ITT Tech banned from accepting new students with federal loans
The Obama administration's war on for profit colleges claimed another casualty as ITT Educational Services has been banned from accepting any new students who receive federal financial aid.
The ban is a death sentence for the college.
Department officials announced the action on Thursday amid a series of measures that could threaten the survival of the chain, which has been the subject of state and federal investigations focusing on its recruiting and accounting practices. Company officials did not immediately comment.
Among the measures, ITT has been ordered to pay $152 million to the department within 30 days to cover student refunds and other liabilities in case the company closes. The chain, based in Indiana, is still paying another $44 million demanded by the department in June for the same reason.
The education department also has prohibited ITT from awarding its executives any pay raises or bonuses, and it must develop "teach-out" plans that would help current students finish their programs at other colleges if the chain shuts down.
Under the new measures, current students can continue receiving federal grants and loans.
Education Secretary John King said the government is taking action to protect students and taxpayers following "troubling" findings about the company. This month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
"It simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal financial aid," King said during a telephone conference with reporters.
If it fails to follow the government's demands, ITT could be cut off entirely from federal aid, the top source of revenue for most for-profit colleges.
ITT operates vocational schools at more than 130 campuses in 38 states, often under the ITT Technical Institute name. Last year, it enrolled 45,000 students and reported $850 million in revenue.
One of the biggest for-profit chains in the nation, ITT has been under increasing scrutiny from the education department following allegations of misconduct.
How much of a villian is ITT and other for profit colleges? Overselling benefits at for profit colleges is one of the main complaints against them. And over promising employment opportunities after graduation is another sticking point with the Education Department.
There is also the charge that many of these schools exist simply to milk the government of cash in the form of student loans.
But despite all this, hundreds of thousands of students have gotten opportunities for good jobs because of their education at schools like ITT. No doubt there are schools that are little better than scams. But the administration has gone to war against all for profit colleges, largely at the behest of 4 year universities who view them as stealing potential students.
College is not for everyone, and that holds true whether it's a trade school, a technical school, or a four year university. Until people like Bernie Sanders and Hillary Clinton accept that basic truism, we will continue pouring tens of billions of dollars into loan programs for students, saddling them with debt for decades, and setting them up for failure.
Thomas Lifson adds: There is one for-profit institution of higher learning that is totally virtuous in the eyes of the Clintons. Laureate, which claims to be the world's largest network of for profit schools, has paid $16.5 million directly to the Clinton family coffers, in addition to donations to the
slush fund foundation.
Now it will face less competition from ITT Tech.