40,000 Students In Limbo, 8,000 Employees Fired As ITT Suddenly Shuts Down

Tyler Durden's picture

The long-running tragic saga of ITT Education Services, which was established nearly 50 ago and operates the ITT Technical Institutes for-profit college chain, finally came to a end this morning with both a bang and a whimper, when it announced that it is shutting down effective immediately, leaving the fate of 40,000 students currently enrolled in limbo, and some 8,000 workers without a job.

The company said the closure is due to an investigation and sanctions by the U.S. Department of Education.

"It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service," the company stated Tuesday. "Effective today, the company has eliminated the positions of the overwhelming majority of our more than 8,000 employees."

As previously reported,  ITT Tech stopped enrolling new students on August 29, just a few days after it was cut off from a significant amount of federal funding by the government. ITT's collapse was catalyzed when the Department of Education effectively killed the company two weeks ago, when it told the company on August 25 that it couldn’t enroll new students who use federal financial aid. The school accused federal officials of forcing the closure and denying it due process. The company has been the subject of state and federal probes for various reasons, including its recruitment tactics, lending practices and job placement figures.

Among the measures imposed, ITT was 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.

In order to have access to federal student loans, schools need to be accredited by a government-recognized accrediting agency. ITT Educational Services was found to be out of compliance with its accreditor’s standards twice this year, according to the Department of Education. Needless to say, for-profit schools tend to rely heavily on federal student aid.

The Accrediting Council for Independent Colleges and Schools recently asked the company for proof of why its accreditation should not be withdrawn or suspended.

ITT's death, while sudden, should not come as a surprise: enrollment has been slipping for a while. In July, the company reported its new student enrollment dropped almost 22% from the same period the year before.

Meanwhile, the roughly 40,000 students currently enrolled now find themselves in limbo: when a school closes its doors, it can leave its students stuck without a degree and massive student loans. ITT"s collapse is reminiscent of Corinthian Colleges, which filed for Chapter 11 bankruptcy protection in May of 2015 in the wake of alleged predatory lending practices and accusations of inflated job placement numbers, leaving about 16,000 students stuck without a degree, and thousands more with huge debts. Some students were eventually able to receive debt relief.

Cited by PIX11, the Department of Education has said that ITT Educational Services’ students could be eligible for a closed school loan discharge, however that process may take years to complete, meanwhile the prospect of earning a college diploma, even if from a novelty school, has evaporated. 

Enrollment in for-profit schools increased in the years following the recession when job growth was weak and people were looking to hone their skills or switch to more in-demand careers.

* * *

The full statement released by ITT is below:

ITT Educational Services, Inc. to Cease Operations at all ITT Technical Institutes Following Federal Actions

"It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service. With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected.

The actions of and sanctions from the U.S. Department of Education have forced us to cease operations of the ITT Technical Institutes, and we will not be offering our September quarter. We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution.

Effective today, the company has eliminated the positions of the overwhelming majority of our more than 8,000 employees. 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.

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. 

For more than half a century, ITT Tech has helped hundreds of thousands of non-traditional and underserved students improve their lives through career-focused technical education. Thousands of employers have relied on our institutions for skilled workers in high-demand fields. We have been a mainstay in more than 130 communities that we served nationwide, as well as an engine of economic activity and a positive innovator in the higher-education sector.

This federal action will also disrupt the lives of thousands of hardworking ITT Tech employees and their families. More than 8,000 ITT Tech employees are now without a job – employees who exhibited the utmost dedication in serving our students. 

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. 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.

These unwarranted actions, taken without proving a single allegation, are a "lawless execution," as noted by a recent editorial in The Wall Street Journal. We were not provided with a hearing or an appeal. Alternatives that we strongly believe would have better served students, employees, and taxpayers were rejected. The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.

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."

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dogismycopilot's picture

So they were, like, literally peddling fiction.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) dogismycopilot Sep 6, 2016 9:29 AM

They were not part of the Central Planning favored College Industrial Complex where unions and statisit indoctrination reigns. 

