ITT Technical closes, leaving thousands of students stranded, and many questioning the value of for-profit schools
ITT announces it will close.
One of the saddest chapters of U.S. higher education closed on Monday, as ITT Technical Institute suddenly announced it was shutting down. ITT has been hit with numerous legal actions, and just last week it finally received what amounted to a death penalty from the Department of Education -- which said it would no longer allow the school to enroll students getting federal financial aid.
ITT has been the subject of numerous legal actions; it's the poster child for what can go wrong in for-profit colleges.
The demise of ITT harms thousands of employees and an untold number of current and former students.
"It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service," the firm said in a statement. "With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected."
Students who are currently enrolled at the school may very find it's too late to enroll somewhere else this fall, and it's unclear that the credits they've earned so far will be accepted at other institutions. It's possible that their federal loans will be forgiven through a "closed school loan discharge."
ITT graduates still have an accredited degree, but the episode obviously casts a gray cloud on their credentials.
The Department of Education anticipated this possibility last week, and offered this somber set of options to students, listed in this blog post. None of the options are good.
ITT's footprint was huge. The company had than 130 campuses in 38 states; it enrolled 45,000 students and reported $850 million in revenue, according to the L.A. Times.
As an example of ITT's legal troubles, the attorney general of Massachusetts sued the firm in April. It accused the firm of counting jobs at big box electronics retailers in its job placement statistics.
"ITT’s admissions representatives allegedly told prospective students that anywhere from 80 percent to 100 percent of graduates obtained jobs in or related to their field of study," the office said. "Real placement rates were actually 50 percent or less at each campus. ITT did not disclose that its placement rates included graduates with jobs outside their field of study and graduates with internships or short-term, unsustainable jobs who never received permanent, sustainable employment – including any job that somehow involved the use of a computer. ITT claimed that jobs simply selling computers at big box stores counted as placements, and even counted a graduate as placed who provided customer service for an airline checking travelers into their flights."
The Consumer Financial Protection Bureau sued ITT earlier this year, too. (I wrote about it then).
“(ITT’s) own analysis projected a default rate of 64 percent on these loans – key information that was never shared with the borrowers,” he said. “The result was that while many of the students got poorer, the investors and shareholders got richer.”
Two-year degrees from the schools, which target low-income students, cost about $45,000, the CFPB said. Only 28 percent of students graduated within six years.
For-profit schools aren't all bad, of course. But the temptation to see students as easy revenue -- as simply tools to tap into a massive revenue stream made available by the federal government through its loan programs -- sets the stage for possible corruption. Shareholders and investors tend to work very closely with these types of schools so that they are able to generate some sort of profit from the services that the school offers. An education attorney is able to offer assistance to both parties throughout this partnership by coming up with and structuring investments so that everyone involved reaches a suitable agreement. This can reduce any chances for further corruption.
The issue will only become more important. Retraining is seen by many as the panacea to frequent displacement of workers in the modern economy. It's common for workers to endure 3, 4, or 5 career changes during their 40-year-plus working years.
America has got to get serious about making continuing education accessible -- and, for God's sake, scam-free -- if we have any hope of surviving the rapid change coming during the 21st Century.
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