ITT Tech has closed down more than 130 campuses nationwide after the Federal government stripped the for-profit college of its eligibility for student aid. The move has left thousands of former students across the US with student loans but no degree to show for the debt.
As Shahien Nasiripour writes for Bloomberg, ITT Tech is blaming the Department of Education for the closure. The Education Department wanted $153 million in collateral in case the institution should suddenly fail.
"Your federal loan debt will be wiped away and you will have the the option of restarting your education," Says John King Jr., the U.S. Education Secretary.
This sudden closure isn't just affecting students, but employees as well. The majority of the company's nearly 8,000 person staff is being let go. The rest of the employees, some of whom work directly with ITT Tech's parent company ITT Educational Services Inc., are being kept on.
This is just the latest obstacle in a recent storm of problems for for-profit colleges, writes Margaret Fosmoe for South Bend Tribune. The Brown Mackie College chain announced that it stopped enrollment at 22 of its campuses in June. As has happened with ITT Tech's campuses, Brown Mackie's campuses are expected to eventually close.
"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. Our focus and priority with our remaining staff is on helping the tens of thousands of unexpectedly displaced students with their records and future educational options," Said ITT Tech.
The government had called into question the company's administrative capacity and viability of its financial future. ITT Tech was the focus of several state and federal investigations. In a statement, Education Secretary John King Jr. said that the school's accreditor admitted the school was not in compliance and wasn't likely to become compliant to standards.
ITT Tech has said they have explored other possibilities such as becoming a nonprofit or becoming a public institution, reports Bill Schackner for the Pittsburgh Post-Gazette. With the for-profit college industry having serious problems, the move to a different kind of institution may be in the company's best interest without federal government involvement.
Taxpayers may have to be aware of an increased load. With the federal government giving the opportunity for these students to have their debt forgiven, plus a new plan to forgive the loans of defrauded students of for-profit and nonprofit institutions, the taxpayer may be footing a large bill. Estimates for the new plan say it could cost up to $43 million.
"We never saw a path forward in the informal conversation that we had been having with potential buyers," Says Education Department Undersecretary Ted Mitchell.
Not every ITT Tech campus has closed for good, note Jennifer Gould, Christina Pascucci, and Mary Beth Mcdade writing for KTLA. Daniel Webster College, an ITT Tech owned school, will continue operating though it won't have the support of the parent company any longer. Daniel Webster College has nearly 700 students.
Alumni of ITT Tech who graduated more than four months ago aren't eligible for the student loan reimbursement the federal government is issuing. The only option available for those alumni will be to show that ITT Tech has defrauded them in some way. They will need to show proof of the school misleading them.