Other for-profit institutions face scrutiny after ITT Tech closure

INDIANAPOLIS, Ind. - With thousands of students left locked out of ITT Tech classrooms, the focus is now shifting to thousands more enrolled in for-profit colleges throughout Indiana. ITT Tech is just the latest closure to make headlines, but some say there could be many more to come.

For-profit schools have a reputation of falling short on accreditation standards and advertising misleading job placement rates.

Devry, National College and Corinthian, along with ITT Tech, were all investigated by local, state or federal agencies, for financial mismanagement and questionable recruiting tactics.

The Department of Education announced last year, it would be cracking down on for-profit colleges, which account for a massive amount of student loan debt.

ITT Tech received 80% of its revenue in 2015 from student loans, Pell grants and federal aid.

“The problem is, they have a deep financial motive to get students coming through, because they can make a percentage off of that,” said Indiana State Representative Ed Delaney, (D – Indianapolis).

Delaney has been watching problems plague for-profit institutions. ITT Tech, he said, is really only the beginning. Corinthian College closed its doors last month, leaving 15,000 students in the dust. It’s only a matter of time Delaney said, before another for profit school collapses.

“We need to have credentials that aren’t dependent upon the advertising and recruiting skills of these schools,” he said.

The DOE cracked the whip that broke ITT Tech. The department banned the enrollment of any student that receives federal aid.

The US Secretary of Education issued this reasoning in a letter to all ITT Tech students:

Dear ITT student,

Today, ITT Educational Services, Inc. (ITT) announced that it is closing all of its ITT Technical Institute campuses. For most of the world, that news will be covered as a business story or a political one, but I know that for you it is deeply personal. You are probably wondering what this means for your future; how it is going to affect your finances and your ability to continue your education.

In recent years, ITT has increasingly been the subject of numerous state and federal investigations. In August, ITT’s accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS) determined that ITT “is not in compliance, and is unlikely to become in compliance with [ACICS] Accreditation Criteria.” This came amid increasingly heightened financial oversight measures put in place by the Department over the past two years due to significant concerns about ITT’s administrative capacity, organizational integrity, financial viability, and ability to serve students.

The school’s decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk. Last week, the Department of Education took oversight actions to prevent ITT from continuing to add to that risk. When we made that decision, we did not take it lightly. One possible outcome of oversight actions is that a school may choose to close rather than take corrective actions, which can cause disruption and disappointment for current students. Ultimately, 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.

We are committed to helping you as you consider next steps. Most immediately, you have two basic options to choose between:

  1. If you are currently or were recently enrolled at ITT, you may be eligible to have your federal student loans for your program at ITT discharged. Your federal loan debt will be wiped away and you will have the option of restarting your education somewhere new. We will post and update information about how to receive a discharge at our ITT announcements page.
  2. If you wish to continue and complete your program at a different school – especially if you are close to graduating – you may be able to transfer your credits. It is important to note that transferring your credits may limit your ability to have your federal loans discharged. Closed school discharge may be an option if you enroll in a different program that does not accept your ITT credits.

Both of these options have pros and cons, depending on your unique circumstances, so it is important that you consider your specific situation carefully. You can find some information to start with at our ITT announcements page. The Department’s Office of Federal Student Aid is ready to support you with resources and information, including through this website, and will be updating you with more information in the coming days and weeks.

Whatever you choose to do, do not give up on your education. Higher education remains the clearest path to economic opportunity and security. Restarting or continuing your education at a high-quality, reputable institution may feel like a setback today, but odds are it will pay off in the long run. There are people and tools – like our College Scorecard – out there to help you pick a program that gives you a real shot at success.

I am proud of your hard work and dedication, and we will do all we can to continue to provide information to you on your options.

Sincerely,

John B. King Jr., U.S. Secretary of Education

For now, Delaney said students enrolled at for-profit colleges have no need to worry. But make no mistake, the way they operate said Delaney, will be changing.

“We as a state owed it to them to regulate them more thoroughly and we didn’t,” he said.

Delaney said he is considering proposing legislation next year that would force the state to hold for profit schools more accountable.