The ITT Technical Institute was a for-profit institution with 130 campuses across the United States. After 50 years of service, all ITT Tech Campuses shut down on September 6th. After trying to sell their campuses and failing, ITT Tech filed for bankruptcy on September 16th.
The U.S. Department of Education charged ITT with a series of sanctions two weeks back, including that the for-profit could not admit students who rely on federal financial aid for their tuition; new students would not qualify for federal student loans or Pell Grants, which are necessary for for-profit institutions. ITT was also prohibited from awarding raises or making severance payments to its executives. Lastly, the Department determined that ITT’s letter of credit requirement (a letter of credit is money colleges have to set aside when the government isn’t sure the college will be able to pay back the money it owes) would be increased from $124 million to $247 million. Sanctions were developed after several years in which a dozen state attorney generals examined allegations that the company misled students about their future job prospects and that the company admitted students who were not qualified for their technical programs.
The Department of Education determined that ITT could no longer provide value to its students and taxpayers. CEO of ITT Technical Services Kevin Modany has stated that the institution was forced to be shut down, even though there was no proof of the allegations against the institution. Additionally he stated that the company did not have their right to pursue due process. The Department of Education has stated that it does not regret its decision, as its duty is “to protect all students and taxpayers”. The company prevented students from enrolling one week ago: the last major sign that the end was near. Now, approximately 40,000 students’ and 8,000 employees’ futures hang in the balance. The company cut down to 200 employees who will help students with the post shut-down transition.
There are two options currently available to ITT’s former students: students can apply to have their federal loans discharged so that they can receive their education somewhere else, or transfer to another school. However, if students choose to transfer they may not be eligible to have their federal loans discharged. Students who had been enrolled at an ITT campus within the past 120 days were allowed to apply for a “closed school discharge” of their student loans, which would allow up to $500 million of loans to be erased. ITT has an outreach program planned for their students in which they will e-mail them about their options, host webinars to help students, and communicate with community colleges around ITT to accept transfer students. However, many students are lacking options in where they can go to transfer because the surrounding colleges do not have their degree programs.