ITT Tech parent to cease operations
ITT Educational Services, the parent company of ITT Technical Institutes, is ceasing all operations Friday, a week after closing the doors at the national chain of for-profit colleges, according to a regulatory filing issued Wednesday.
The company blamed sanctions handed down by the Department of Education last month for the decision to close what’s left of its operations, which includes Daniel Webster College. ITT has struck an agreement with Southern New Hampshire University, a nonprofit school that offers online courses, to make it easier for the students at Daniel Webster to transfer their credits and complete their degrees.
ITT Tech spent years battling allegations of fraud, deceptive marketing and steering students into predatory loans. ITT Educational Services is being investigated by more than a dozen state attorneys general and is facing lawsuits from two federal agencies.
Evidence unearthed in those cases could be used in what’s known as “borrower defense to repayment” claims. Anyone who can prove a school used illegal or deceptive tactics in violation of state law to persuade them to borrow money for college is eligible for this form of loan forgiveness. But the system is widely considered difficult to navigate and few people have successfully appealed their cases.
Of the more than 26,000 claims received by the Department of Education by the end of June, only about 14 percent have been approved. And all of them come from former students of Corinthian Colleges, a for-profit chain that closed in 2014 amid accusations of widespread fraud. ITT students have submitted 1,500 claims, according to the Debt Collective, an offshoot of the Occupy Wall Street movement working with the strikers.
The end of ITT comes weeks after education officials said the company could no longer enroll new students who rely on federal loans and grants, award raises, pay bonuses or make severance payments to its executives without government approval. They also demanded that the company provide a letter of credit from a bank assuring the availability of as much as $247 million, up from the $124 million letter of credit ITT already had on file. The move sent shares of the publicly traded company tumbling to an all-time low and eventually led to the closure of the 50-year-old chain of schools.
The filing was issued as more than 100 former students of now-shuttered ITT Tech announced Wednesday they’ll no longer make payments on their federal student loans, part of a small but growing revolt against what they call the Obama administration’s negligence in policing for-profit colleges.
The students, many of whom graduated from ITT Tech campuses nationwide, say they’re burdened with worthless credentials and debts they’ll never be able to repay. They say the Department of Education, which manages the federal student loan program, failed to protect them and millions of others enrolled in schools that ultimately didn’t deliver what they promised.
They join about 200 others who, beginning last year, launched a “debt strike” after the Education Department’s bailout of Corinthian Colleges.
Corinthian filed for bankruptcy in May.
In the week since ITT Tech shut its doors, the Department of Education has encouraged students affected by the closure to weigh their options for transferring their credits or applying for loan forgiveness.
The striking former Corinthian and ITT Tech students are hoping to have their federal student loans forgiven.
With some 300 Americans now publicly refusing to make payments on the loans, the issue threatens to become yet another headache for the Obama administration. For years it has tried to stiffen rules governing career schools that predominantly rely on taxpayer-subsidized student loans and grants, but it only recently began exercising its vast enforcement powers, after years of sustained criticism from political allies.