Another For-Profit College Chain Closes Its Doors

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An ITT Technical Institute for-profit college location in Chantilly, Virginia in 2014.

An ITT Technical Institute for-profit college location in Chantilly, Virginia in 2014. (Kristoffer Tripplaar/ Sipa USA)

September 7, 2016

Around 40,000 college students at more than 130 campuses have no classes today, as ITT Technical Institute — one of America’s largest for-profit college chains — has shut its doors.

In a statement released Tuesday, the company blamed the U.S. Department of Education for its closure, saying, “the actions of and sanctions from” the department had forced it to cease operations.

The company, with campuses in 38 states, has come under increased scrutiny in recent years as the federal government has cracked down on for-profit colleges accused of aggressive recruitment techniques and misrepresentation of job placement rates after graduation. Last April, another major for-profit chain — Corinthian Colleges — shut down, leaving around 16,000 students in the lurch.

In October 2015, the Department of Education tightened ITT’s access to federal grants and loans “after ITT failed to account for millions of dollars in aid that was disbursed to students in the last five years,” according to The Washington Post. Last month, the department cut off ITT’s access to federal funding — a key source of revenue — a move that blocked the for-profit company from enrolling students who were using federal financial aid.

“Our responsibility is first and foremost to protect students and taxpayers,” Secretary of Education John B. King Jr. said in a statement on Aug. 25. ITT was prohibited from giving raises, bonuses or retention or severance payments without the Department of Education’s approval. It was also told to increase its surety — funds that are used to reimburse the department in the case of student refunds, loan cancellations or other expenses related to ITT closing campuses — from $94 million to $247 million.

ITT, in its statement on Tuesday, said the department’s actions were taken “without proving a single allegation” and were “inappropriate and unconstitutional.”

Addressing ITT’s closing, Under Secretary of Education Ted Mitchell said on Tuesday, “Ultimately, our responsibility is not to any individual institution — it’s to protect all students and all taxpayers.”

Mitchell outlined the options for students who were enrolled at ITT: they can have their federal loans wiped away and start fresh; or they can try to transfer their credits to another school and continue their studies. Community colleges have been encouraged to reach out to former ITT students, and students can also call 1-800-4-FED-AID or visit this website for more information.

Mitchell said the department had been planning for the possibility of ITT closing after they increased their oversight of the company. If all eligible students seek loan forgiveness, it could amount to a bill of $500 million for taxpayers, according to government estimates. ITT’s surety can only cover $90 million of the bill.

In the 2010 documentary College, Inc., FRONTLINE investigated allegations of fraud and predatory behavior in the for-profit college industry. In A Subprime Education, airing next Tues., Sept. 13, we return to the story of for-profit colleges. Watch a trailer below.


Priyanka Boghani

Priyanka Boghani, Digital Reporter & Producer, FRONTLINE

Twitter:

@priyankaboghani

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