ITT Technical Institute Closing With Blast At Feds' Oversight

by Thom Forbes , September 7, 2016

Blaming the U.S. Department of Education for excessive oversight and sanctions, ITT Technical Institute — which had about 40,000 students enrolled on more than 130 campuses in 38 states — yesterday said it was pulling the plug and shutting down.

“Except for a small school that operates under a different name, the move puts an end to an operation that has been accused of widespread fraud and abuse,” writes Patricia Cohen for the New York Times.

Late last month, the Education Dept. banned the Carmel, Ind.-based school from enrolling new students who rely on federal financial aid. It also required that ITT set aside $247.3 million should it go out of business.

“Experts called it a death sentence. On Tuesday, ITT blamed its closure on those sanctions, calling them ‘unwarranted,’ ‘inappropriate’ and ‘unconstitutional,’” write Justin L. Mack, Chelsea Schneider and Stephanie Wang for the Indianapolis Star.

“These unwarranted actions, taken without proving a single allegation, are a ‘lawless execution,’ as noted by a recent editorial in the Wall Street Journal,” the school maintained in its news release. It also said that it was letting go “the overwhelming majority of our more than 8,000 employees.”

But state and federal investigations into ITT have been ongoing since 2002, Mack, Schneider and Wang point out.

“ITT currently faces fraud charges from the Securities and Exchange Commission and a lawsuit from the Consumer Financial Protection Bureau. It has been under investigation by at least 19 state attorneys general,” they write.

“Some of ITT's attitude is justified,” Credit Suisse analyst Trace Urdan tells them. “But it's certainly not the case that the Department of Education did this to them. They did this to themselves.”

“ITT’s closure comes after Corinthian Colleges Inc. shut the doors of its schools and filed for bankruptcy last year. The Education Department agreed to forgive $171 million in loans owed by former students, most of them in California,” point out Jim Puzzanghera and Ronald D. White in the Los Angeles Times.

“‘Both Corinthian and ITT made the same bad decision, which was to guarantee third-party private loans’ while pushing out more students into a weak jobs market after the Great Recession,” Urdan tells them.

But there were other issues, too.

“In blocking new students from enrolling, the Education Department cited the actions of ITT's accreditor, the Accrediting Council for Independent Colleges and Schools, which determined that ITT ‘is not in compliance and is unlikely to become in compliance with [ACICS] accreditation criteria,’” reportsInside Higher Ed. “According to the department, ACICS questioned ITT's compliance with standards such as financial stability, management, record keeping, admissions, recruitment standards, retention, job placement and institutional integrity, in an Aug. 17 letter sent to the department.”

A page on ITT’s Web site touts its “power packed programs” in fields such as information technology, electronics technology, drafting and design, business, nursing and health sciences. Another page warns that credits earned there “are unlikely to transfer” and states that the company “does not represent, promise or guarantee that a student or graduate will obtain employment.”

Undersecretary of Education Ted Mitchell yesterday told reporters that “the department is reaching out to ITT students directly to inform them about their options,” reports Danielle Douglas-Gabriel in the Washington Post. “He said the department is also hosting a series of webinars this week and partnering with states to hold on-site sessions to help ITT students. The department is asking community colleges near ITT locations to accept academic credits from the career school.”

If students are successful in transferring their credits to other institutions to complete the same degree, they will not be eligible for federal student loan forgiveness, however.

Daniel Webster College in Nashua, N.H., is the one school owned by ITT that remains open. Acquired in 2009, it serves about 650 students on a 54-acre campus and has 21 full-time and 67 part-time faculty members, according to Kimberly Houghton’s story in the Manchester Union Leader.

“Without the parent company’s support, it will be difficult for DWC to operate,” its president, Michael Diffily, wrote in a letter to students, Houghton reports. “Several institutions also accredited by (New England Association of Schools and Colleges) have approached ITT and have expressed interest in acquiring the college, which would be a good thing for DWC.”

“It’s too simplistic to look at today’s closure as just the result of actions by the Department of Education,” Ben Miller, senior director for postsecondary education at the Center for American Progress, tells the Post’s Douglas-Gabriel. “Years of mismanagement by ITT leadership put it in a position where ED’s action was necessary and impossible to survive.”

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2 comments about "ITT Technical Institute Closing With Blast At Feds' Oversight".

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Virginia Suhr from Lobo & Petrocine, September 7, 2016 at 9:08 a.m.
There is a unilateral condemnation of all for-profit colleges by the Obama administration.

However, there are smaller for-profit colleges that provide a good education - they are just privately owned.

There are also non-profit colleges that have been mismanaged for years and charge very high tuition and fees. Many of their credits can't be transferred and they won't guarantee a job. As far as agressive advertising, SNHU is constantly on broadcast and cable network TV. That's not inexpensive.

While public colleges are much cheaper, they aren't guaranteeing a job after graduation. Many community colleges have very low graduation rates. 25% of my daughter's high school class went to the local community college. Many of them dropped out. They went from a school with 1,200 students to one with 25,000 students. The reason for dropping out was often cited as the community college was too impersonal and too large and these students needed extra attention.

A good college education at a low cost should be the goal. But rather than targeting one type of colllege - for profit, the education department needs to look across the board at all types of colleges - for profit, non-profit and public - and make improvements.

Mismanagement is rampant across the education industry. But there are also many good colleges of all types. Don't penalize the good for profits, non-profits and public colleges by lumping them together.

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Paula Lynn from Who Else Unlimited, September 23, 2016 at 8:16 a.m.

Go back to who pays ? Smaller colleges cannot provide course variations or all the diversifications needed for a full education. The real world is large, larger than 25,000 in which we all must work. The larger instituitons may need to extend an extra helping hand to some of the students, but the students are not coming in prepared either to be independent students, a college requirement.

It is not mis management; it is pure greed. So many of the students they accept shouldn't be; they are not ready for college. When you can't keep up with the material, you drop out and owe money or financial aid, that is, your taxes, are paying for nothing or worse - discouragement - and line the pockets of the owners (major stock holders, bundlers, etc.). They are scams and fraudulent purveyors of classes and should not only be shut down but procesecuted on financial and criminal charges. Yes, I did work for a for profit diploma school at one time (did not sell itself on the fancy swimming pools or campus e.g.) which became a credited 2 year school as it grew. it still doesn't all of these years later.