Central Planning - Must... Shut... Down...

Let what's left of the free market work.  If people want to pay this organization for their services, let them.

pods's picture

So what is that Fat Broad Sally Strothers gonna pimp now?

I got pissed when they dropped "gun repair" from their offerings.

pods

NoDebt's picture

Nothing that more H1B visas can't fix.  

BaBaBouy's picture

Omaba's Strong Economy Strikes Agian ...

War On Our Young Trying To earn A Living ...

mtl4's picture

Had they employed a few skull and bones society folks all would have been fine but NOOOO, they wanted to do it the hard way!

SafelyGraze's picture

Gross!

Cover your cough!

https://www.youtube.com/watch?v=gvMwIjbTKRk

hugs,
the state of oregon 

BuddyEffed's picture

Obama care, pensions, and the other varied cartel like interests are pricing out the weak business models.

CheapBastard's picture

ITT used to offer some great courses back in the 1990's. My neighbor's son went there to learn a trade because he hated college and did quite well. One problem now is students may not have the same drive or aptitude. Many thing ITT will be easy but many of these trades are very difficult and alot of studying is required, something many kids don't want to od now.

They think just by sitting in class they're going to learn and get 'smart"... "everybody's a winner" is the 21st century mantra and "my Johnny ( or Leroy) can do no wrong." They go home and watch TV or hang out at the mall. I watch the young Asian skids down my block who come home after piano or vilin lessons and study for 4-5 hours a night. They play volleyball at school so they're not total nerds. One scored 2240 on the freaking SATs and the boy scored 2190.

Parents who blame schools for their kids' failure are largely to blame imo. Habits and behavior begin at home. Schools and crappy teachers are only part of the problem.

Basically, our entire western culture has been dumbed down from the top on down. I mean, look at our last few presidents, for example.

Shocker's picture

How is that recovery treating you... Sad sad

Layoff List: http://www.dailyjobcuts.com

-

DownWithYogaPants's picture

What will I do?  I was depending on  International Testicle Tech to get a new jobs.

MANvsMACHINE's picture

https://www.itt-tech.edu/

If you look at their website, they are not taking new students so just tell them that you are an old student.

archon's picture

That "pop" you just heard, may be the beginning of the higher education bubble popping.

PTR's picture

Just wait until a dollar crash/global financial reset.  Price discovery 101 begins.

bleu's picture
bleu (not verified) PTR Sep 6, 2016 8:17 PM

The CURSE is relentless. http://wp.me/p4OZ4v-3z

willwork4food's picture

You should see their stock value!

rich1657's picture

Not only here but also at approximately 5000 other alleged institutions of learning.

californiagirl's picture

Zhifeng Zhang did pay the requisite potection  contribution to the Clinton Foundation

StackShinyStuff's picture

Somewhere, the owners of an asset-backed security stuffed with soon to be worthless loans tied to this place suddenly screamed out in terror and were suddenly silenced...

SmittyinLA's picture

They lost federal student loan eligibility, those are taxpayer insured loans.

Only a matter of time before the ripoff of state universities get noticed.

BaBaBouy's picture

"One problem now is students may not have the same drive or aptitude."

Could Be... Gov' Money, Food Stamps Soooo Much Easier ...

Gold Pedant's picture

US Department of Education -- now THERE'S an oxymoron.

 

I love how the feds have snatched up the purse strings like a thief running off with a woman's bag in the middle of the crowd. If you don't accept federal Financial AIDS, your institution doesn't stand a chance. If you do, you are at their mercy. Students are more or less forced to use Financial AIDS because of how the rules are written these days. The trickle-down urine effect here is obviously that the government dictates what these naive kids see, hear, and feel. The government wins, the bankers win, and everyone else loses.

