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ITT Technical Institute Shuts Down — What Happens To Students Now?

By Shaunee Flowers
Published on: 05:53 PST, Sep 7, 2016

ITT Technical Institute shocked students this week when every single campus shut down and classes ceased. Now, tens of thousands of students of the technical school are left wondering what to do next since they cannot finish classes at the for-profit school. Will the students be left in the lurch with crushing student loan debt and college credits that won’t transfer anywhere else or is there a plan to assist them in transferring elsewhere or getting their money back?

On Tuesday, ITT Tech announced that they would be discontinuing classes in all 140 locations nationwide. The now-defunct technical school was operating in 38 states with an active enrollment of roughly 45,000 students when operations ceased, and students were notified not to come to class.

According to the U.S. Department of Education, ITT Technical Institute was banned in August from enrolling new students using federal financial aid. This happened after the Accrediting Council for Independent Colleges and Schools (ACICS) decided that ITT was not in compliance and was not likely to come into compliance with their accreditation criteria shortly.

“Our responsibility is first and foremost to protect students and taxpayers,” said U.S. Secretary of Education John B. King Jr. “Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds.”

The Department of Education sent a letter to ITT Tech that not only banned them from enrolling new Title IV students, which are those who rely on federal financial aid, but also put additional sanctions on the school. They were required to notify students of their lack of accreditation and were stopped from giving pay increases, bonuses or making severance payments to executives at the school without approval from the DoE. Additionally, they were required to cover federal financial aid disbursements to existing students using their own funds.

The letter from the Department of Education also required ITT Tech to increase their surety held by the DoE to cover 40 percent of the existing Title IV federal financial aid within 30 days as a safety net in case the school were to close campuses. The amount held by the department would increase from $94,353,980 to $247, 292,364 to meet the new conditions.

The final sanction placed on ITT Technical Institute by the Department of Education would have forced the school to make teach-out agreements with other schools and colleges in case the school shut down so that students would be able to transfer classes and credits to other schools and continue their education.

In response to that letter from the DoE, ITT Tech opted to just cease operations entirely. Students were shocked when they were informed that classes were canceled on Tuesday going forward, and so far, none of the requirements outlined in the letter seem to have been upheld.

Students who were currently enrolled at the now-defunct school before the shut down are left to wonder what will happen now that they are in the middle of classes. Information has been released by the Department of Education that outlines ways that students can go about getting refunds and having their student loans discharged. A webinar is being held on Wednesday and for those who missed it, there will be a recording of the information available to ITT Technical Institute students to access later to get the information they need.

The Washington Post reported that ITT Technical Institute students have a few options when it comes to recovering their class credits or having their federal student loans waived now that the school has shut down. Per the Department of Education requirement that ITT makes agreements with other schools to accept transfer credits they have accrued to another school to finish a degree. The downside to transferring credits and continuing is that many of these schools are also for-profit and have a low standard for student learning, rendering the degrees obtained as useless.

Another issue that former ITT Tech students may want to consider is that if they do opt to transfer credits to another school, it will make them ineligible for federal student loan forgiveness under a program called a closed-school discharge.

Under a closed-school discharge, federal student loans are forgiven for students who were enrolled at ITT Technical Institute at the time of their closure. It also covers students who withdrew from classes within 120 days prior to that closure. In order to qualify for the student loan forgiveness, those students are required to start all over with their education and cannot transfer credits to another school or college.

One thing that Department of Education officials are warning ITT Technical Insitute students in the wake of the sudden school shut down is that closed-school discharge filings are free. Many companies will offer to do the paperwork and get the ball rolling for a fee, but those who are opting to have their student loan debt forgiven do not need to pay any fees to do that.

[Photo by Dwight Burdette (Own work) [CC BY 3.0], via Wikimedia Commons]

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