Local ITT Technical Institute Closing After Feds Cut Funding

ITT Technical Institute, a for-profit college based in Carmel, Indiana, is closing permanently under federal pressure.

The school has operated for 50 years and serves 43,000 students at 130 campuses in 38 states.

The “actions of sanctions by the U.S. Department of Education have forced us to cease operations” immediately, leaving tens of thousands of students about to begin the September quarter scrambling for options, ITT Educational Services Inc., the company that operates the college, said in a news release.

The DOE showed “complete disregard … for due process to the company,” negatively affecting students, alumni and more than 8,000 employees, the company said.

The college said the decision was reached “only after having exhausted the exploration of alternatives, including transfer of students to a non-profit or public institution.”

Last month, the Education Department banned the school from enrolling new students who receive federal aid after its accrediting agency cited chronic mismanagement of finances and questionable recruiting tactics.

Federal aid provided 68 percent of parent company ITT Educational Services Inc.’s $850 million in revenues.

This spring, ITT was the fifth-largest for-profit college chain, and was among several under scrutiny by the Obama administration, which said the for-profit industry in general uses deceptive marketing tactics to enroll students who accrue thousands of dollars of debt for low-quality educations.

The school’s enrollment has been dwindling, down 22 percent from 9,910 in the second quarter of 2016 from 12,638 for the year prior.

Positions held by the majority of the college’s 8,000 employees were immediately eliminated, and remaining staff will help the tens of thousands of unexpectedly displaced ITT students obtain their records and explore their educational options.

“This action of our federal regulator to increase our surety requirement to 40 percent of our Title IV federal funding and place our schools under ‘Heightened Cash Monitoring Level 2,’ forced us to conclude that we can no longer continue to operate our ITT Tech campuses and provide our students with the quality education they expect and deserve,” the company said, adding that the “damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.”

“We have always carefully managed expenses to align with our enrollments. We had no intention prior to the receipt of the most recent sanctions of closing down despite the challenging regulatory environment that now threatens all proprietary higher education,” the company said. “We have also always worked tirelessly to ensure compliance with all applicable laws and regulations, and to uphold our ethic of continuous improvement. When we have received inquiries from regulators, we have always been responsive and cooperative.

“Despite our ongoing service to this nation's employers, local communities and underserved students, these federal actions will result in the closure of the ITT Technical Institutes without any opportunity to pursue our right to due process.”

In an editorial, The Wall Street Journal recently called the Education Department’s decision to cut off funding a “lawless execution” and said the action was taken without proving a single allegation.

The company said it believes the government’s action was “inappropriate and unconstitutional” but said that with the shuttering of ITT Technical Institutes, “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.”

By Beth Dalbey, Patch; Image: ITT Technical Institute campus via Google Earth