ITT Technical Institute has shut down all of its campuses, leaving 35,000 students stranded at the beginning of the academic year.
In early September, the chain of for-profit technical colleges closed all 130 of its U.S. campuses after the company was banned from enrolling new students who use federal financial aid. The U.S. Education Department had deemed the school a risk to both students and taxpayers. Several states also cut off ITT from receiving state financial aid.
ITT was already under pressure from state and federal authorities because the school had failed to meet basic standards, and was accused of encouraging students to take risky loans while misleading them about the quality of the school’s programming.
In April, the school’s accrediting institution, the Accrediting Council for Independent Colleges and Schools (ACICS) issued a letter to the Department of Education indicating that ITT could not meet its standards. In August, ITT’s participation in federal student programs was restricted, and the closure followed shortly afterward. The education department ordered ITT to pay $152 million to cover student refunds and other liabilities.
ITT had also fallen under scrutiny because its programs (some of the most expensive in the country) were considered overpriced given the expected salaries its graduates typically received. Critics claim that the school was pushing students into high federal loans, and then providing a sub-standard program that left them in lower paying jobs than would otherwise justify such high debt. Massachusetts filed a lawsuit against ITT in April for what it characterized as abuse sales tactics.
Tens of thousands of current ITT students have been left with the double dilemma of not being able to complete their degrees and possibly being saddled with heavy student loans that may or may not transfer. Those students are being encouraged to contact local community colleges and other technical colleges to discus transfers.
ITT has agreements in place with a number of community and technical colleges around the country for student transfers. More information about those schools can be found here. However, some of those schools – like the University of Phoenix and Devry – have faced the same type of criticisms leveled at ITT. Another college on the list, Ashford University, was recently fined by the federal government for financial aid violations.
ITT’s website includes information about obtaining transcripts and other documentation. The Department of Education also set up a website to help current students.
Students who enrolled at ITT within the last 120 days can apply to have their federal student loans erased, which will cost taxpayers nearly $500 million. If students transfer to another program, they would not be eligible for the program (which is referred to as the closed-school discharge option).
For-profits in the crosshairs
The Department of Education has increased efforts to halt unscrupulous recruitment practices by for-profit colleges over the past several years. Many of these schools, which receive billions in federal student aid, have been accused of misrepresenting student success rates and placement rates. The schools have also been under financial pressure after steep declines in enrollment over the past several years.
ITT, like many other technical and community colleges, primarily served lower income students. The Consumer Financial and Protection Bureau (CFPB) outlined a number of student complaints in a lawsuit filed against ITT, including exorbitant tuition rates and an increased risk of student loan default; pressuring students to accept large privately-funded loans; poor job prospects; and lower educational standards, which resulted in other colleges rejecting transfer credits from the school.
ITT students paid between $45,000 and $53,000 in tuition for an Associate’s degree (the average cost of a similar two-year degree in the U.S. is $9,888 including room and board, according to the National Center for Education Statistics). Compounding the issue, ITT’s job placement rates after graduation were very low – roughly 50 percent or less, depending o the program. ITT touted much higher placement rates by padding the numbers with jobs unrelated to the actual field of study.
The Department of Education has also recommended revoking the recognition of the ACICS, which primarily works with for-profit colleges. ACICS previously maintained accreditation of Corinthian Colleges Inc., which declared bankruptcy last year after it was the target of federal and state lawsuits charging that it defrauded students. According to the department, ACICS had failed to address widespread placement rate falsification by career schools.
Technical and community colleges have provided a valuable service to lower-income students, and students who want to learn a trade without having to complete Bachelors programs that require unrelated coursework. For students, the key is to carefully evaluate the program prior to enrollment.
According to Dan Poeschel, associate dean of transportation at Fox Valley Technical College in Wisconsin, students should make sure the program is accredited by a reputable accreditation agency, and make sure the program of study fits their needs. (ITT does not operate any campuses near Fox Valley Technical.)
“Accreditation is the biggest thing,” Poeschel says. “We’re accredited through the Higher Learning Commission, for example, which just about every college in the state goes through.”
Even more importantly, prospective students should speak to alumni and employers in the field to get a better idea of the value of the degree. Hiring managers generally view degrees and certifications from some institutions as more valuable than others, which will affect how likely you are to actually get a job after obtaining the degree.
“There are some out-of-state programs that students would go to, and then when they returned the companies would say, ‘Sorry, you went to the wrong school,’” Poeschel says. “Employers are the best ones to talk to. See where they want you to go.”
Tuition rates are another consideration; they should generally be comparable to similar degrees at traditional colleges (or at least not significantly higher). Given recent efforts by state and federal regulators, it would also be wise to check whether or not the school is currently the subject of an investigation or lawsuit.
