ITT Shutdown: What Students Should Do Now

ITT Technical Institutes, one of the largest for-profit colleges in the U.S., shut down Tuesday, stranding about 45,000 students and 8,000 staffers just as fall classes start.

Parent company ITT Educational Services announced the move less than two weeks after the Department of Education shut off financial aid funding for new students enrolling at the troubled college, which offered career-focused certificate programs or associate degrees at 136 campuses and online in fields such as nursing and IT.

The shutdown has been a long-time coming. ITT, which has been in operation for 50 years, has been under scrutiny by federal and state regulators for fraud and abuse for several years and is the target of numerous lawsuits. Charges include that ITT misled students about job placement prospects and lied about student loan default rates. ITT’s enrollment has dropped from about 85,000 six years ago.

ITT blamed the Department of Education for the shutdown. “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,” according to a company statement.

Consumer advocates say the Department of Education acted appropriately. “ITT Tech has a long record of making big promises to students, only to leave them deep in debt without delivering the kind of quality education they need to succeed,” says Suzanne Martindale, staff attorney for Consumers Union, the policy and mobilization arm of Consumer Reports. “We are pleased that the Department of Education has stepped up its oversight of ITT Tech and that students and taxpayers will no longer subsidize this failing institution."

Options for Current and Former Students

While critics of for-profit colleges applauded the shutdown, it leaves current students scrambling to figure out what to do. The Department of Education has set up a dedicated phone number, 800-4FEDAID, and a website for ITT students. There will also be a series of national webinars, starting Wednesday. The Consumer Financial Protection Bureau's student loan ombudsman also posted information on its site. Students who are currently enrolled or enrolled in the last 120 days essentially have two options, according to the Department of Education:

Transferring credits will be difficult, says Debbie Cochrane, vice president of the Institute for College Access & Success. While it’s up to a school to decide, ITT says on its own site that credits are unlikely to transfer. 

Cochrane says even if some credits transfer, ITT students may be better off just starting over. “If you’re three years into a program and you find a school that will only accept a couple of credits, you are probably better off getting your loan debt wiped clean,” says Cochrane. If you do transfer your credits to another college and continue your program of study, you can't have your loans discharged.

For graduates or those who withdrew from ITT a while back, it's a different story. If it’s been more than 120 days since you graduated or withdrew from ITT, you won’t be eligible for the federal loan discharge program. But you could apply for cancellation of your loans under what is known as a borrower’s defense to repayment case if you can prove the school defrauded you. Many nonprofits are providing free information and counseling to affected students at ITT already.  You can find out more at the Student Loan Borrower Assistance Project site at the National Consumer Law Center.

Some community colleges are stepping up to help ITT students. For example, Bucks County Community College in Pennsylvania will hold information sessions for prospective students who want to enroll.

Is Your School Next?

ITT isn’t likely to be the last for-profit school in this situation. Dozens of for-profit schools have been targets of government investigations and lawsuits from students. Last year, Corinthian Colleges shut down. Earlier this year, the Federal Trade Commission announced a lawsuit against DeVry University for allegedly deceiving consumers about the likelihood that graduates would find jobs in their fields of study and would earn more than those graduating with bachelor's degrees from other colleges or universities.

“This puts for-profit schools on notice that they need to focus on educational quality, not just enrollment numbers,” says Martindale. “The collapse of Corinthian, and now ITT, sends the message that no college is too big to fail and that the days of making grand promises to students about helping them get ahead in life can't be built on sand.”

Not all for-profit schools are bad but if you’re considering one, do your homework. 

Look for regional accreditation. Accreditation is no guarantee of the quality of a school. National accreditation groups such as Accrediting Commission for Career Schools and Colleges and Accrediting Council for Independent Colleges and Schools have had their own problems and have not been successful in finding where students are being defrauded. Besides that, many of their board members are from for-profit schools, says Stephen Burd, senior policy analyst of the Education Policy Program at New America, a nonpartisan public-policy institute.

Regional agencies do a better job, says Burd. Check for credentials at the Department of Education’s Database of Accredited Postsecondary Institutions and Programs. It's important to check whether a particular program has the accreditation you'd need, especially if the job you're training for requires a state license, says Martindale.

Understand the costs. Most for-profit schools charge higher tuition than comparable programs at community colleges and public universities yet their students carry significantly more debt. Comparison shop before you enroll and consider less expensive programs at community colleges and public schools.

Check for complaints. A simple Google search with the school name and “complaint” or “lawsuit” is a start. You can check for formal complaints with your local Better Business Bureau and through the Consumer Financial Protection Bureau’s Paying for College site.

Beware a hard sell. School recruiters often pressure students into enrolling. If that happens, you should go elsewhere. "If a school is making a slick sales pitch, promising you a quick and easy path to a high-paying job, think twice," says Martindale.

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