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The U.S. Department of Education said Thursday that ITT Educational Services – which is the parent company of ITT Technical Institutes – can’t use federal financial aid to enroll new students anymore. It’s the latest in the department’s move to assert closer regulation on for-profit colleges.
This is bad news for ITT: Of the school’s reported earnings last year, over 80 percent came from federal aid. The Feds also told ITT it has to set aside more than twice as much in cash reserves than it currently has on hand. That’s because the DOE doesn’t trust the school’s financials. Ben Miller with the Center for American Progress said that requirement might spell the end for ITT.
“I would be very surprised if ITT was able to find the money the department is requesting,” he said. “If you look at it, basically they have to come up with about $153 million in 30 days. And normally, if I was a for-profit college, I would find this money by enrolling and recruiting new students.”
ITT can’t do that. Miller said that ITT is not the only for-profit college that’s in trouble. They’ve all seen decreases in their enrollment, but he said it’s probably the worst off because it’s currently facing more legal action than any of the others. Nineteen state officials are investigating ITT, claiming that they falsify job placement numbers and use unfair marketing and recruiting.
The vast majority of the roughly 40,000 at ITT campuses get federal aid. And the DOE knows this, so it put out a guide for current students.
There are a few options: Students can continue their courses at ITT if they assume they’ll stick around; they can transfer credits to a new school if that new school is willing to accept those credits and then they can finish their education there; or they can press pause and wait to see what happens.
If students just enrolled but haven’t started classes yet, they can’t start in the fall using federal financial aid.