The for-profit technical Institute ITT is one of the latest institutions in its category that has fallen on hard times due to stricter government regulations, tighter scrutiny, and greater oversight of the schools in the for-profit industry.
ITT has approximately 130 campuses in 38 states of the U.S. and is owned and operated by ITT Educational Services, Inc., a publicly traded company headquartered in Carmel, Indiana.
It primarily provides career-focused degree programs for a large number of students throughout the country.
ITT recently reported that it had received a letter from the government demanding $44 million to cover potential obligations that might arise, such as student refunds.
The department cited increased risks in ITT’s educational offering as the reason for the latest and new demand.
The call is part of a set of woes that has now bedeviled the institution as it seeks to press the survival mode button.
The current situation of the school reminds one of the dire straits of Corinthian College another for-profit educational institution which folded recently because its operations was found wanted under greater government scrutiny.
In April, the Accrediting Council for Independent Colleges and Schools (ACICS) told ITT Technical Institute that its schools had not demonstrated that they met certain standards.
ITT said it believed that the schools were in compliance, but acknowledged that if the schools lost the accreditation, they would lose access to government loan programs.
As a result, the company said in a regulatory filing, “we likely would not be able to continue to operate our business.”
About 80 percent of ITT’s cash revenue last year came from the Education Department.
ITT is said to enroll nearly 45,000 students who annually receive more than $600 million in federal student aid.
The fact is the school is currently facing an uphill task in recruiting students and with the negative press reports its cause is certainly not helped.
Additionally, there are three separate government lawsuits alleging fraud filed by the federal consumer and securities regulators and the Massachusetts attorney general.
Its net income last year reportedly fell to $23.3 million, a 92 percent drop compared with 2011.
ITT is listed among the for-profit schools that have saddled students with a tremendous amount of debt. It is reported that some 191,000 former ITT students cumulatively owed more than $4.6 billion on their federal loans as of 2014.
Furthermore, it is reported that 51 percent of former ITT students whose loans came due in 2009 had defaulted in the following five years. The 2009 cohort also saw their cumulative balances rise 1 percent by 2014.
By comparison, former New York University students whose federal loans came due in 2009 had paid down 34 percent of their debt after five years.
Nigel Belle, Readers Bureau, Fellow
Edited by Jesus Chan
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