More than 35,000 students displaced as ITT closes

ITT Educational Services announced Tuesday that it will cease most operations.

ITT Educational Services announced Tuesday that it will cease most operations.

All institutions in the ITT Technical Institute system—the majority of the company's colleges—will close, but one school, Daniel Webster College, will remain open.
In a
statement, the for-profit college chain blamed "actions" and "sanctions" of the Department of Education for forcing it to close.

About two weeks before ITT's announcement, the Education Department leveled new restrictions at the school, for example, banning it from enrolling students who use federal financial aid or giving bonuses to ITT executives.

The rules were part of the Education Department's nationwide crackdown on for-profit colleges. The companies have faced recent criticism over graduate debt, misleading advertising, and inflated job placement statistics.

ITT had legal and accreditation troubles as well. The school faced lawsuits from the Consumer Financial Protection Bureau and the U.S. Securities Exchange Commission. And its accreditor, the Accrediting Council for Independent Colleges and Schools, concluded in August that ITT did not meet its criteria for accreditation and was "unlikely" to do so in the future.

ITT Educational Services emphasized that the closure means eliminating the jobs of more than 8,000 employees and displaced more than 35,000 students. About 200 staff members will remain for the short term to wrap up administrative loose ends and help students transition to other institutions.

"There's nothing to celebrate," says Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. He says he would have preferred stronger oversight from the beginning, "so that we don't reach the point where you have to wish for an operation to go under."

The closure also could cost the federal government up to $500 million in student loan discharges, as the tens of thousands of displaced students may qualify for loan forgiveness for being current or recent students of a college that closes. However, if the students transfer to other institutions, then they will no longer qualify for loan forgiveness under that policy.

Ted Mitchell, undersecretary for the Education Department, says officials are encouraging community colleges to accept ITT transfer students and find ways to migrate their academic credits (Smith, Inside Higher Ed, 9/7; ITT Educational Services release, 9/6; Cohen, New York Times, 9/6; Stratford/Hefling, Politico, 9/6). 

Best practices for paving the path for transfer students

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