In response to the federal government’s recent ban on ITT Technical Institute enrolling new students who receive federal financial aid, the for-profit college chain announced today it is ceasing all of its academic operations and eliminating most of its 8,000 employees effective immediately.
“The actions of and sanctions from the U.S. Department of Education have forced us to cease operations. We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a nonprofit or public institution,” a spokesperson for ITT Tech’s parent company, ITT Educational Services, Inc., said in a statement.
As of this spring, ITT Tech was the fifth largest for-profit college chain by revenue, comprised of more than 130 campuses in 38 states with nearly 43,000 students nationwide. The institution has been accused by its accreditor of using questionable recruitment tactics and of continuous mismanagement of its finances. ITT Educational Services is also under investigation by state and federal authorities.
In late August, the Education Department said it had lost faith that ITT would be able to withstand scrutiny and prohibited its schools from admitting new students who plan to use federal loans and grants to pay for tuition — aid that accounted for 68 percent of the company’s $850 million in revenue last year. At that time, analysts said this move would likely force ITT Tech to close many if not all of its campuses.
The Obama administration has led an expansive crackdown on the for-profit college industry, which officials have accused of using misleading marketing tactics to enroll vulnerable students who accrue thousands of dollars in debt for a low-quality education and poor job placement rates.
ITT criticized the government’s actions Tuesday, saying it wasn’t given the “opportunity to pursue [its] right to due process.”
“The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable,” a company spokesperson said in a statement. “We believe the government’s action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again.”
The Education Department has yet to comment on the company’s decision to close all campuses.
