schools remained worthy of accreditation.
“ITT has been financially sound, had no intention of closing down, and has been responsive to all of the requests of the various regulatory agencies that oversee our schools.”
The letter blamed the shutdown on the actions of the Department of Education. The department required ITT to post a letter of credit of more than $246 million, equivalent to 40 percent of federal student-loan funding received by ITT during the last fiscal year. It also halted Pell Grants and student loans, prohibiting the enrollment of any student who needed federal funding.
ITT alumnus Donald Fife told AMI Newswire he was “not entirely surprised” by the closure. He attended ITT Tech from March 2012 to December 2015, earning an associates degree in electronic engineering and a bachelors in project management administration.
“The electrical wasn't that valuable, but I think the project management portion was,” he said. “My overall experience was not bad, but lacking in a lot of areas.”
Fife funded his education with the GI Bill and the Yellow Ribbon program, a GI Bill companion program funded by the Veterans Association to defray the cost of education.
The Obama administration has repeatedly voiced its support for closing a loophole in the so-called “90-10” rule, which prohibits for-profit higher-education institutions from using federal student-aid dollars to make up more than 90 percent of their yearly revenue. The loophole does not include GI Bill or Department of Defense tuition-assistance programs.
A 2012 U.S. Senate investigation led by former Democratic Senator Tom Harkin found that for-profit-colleges were targeting former service members and their families. The report stated, “Federal taxpayers are investing billions of dollars a year, $32 billion in the most recent year, in companies that operate for-profit colleges. Yet, more than half of the students who enrolled in those colleges in 2008-09 left without a degree or diploma within a median of four months.”
Fife had already completed his degree before the ITT shutdown went into effect, but an estimated 40,000 undergraduate students will be unable to attend classes for the semester scheduled to begin Sept. 12.
Students may be able to transfer their credits to other institutions, but only at the discretion of the transfer school. Many students may also be eligible to have their loans discharged.
Education Under Secretary Ted Mitchell discussed the impact on students during a conference call with media. He said students still enrolled at ITT Tech or those who have withdrawn in the past 120 days may be eligible for a loan discharge.
Mitchell also said that the department is contacting all enrolled students to let them know what is happening and to inform them of their options. The students will be provided with an 800 number for assistance with student-aid questions and have access to webinars and transfer fairs that will be posted on the studentaid.gov/itt website.
“We knew that when we stepped up our oversight of ITT, this outcome was a possibility and we have been planning for this contingency,” Mitchell said. “As we said then, it wasn't a decision we took lightly.”
For-profit schools like ITT are facing increasing challenges in the current economic and regulatory climate. Corinthian Colleges Inc. shut more than 120 schools and filed for bankruptcy in May 2015. That same month, Education Management Corp., owner of the Art Institutes, announced the phase-out of 15 campuses and Career Education Corp. announced a restructuring. In February 2015, Kaplan Inc. sold all 38 Kaplan campuses and DeVry University closed 14.
A report by Inside Higher Ed named federal regulations, lawsuits and a growing stigma against for-profit education as the main contributors to these declines. The Obama administration, arguing that the for-profits are ill-serving many of their students, has repeatedly tightened regulations on the schools.
Critics, including Urban League President Marc Morial -- usually an Obama ally -- have argued that the regulations and subsequent school closings are taking career opportunities away from hundreds of thousands of at-risk students.
AMI tried by phone and email to reach Morial for comment on the ITT situation, but received no response.