IIT Educational Service Inc, will be ceasing all academic operations at all of its more than 130 ITT Technical Institutes permanently after almost 50 years of valuable services. The Carmel, Indiana based company has eliminated more than 8000 employees. The Company in a prepared statement said that the actions of and sanctions from the U.S Department Of Education have forced to cease operations of the IIT Technical Institutes and will not be offering their September quarter.
The U.S. Department of Education forbid ITT Educational Services Inc. from accepting any new students receiving federal financial aid. It also imposed financial sanctions which required the schools’ owner to boost its cash reserves by $153 million to cover potential damages to taxpayers and students.
In recent years, it has been witnessed that ITT has increasingly been the subject of state and federal investigations and this year it has twice been found out of compliance with its accreditor’s standards, according to the Department of Education.
Students who are currently enrolled at IIT Tech could stay enrolled with the hope that the school would close and they would become eligible for a closed school discharge. They could also choose to withdraw from IIT Tech and enroll in a different school but potentially give up the opportunity for loan forgiveness if they transferred their ITT Tech credits or withdrew more than 120 days before the school officially closed.
Each and every option presented serious risk for students, and the closed school discharge created a perverse incentive for students not to try and complete their education elsewhere. To spare the students of this situation the Department of Education seemed to want to force a shutdown of the school as quickly as possible which it did eventually.
It demonstrated its ability to bring down the school in a matter of weeks. It required IIT Tech's parent company to post a letter of credit worth $153 million on top of the $94 million the school had already posted in order to provide a buffer against closed school discharges. The department also forbade the school from enrolling new students on federal student aid which was too much for the school to survive.
IIT Tech has been receiving substantial taxpayer subsidies in the form of Pell Grants and Student Loans so Department of Education was perfectly reasonable while attaching such conditions.
Closed school loan discharges from IIT tech will amount to $485 million and only a fifth of which will be covered by the school's collateral. Presently only current students and recent dropouts are eligible for discharges which could change.
Questions are being raised whether The Education Department surveyed before extending billions in taxpayer-backed loans to ITT Tech in the first place. It held many warning signs of a poor quality institution which included aggressive recruiting tactics, high dropout rates, low loan repayment rates, grade inflation, and a large percentage of revenue derived from government subsidies. The school’s accreditor has green-lighted the accreditation of many other poor-quality schools. The school's main virtue is the age which has existed since 1969 during its journey down these years it has failed living up to its standards.
The school in a statement said that the action of their federal regulator to increase the surety requirement to 40% of their Title IV Federal Funding and placing the schools under "Heightened Cash Monitoring Level 2," forced them to conclude that they can no longer continue to operate their ITT Tech campuses. They lack intention of closing their institutes prior to the sanctions and called DOE's action a lawless execution.
The statement read that despite their ongoing service to the nation's employers, local communities and underserved students, these federal actions will inevitably lead to the closure of the ITT Technical Institutes without any opportunity to pursue our right to due process,” the statement read.
U.S. Secretary of Education, John B. King Jr., said the schools accrediting agency’s significant concerns about ITT’s administrative capacity, organizational integrity, financial viability, and ability to serve students, forced the shutdown.
Costar reports they have leased 112 facilities, own 42, and have leases on six campuses no longer in use that expire by January 2017. It also owns its 43,000 Sq Ft headquarters. Its facilities range in size from about 10,000 to 58,000 square feet.
Latest posts by CREHQ (see all)
- The Best Canadian Markets for Commercial Real Estate - April 11, 2018
- Map of 2018 Big-Box Store Closings - April 6, 2018
- Massive New $350 Million Park Set For Tulsa - September 20, 2017