ITT Technical Shuts Down All Campuses Nationwide After Department of Education Bans Enrolling New Students – Federal Sanctions To Blame?

Back in August, it was reported that the U.S. Department of Education had banned the enrollment of new students to ITT Educational Services, Inc. On Tuesday, the ITT Technical Institute announced that after 50 years of operation as the U.S.’s largest for-profit technical institute, the federal sanctions they face had forced them to shut down all of their facilities.

The press release from the Department of Education advised that the actions it had taken to sanction ITT has been to protect both taxpayers and students, who would be using federal financial aid funds to help with their education at the Institute. They also intended to step up financial oversight of the for-profit educational provider and any form of pay raise, bonus or even payments of severance packages to executives in the company would be subject to government approval.

.@ITTTech has four campuses in Georgia, all in the #Atlanta area. #ITTTech https://t.co/Bmt4QsNuDv

— Jeff Cox (@JeffCoxWGXA) September 6, 2016

In announcing the closure of all their facilities on Tuesday, ITT stated that the move is only due to the actions the government has taken in preventing them from accessing federal loans and grants. Those educational grants is a critical source of revenue for the company and not having access to them means that the institute will be losing millions of dollars. The decision that the U.S. Department made caused shares in the publicly traded company to drop to all-time lows but they insisted that the company was “not in compliance” with the criteria necessary for accreditation. It also stepped-up financial oversight of ITT, building on measures put in place in 2014 due to “significant concerns” about the school’s organization and “financial viability.”

With approximately 130 campuses nationwide, this full-scale closure is no small loss for ITT Educational Services, Inc and will mean the largest college campus closure in the history of the U.S. The Chicago Tribune wrote that the Carmel, Ind. based company said on Tuesday that the closure has taken place right before the fall quarter and will now leave 40,000 students without a campus and put more than 8,000 employees out of a job.

Even worse, the credits that the current students have earned at ITT Technical will more than likely not be transferable to a neither a public university nor an accredited private school. These students will have to actively seek out a school who will consider accepting the credits, and if they cannot, unfortunately, they will be forfeiting any sum of money that has been invested into their education at the now-defunct school.

When u go to ITT tech and showed up for class today pic.twitter.com/XOsKmzfNyh

— Borchata Papa (@TurtleAnkles) September 6, 2016

ITT released a statement explaining that they were forced to shut down the campuses only after determining that the government had left them with no other options.

“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. We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution.”

However, despite all of the insistence ITT Technical has made that it is the government why they are now forced to shut down, they have been experiencing a number of problems for a few years. An Inquisitr piece outlined that those problems grew significantly in 2014 and are exactly what made the government begin such a stringent management system of the college in the first place. The Consumer Financial Protection Bureau, with the full support of the United States Congress, brought a lawsuit against the institution in 2014 for reported predatory lending practices, exaggerated job-placement statistics, as well as loan fraud. This was after a dozen state attorneys had done the same as well and the cases had proven dishonest practices.

ITT Technical had numerous sanctions placed on it since 2014 but the final blow came with a letter of credit sent to them from the Education Department. It required that they prove they had at least $247 million available in the bank, in case they are unable to cover federal student-aid liabilities. The sum would have been 40 percent of the federal financial aid the schools received last year and would serve as security in case the school shuts down, which is exactly what happened.

Ten days remained on the timeline ITT Technical was given to produce the $153 million payment, but they chose instead to shut down their operations ahead of the due date.

[Photo by Michael Conroy/AP Images]