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Embattled for-profit college chain with 40,000 students is shutting down

Laura Brozek, a former director of recruitment for ITT, describes the recruiting methods used to get students to enroll. CREDIT: AP/J. SCOTT APPLEWHITE
Laura Brozek, a former director of recruitment for ITT, describes the recruiting methods used to get students to enroll. CREDIT: AP/J. SCOTT APPLEWHITE

Embattled for-profit college company ITT Educational Services, Inc. is officially shutting down its academic services, the company announced on Tuesday. Most of the 8,000 employees working for the company’s for-profit college, ITT Technical Institutes — which has about 40,000 students attending around 130 campuses in 38 states — will lose their jobs.

The shuttering of the college comes as no surprise. Last week, ITT Tech stopped enrolling students at all of its campuses after the U.S. Department of Education prohibited the company from enrolling students who rely on federal student aid. And although this was the final nail in the coffin, ITT has been dealing with increasing scrutiny of its operations for years.

Last year, the department put ITT on the heightened cash monitoring list for filing its financial information late and the Securities and Exchange Commission announced fraud charges against two ITT executives. The SEC’s director of its division of enforcement, Andrew Ceresney, claimed that the executives “made numerous material misstatements and omissions in its disclosures to cover up the subpar performance of student loans programs that ITT created and guaranteed.”

In 2014, the Consumer Financial Protection Bureau sued ITT for predatory student lending, arguing that the college encouraged students to take out expensive private loans that they would most likely default on. And this year, Massachusetts Attorney General Maura Healey sued ITT for misleading job placement rates.

In April, ITT’s accreditor, Accrediting Council for Independent Colleges and Schools (ACICS) — which was also under scrutiny for providing accreditation to so many for-profit colleges accused of perpetrating fraud against students — finally determined ITT was not under compliance with its standards for recruitment of students, job placement, and myriad other issues.

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ITT is just one of a few for-profit college giants to come under this level of scrutiny from the department, attorneys general, and the CFPB.

Many for-profit colleges are considered predatory because they take so much federal aid — often enrolling many veterans — while insufficiently preparing students for their fields. Students say they struggle to find jobs after graduation, and also say the career offices at these colleges end connections with them immediately after graduation and the schools misrepresent the job placement rates for graduates as they are being recruited.

The for-profit college chain Corinthian Colleges, for instance, shut down its campuses in the spring of last year after receiving a $30 million fine from the department for its misleading job placement rates. One of its colleges claimed that a former student working at Taco Bell was actually working in the accounting field. Only days after, Education Management Corporation announced it would shut down 15 of its 52 Art Institutes campuses.

The company’s announcement raises the possibility of “other parties” pursuing legal recourse.

“We believe the government’s action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again,” the company stated in its press release.

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Students who attended these colleges are pursuing student loan forgiveness and claiming they were the victims of fraud. The department is addressing the issue of student loan forgiveness for for-profit college students who say their colleges committed fraud, allowing students of Corinthian Colleges to finally receive some relief, but it has been a slow process for students weighed down by debt and few job prospects.