 

No Department of Education? Let the market decide the real winners and losers. See ITT or one of the even worse for-profit "schools" exist in the real world?

dunce's picture

I took one of their courses back in the early 70s and it was very good and my employer paid for it. They lost their way when they got involved with the governnment student loan program. This affected the kind of students they had and opened them selves up to exactly this kind of attack. The colleges do not like the competion and the opportunity to avoid leftist indoctrination along with a practicle education. The instructors do not belong to the liberal professoriate and have real world experience.

Gaius Frakkin' Baltar's picture

Or maybe the jurbs aren't there...

You do realize shit is worse than the 90s right?

VinceFostersGhost's picture

 

 

established nearly 50 years ago

 

YES WE CAN!!!!

shamus001's picture

@CheapBastard Your absolutely right.  I am an Engineer, and my daughter just entered college last year.  For the past three years I've been telling her "The world I enjoyed will not be yours; there will be a lack of jobs and the competition for those jobs will be heavy!  If you want a "decent" future during the dark financial times ahead, your going to have to be BETTER than everyone else."

She is an A student the past 3 years - from a B student. (always smart, but began fooling around the last quarter)

As for ITT.  Part of me is real sad, because this school would be boom in right now if the economy had collapsed already.  Now WHEN it collapses, there will be one less place for the youth of the future to learn practical skills.

Now that I've cuddled them, heres the other side of the coin- ANY SCHOOL THAT EMPLOYES PEOPLE TO THE EXTENT OF 20% OF THEIR ENROLLMENT IS FINANCIALLY UNSTABLE.

40 thousand students and 8 thousand employees!!  Wholly $H!T! Talk about hemmoraging cash flow!  Walk into Central Washington University and there must have been 2-300 students for every faculty member I had seen. (and some of thsoe might have been volunteer students who are juniors/seniors)

FOR PROFIT is the only way to go.  Competition in colleges.  Get rid of the damn loans and college tuition would be seriously lower! The rest of us who work for a living could afford to put our children through it.  FREE RIDE children will ALWAYS perform poorly- BECAUSE THEY HAVE NO SKIN IN THE GAME. (I remind my daughter of the debt load she will be facing when she gets out- which cannot be purged in bankruptcy- it works!  She's actually studying, and not partying)

pods's picture

Yeah but student loans are shouldering the load for increasing our debt.

And that my friends is the number one goal for the system.

Debt, expanding exponentially. Only way for the system to survive.

pods

Occams_Chainsaw's picture

A good percentage of those employees were part time.  I mean really part time.  I was asked to teach a class once.  Just 3 nights a week for an hour or so plus a few hours of other time....so like 5-6 hours a week.  Paid for crap as well.

delacroix's picture

a lot of those employees are (were) h1b

carlnpa's picture

Many/most of the employees were part time, think guest teaching positions, no benefits.

I had talked to them about teaching.

Government needs you to pay taxes's picture

Many public schools are little more than gold-plated athletic facilities plus a side helping of 'smart-stuff infotainment'. 

Yukon Cornholius's picture

Shut up! Ow My Balls is coming on soon!

HughBriss's picture

+1 for idiocracy reference.

 

 

:D

a Smudge by any other name's picture

The pay scale has taken a beating. IT was synonymous with God for a while there but no longer.

Backin2006's picture

The purpose of a modern Western, state-funded education is indoctrination into 'liberal' values: it is not about the truth setting you free. Hand your kids over at your peril! Western educational institutions are only interested in your usefulness as an element of social disruption. Western educationalists schooled in John Dewey are bent on the destruction of society, civilisation, heritage, wisdom, received knowledge, organised religion, respect for previous generations, respect for elders, and direct instruction. It Newton praised standing on the shoulders of giants, this generation insists on making all the mistakes for themselves, then blaming it on others. We are insular, narcissistic and disillusioned. We have lost our belief.

Those that care least about the interests of the people seem to have the most control over the levers of power and influence: big banks, big ag, big food, chemical manufacturers, foreign religious foundations, globalists, banksters, usury merchants, secret societies, stupidity agencies, the military-industrial corporation etc. etc.

