For-profit college chain ITT closes door, leaves future of students in Arkansas, nationwide in doubt

For-profit higher education giant ITT Educational Services unexpectedly announced Tuesday (Sept. 6) it was ceasing operations nationwide, leaving thousands of students in Arkansas and across the U.S. in the lurch as they wonder about their educational and professional futures and thousands of dollars in student loan debt.

In a news release, the parent company of ITT Technical Institutes said recent oversight actions and sanctions by the U.S. Department of Education forced the Carmel, Ind.-based technical school to cease operations immediately, shuttering the doors of nearly 150 ITT local campuses in 40 states.

The nation’s fifth-largest for-profit university said federal regulators decision to increase the school’s surety requirement to 40% of its Title IV federal funding and the placement of the school on the “Heightened Cash Monitoring Level 2″ forced the company’s hand.

“(We) concluded that we can no longer continue to operate our ITT Tech campuses and provide our students with the quality education they expect and deserve,” said the Indiana-based for-profit school said “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.”

ITT officials said as of Tuesday, the company had eliminated the positions of the overwhelming majority of our more than 8,000 employees. Several calls by Talk Business & Politics made to the for-profit company’s West Little Rock campus at 10800 Financial Centre Parkway went unanswered and the school’s website was shut down by early afternoon.

“Our focus and priority with our remaining staff is on helping the tens of thousands of unexpectedly displaced students with their records and future educational options,” the company said.

Arkansas Department of Education officials were not immediately available to respond to this story concerning total student and staff count at ITT’s West Little Rock campus, which had nearly 300 undergraduate students enrolled at the end of last year.

NATIONAL ITT STUDENT WEBINAR SET
Across the U.S., the unexpected closing of the ITT created frantic confusion at a  number of local campuses, causing the U.S. Department of Education to create a special web page on Tuesday for ITT students.

At the “ITT announcement page” on the Department of Education’s website, students were invited to get more information during three national webinars Wednesday at 10 a.m., noon, and 2 p.m. (Eastern Standard Time).

According to the Obama administration’s consumer watchdog agency, Consumer Financial Protection Bureau (CFBB), ITT’s tuition costs are among the highest in the country in the for-profit industry. Earning an associate’s degree at ITT can cost more than $44,000. Bachelor’s degree programs can cost $88,000, which is significantly higher than the cost of similar degrees at a community college or a public four-year institution. CFPB officials.

According to CollegeCalc.com, a research college cost portal run by the U.S. Department of Education, tuition for ITT Technical Institute Little Rock was $17,748 for the 2015-2016 academic year.

“This is 17% more expensive than the national average private for-profit, four-year college tuition of $15,199,” the website states. “The cost is $5,009 and 39% more expensive than the average Arkansas tuition of $12,739 for 4 year colleges.”

EDUCATION SECRETARY BLOGS TO ITT STUDENTS
In order to respond to mounting concern from thousands of ITT’s student after the company’s announcement, U.S. Education Secretary John King Jr. took to his blog to explain the Obama administration’s decision to take a more active role in oversight of the for-profit school.

“For most of the world, that news will be covered as a business story or a political one, but I know that for you it is deeply personal,” King wrote. “You are probably wondering what this means for your future; how it is going to affect your finances and your ability to continue your education.”

The Education Secretary also explained that ITT had put its student and millions of dollars in taxpayer-funded federal student aid at-risk following numerous state and federal investigations that imperiled the school’s accreditation, integrity, financial viability and ability to serve students.

“When we made that decision, we did not take it lightly. One possible outcome of oversight actions is that a school may choose to close rather than take corrective actions, which can cause disruption and disappointment for current students,” King said. “Ultimately, we made a difficult choice to pursue additional oversight in order to protect you, other students, and taxpayers from potentially worse educational and financial damage in the future if ITT was allowed to continue operating without increased oversight and assurances to better serve students.”

Concerning next steps, King told the students that many of them may eligible to have your federal student loans for their ITT study discharged. For students wishing to continue or complete their studies at another school, King offered a list of pros and cons tied to whether or not another school would accept the ITT credits.

ITT STUDENT: ‘I CAN’T BELIEVE THIS IS HAPPENING’
In response to King’s blog post, a fiancé of an ITT student begged the Education Secretary for advice concerning the for-profit school’s sudden closure.

“My fiancé is scheduled to graduate from ITT this December with a Bachelor’s Degree is Construction Project Management. He only has 1 or 2 classes left. He has earned straight A’s. Most of his credits will not transfer and he owes around $80,000 in student loans,” said the frantic blog poster. “Please, what can we do? I am begging for advice. I can’t believe this is happening!”

Several other posters to King’s blog also expressed outraged and frustration concerning ITT’s closing, and the Department of Education’s lack of answers concerning the possibility they may be on the hook for thousands of dollars in student loan debt without a degree.

“Now that I went from federal to private (student loan) just a month ago – am I out of luck? Is there any options for me?”, a poster named “Diego” asked King. “Don’t tell me I will need to regret a decision I made 30 days before ITT went out of business for the rest of my life!”

Although the for-profit college industry’s business model has been under scrutiny for several years now, ITT troubles accelerated in early 2014 after the CFPB filed a lawsuit against the Indiana company, accusing the for-profit college chain of predatory student lending. The Obama administration then alleged that ITT exploited its students and pushed them into high-cost private student loans that were very likely to end in default.

“ITT marketed itself as improving consumers’ lives but it was really just improving its bottom line,” said CFPB Director Richard Cordray. “We believe ITT used high-pressure tactics to push many consumers into expensive loans destined to default. (Our) action should serve as a warning to the for-profit college industry that we will be vigilant about protecting students against predatory lending tactics.”