The company that operates ITT Technical Institutes said Tuesday that it was permanently closing all its campuses nationwide, blaming the recent move by the U.S. Education Department to ban the for-profit college operator from enrolling new students who use federal financial aid.
ITT Educational Services Inc. said that the shutdown will affect “tens of thousands” of students who were preparing for the start of classes this month and cost more than 8,000 employees their jobs.
“We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution,” ITT said in a statement.
It said it would now focus on helping its students obtain their records and pursue their educations elsewhere.
The company has operated vocational schools on more than 130 campuses in 38 states, often under the ITT Technical Institute name. Last year, it enrolled 45,000 students and reported $850 million in revenue.
But like many other for-profit college operators, ITT has faced federal and state investigations of is recruiting and accounting practices.
The day after the U.S. Education Department’s decision, California imposed further restrictions on the company. Citing concerns about ITT’s financial viability, the state Department of Consumer Affairs’ Bureau for Private Postsecondary Education issued an emergency decision banning ITT from accepting new students at its 15 California locations.
The state also planned to seek to revoke ITT’s approval to operate in California.
ITT blamed its closure on what it called unwarranted federal action.
“The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable,” ITT said.
“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,” the company said.
U.S. Education Secretary John B. King Jr. said Tuesday that his agency did not take its action lightly and that federal officials were committed to helping ITT’s students.
“The school’s decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk,” King said in a blog post.
“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,” he said.
King said current or recently enrolled students could be eligible to have their student loan debt forgiven and might be able to transfer ITT credits to another school.
Last month, in addition to the ban on enrolling new students who used federal aid, the U.S. Education Department also prohibited ITT from awarding its executives any pay raises or bonuses and said it must develop “teach-out” plans that would help current students finish their programs at other colleges if the chain shuts down. Current students, it said, could continue receiving federal grants and loans.
Earlier in the month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
Sen. Richard Blumenthal (D-Conn.) said ITT’s announcement “should put the entire for-profit college industry on notice: Predatory practices, the exploitation of taxpayers, and the deception of students have no place in our higher education system.”
“ITT Tech has cheated students, taxpayers, and veterans for far too long,” he said. “Now that this bad actor has collapsed under the weight of its own wrongdoing, we must do everything we can to ensure that its former students aren’t left holding the bag.” </