For-Profit Education Giant ITT Tech Shuts Down

In late August, when the government barred ITT Tech from enrolling new students who depended on federal financial aid, analysts said it was a "death sentence" for the nation's largest for-profit chain school.

Now, ITT has taken its last breath -- on Sept. 6, ITT announced it was shutting down, blaming the federal government's decision for leaving thousands of students hanging just as the fall semester was set to begin, the Los Angeles Times reported.

ITT Tech had been in trouble for a while, with several concurrent federal and state-level investigations launched after accusations that the company mismanaged funds and provided poor value to its graduates, many of whom struggled to find jobs after graduating.

But students say the college told them not to worry.

"Two quarters ago there were rumors about the school having problems, but they told us that anyone who was already a student would be allowed to finish,” Leon Wiggins II, a student aiming for a degree in cyber security, told the Times.

“Am I angry?” he said. “I'm like angry times 10 million."

In addition to disrupting the plans of some 35,000 students who won't get to continue classes as expected, 8,000 ITT Tech employees were laid off, the newspaper reported.

The federal government's cooperation was so crucial to the continuing success of the company because 68 percent of its revenue -- equal to about $580 million in 2015 -- came from the government by way of financial aid, an earlier Indianapolis Star report noted.

Department of Education officials are attempting to make the shutdown less painful for ITT students by encouraging community colleges to accept credits earned by transferring former ITT students, the Los Angeles Times reported. Students who left ITT within the past 120 days can have their federal loans forgiven if they enroll in another school.

ITT's collapse follows the 2015 shutdown of Corinthian Colleges Inc., another for-profit college giant, as federal officials devoted more scrutiny to corporate schools and their practices.

While they say the shutdown of for-profit schools is better for students in the long run, some of those impacted by ITT's fall weren't happy with the situation. Among them is 27-year-old Niel Smith, who told the Indianapolis Star that he has $30,000 in student loan debt and is now stuck in limbo.

"When I took out those loans, my goal was to get a degree," he said. "It wasn't my goal to stop halfway through and have to pay back something that I have nothing to show for."

Sources: Los Angeles Times, Indianapolis Star (2) / Photo credit: Xbxg32000/Wikipedia

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