ITT Technical Institute shuts down, leaving 40,000 students in limbo
on September 16, 2016
Students in Oakland were among thousands nationwide who found their dreams postponed last Tuesday, when one of the country’s largest for-profit technical colleges, ITT Technical Institute, closed its doors.
The company ceased operations at all 137 of its campuses on September 6, after being subject to multiple state and federal investigations over its financial practices. ITT Tech enrolled over 40,000 students nationwide at the time of its collapse. The institute offered Bachelor’s and Associate degrees in programs including engineering, accountancy, law, management and information technology, and an online Master’s degree in business administration.
ITT Tech was first subject to heightened financial oversight measures by the U.S. Department of Education in early 2014. After the institute’s accreditation was put under threat this year, those measures were expanded in June, 2016, due to “significant concerns about ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students,” according to a press release from the department at the time. Additional restrictions were imposed on August 25, twelve days before the company announced it would no longer be operating.
The company was also under investigation by the Department of Justice last year to determine whether it had contravened the Federal Claims Act, in an investigation which focused on whether ITT Tech staff knowingly submitted false statements in violation of the Department of Education’s Program Participation Agreement regulation. The agreement outlines a school’s responsibility in administering federal funds, such as financial aid. In 2015, ITT reported it sourced about $580 million of its total revenue from financial aid.
In a statement, ITT Tech staffers blamed the Department of Education oversight measures for the sudden closure of its campuses. “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 effected,” they wrote.
ITT Tech representatives were not available to comment; all calls to the company’s Oakland campus and national headquarters went to voicemail.
“I just knew something was wrong the whole time,” said Sho-moe Pina, an electrical engineering student at the Oakland campus. Tuesday would have been the final week of his second semester at ITT Tech, but Pina said his suspicions about the state of the company led him to stop attending classes in August.
Four months earlier, the institute had been told that its accreditation was in jeopardy after investigations into its practices were brought to the attention of its accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS.) On April 20, the ACICS issued the company a Show-Cause Directive Letter requesting information to establish why it should continue to accredit the institution in light of alleged breaches of ACICS standards. In particular, the letter highlighted that civil investigation demands from 19 State Attorney General Offices were still unresolved.
According to Pina, ITT Tech staff alerted students that the institute’s accreditation was at risk, but told them not to worry. “That was when I was like, ‘I need to pull out because I know that something ain’t right,’” Pina said.
In June, the threat to the institute’s accreditation triggered oversight measures from the Department of Education. The department required ITT Tech make money available to cover losses incurred by the government if the institute was to collapse and its students seek federal loan forgiveness.
On August 25, the Department of Education imposed additional restrictions, due to “the continued risk to students and taxpayers,” according to information published by the department. These additional restrictions included forbidding the enrollment of any new student who relied on federal loans or grants. Less than two weeks later, ITT Tech was out of business.
The Department of Education estimates up to $500 million would now be needed from the government if all ITT Tech students sought forgiveness for their loans.
Some students in Oakland, along with many across the country, overlooked the institute’s accreditation difficulties and ongoing legal concerns as they focused on earning their diplomas. Jesica Salinas wanted to follow in her father’s footsteps, and was studying for an associate degree in electrical engineering. “It’s always been my dream to go to ITT Tech,” she said. “Once I got hold of one of the reps that worked there I really connected with her, and I was convinced to come in and sign up.”
While she described the teaching at the Oakland campus as “phenomenal,” she said she felt the company “cared more about getting students to apply for these loans” than of their welfare or success in school.
Like many ITT Tech students, Salinas held down a job while completing her studies. She was at work on Tuesday when she heard class was cancelled. She said the news was devastating. “Depressed, I feel very ill, I feel like I’m back at square one,” she said of her mental state last week.
A letter from the US Secretary of Education, John B. King Jr, told students that imposing additional oversight on ITT Tech was “a difficult choice,” but one which the department felt necessary to protect students and taxpayers from “potentially worse educational and financial damage.”
King urged students: “Whatever you choose to do, do not give up on your education.” The letter recommended students find out whether they are eligible for federal loan forgiveness, or consider transferring their credits to another school.
Tamika Brown, interim assistant vice chancellor for enrollment management at the Peralta Community College District, said Peralta’s four East Bay colleges will be able to accommodate all ITT Tech students who may be thinking of transferring to similar programs there. “What ITT Tech’s closure means for us is that we have an opportunity to once again serve students within our community,” she said.
Salinas said she has already been in contact with competitor DeVry University and other local colleges to investigate her transfer options, but her situation was still unclear. “I just have a fear that everything is going to come crumbling down again,” she said.
And students like Pina, who say they sought higher education as a way to pursue their dreams, feel they now face locked doors.
“I was living homeless for the first semester, because I was dedicated to this new future. I was living out of my car. It was crazy,” said Pina.
“Now,” he said, “we have nothing.”
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