If a President who really cared about the people were to be elected, his or her first action should be to do what Putin did back in 2000. Everyone has forgotten this moment today, but it is the reason that Putin is still in power now. Putin called all of the oligarchs into a room and told that they can keep their ill-gotten gains, but if they so much as lifted a finger to get into politics, he would confiscate it and return it to the Russian people. They few that have tried, e.g. Khodorovsky, are currently in prison.

Your Gates, Waltons, Hewlets, Packards, Soroses and the huge number of multi-billion dollar foundations need told the same thing, "You need to stop wrecking the West with your emasculating liberalism." Let them eat cake, but just keep the cake out of Washington, London, Berlin and so on.

JohninMK's picture

I agree totally with the strategy that you describe that Putin adopted that got Russia out of the mire. After the plan you mentioned worked, over the past couple of years he has been encouraging those who left with their loot to bring it back, helped by special deals. It seems to be working as due to sanctions there is a huge drive for self sufficiency with juicy potential profits in all kinds of businesses from timber product to fish farms, talk about Law of Unintended Consequences. As a result Russian agriculture is now booming, with exports in 2016 expected to be higher than their military stuff.

But Mikhail Khodorkovsky is not still in prison, he was released early from his 9 year prison sentence for fraud in 2013. He and his backer Rothschild are of course stirring it up against Russia in revenge.

buzzkillb's picture

I worked with some very good drafters who went to ITT, and were slowly learning the basics of engineering calculations required for moving up. I still think schooling is important, but it also depends on what you will enjoy doing and if the school gets you to that goal. Having work done on our house fixing all the mickey mouse nonsense tells me there are not enough people doing this kind of work.

firstdivision's picture

...or the fact that ITT Tech sucks and are a joke in the industry anymore.  They may have provided quality education in the past, but I'm sure those days passed long ago. ITT preped people for the jobs that H1B's do now, and H1B's are cheaper than ITT Grads.

zagzigga's picture

I used to think that ITT provides low cost vocational training courses that help people to get decent jobs. I wonder what went wrong. Did the fake "strong US economy" make it near impossible for all these trained machinists, lab technicians, etc to find jobs and cause ITT to fudge its job placement numbers? 

johngaltfla's picture

This is what happens when an out of control Dept of Education is given a paramilitary, own prosecutorial regulatory legal team, and the power to impose decisions wihtout due process or judicial review.

ITT and any other private learning institution that refuses to work within the DoE guidelines will be harassed, and ultimately shut down. Many of the students at ITT received grants because they were from the poorest of cities or laid off during this "booming" economy. Now the Feds are selecting winners and losers and because ITT didn't have a fleet of Ivy League lawyers working for both them and the Feds, they were doomed in this battle from the start.

Next up:

Regulating internet content and discussion boards in the name of "public safety."

tmosley's picture

So, when will the Feds pull the funding for the rest of the academic complex? They all lie about job placement statistics, not to mention starting salaries.

Doom Porn Star's picture

They probably threw thew that mic away after she spewed all over it...

Dick Gazinia's picture

Damn it - Somebody in the administration must have said something less-than-enthusiastic about "Climate Change Science"

BaBaBouy's picture

THIS Is Exactlty WHY We Need President TRUMP ~~~

beemasters's picture

To restart Trump University??? Please say no.

"In 2013, Florida Attorney General Pam Bondi considered investigating fraud allegations against Trump University but ultimately decided not to pursue the case. In 2016, the watchdog group Citizens for Responsibility and Ethics in Washington noted that the Trump Foundation broke IRS rules by donating $25,000 to Bondi around the time she was considering the investigation. Donald Trump paid a $2,500 penalty tax after this was discovered"

https://en.wikipedia.org/wiki/Trump_University

Bollixed's picture

Meanwhile, Hillary's killing spree continues but any fault the Donald has is multiplied and magnified in order to do what? Show how Hillary is the better choice? Another epic fail and double standard example. Trump tries a lot of stuff and has a few failures. That makes him human, and I'd like to see a human hold the office for the first time in decades.