The Obama administration’s war on for profit colleges claimed another casualty as ITT Educational Services has been banned from accepting any new students who receive federal financial aid.
The ban is a death sentence for the college.
Department officials announced the action on Thursday amid a series of measures that could threaten the survival of the chain, which has been the subject of state and federal investigations focusing on its recruiting and accounting practices. Company officials did not immediately comment.
Among the measures, ITT has been ordered to pay $152 million to the department within 30 days to cover student refunds and other liabilities in case the company closes. The chain, based in Indiana, is still paying another $44 million demanded by the department in June for the same reason.
The education department also has prohibited ITT from awarding its executives any pay raises or bonuses, and it must develop “teach-out” plans that would help current students finish their programs at other colleges if the chain shuts down.
Under the new measures, current students can continue receiving federal grants and loans.
Education Secretary John King said the government is taking action to protect students and taxpayers following “troubling” findings about the company. This month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
“It simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal financial aid,” King said during a telephone conference with reporters.
If it fails to follow the government’s demands, ITT could be cut off entirely from federal aid, the top source of revenue for most for-profit colleges.
ITT operates vocational schools at more than 130 campuses in 38 states, often under the ITT Technical Institute name. Last year, it enrolled 45,000 students and reported $850 million in revenue.
One of the biggest for-profit chains in the nation, ITT has been under increasing scrutiny from the education department following allegations of misconduct.
How much of a villian is ITT and other for profit colleges? Overselling benefits at for profit colleges is one of the main complaints against them. And over promising employment opportunities after graduation is another sticking point with the Education Department.
There is also the charge that many of these schools exist simply to milk the government of cash in the form of student loans.
But despite all this, hundreds of thousands of students have gotten opportunities for good jobs because of their education at schools like ITT. No doubt there are schools that are little better than scams. But the administration has gone to war against all for profit colleges, largely at the behest of 4 year universities who view them as stealing potential students.
I went to ITT Tech for about a semester. It wasn’t a good match for me, so I ended up at another for profit school that wasn’t exactly a scam, but it was not aimed at the students they claimed to be aimed at. They wanted more advanced students in the tech field and taught to them, and the rest of us sort of floundered and faded away.
But I see what the draw is, especially now as I am, once again, trying to go back to school in hopes of getting a better job than what I’ve been able to get to this point. These for profit schools cater towards people who don’t want to attend a four year college for whatever reason. They are usually rather expensive, but you aren’t spending two whole years taking courses on subjects you aren’t interested in and won’t help you get a job. The for profit schools cut that part of it out, and you can usually get through them in six months to two years, depending on the school and course of study.
With more traditional schools, aside from having to pay for two years worth of fluff courses, they aren’t catered towards people who have to work while they go to school. There are a lot of colleges around me, both traditional and for profit. None of the traditional schools offer full courses of study at night on campus or online. You can take some classes at night or online, but not your entire course load. At some point, you have to go there during the day. And if you have to work while you attend school, like I do, then you can’t go there during the day. And if you are going back to school while working, odds are, your boss isn’t going to help you out. I know when I went to school, my last boss wasn’t giving an inch because my course of study was not my current line of work. So I was always late for school because I couldn’t get out early.
It seems to me, though, that this is a new development. My mother has several degrees and several masters degrees, and she did her entire courses of study at night. And that was a traditional college. So what changed? This was only in the 90s, it wasn’t that long ago.
But if you think about it, that was around when the for profit schools began to get big, and a lot more opened up. So, really, the traditional schools started this themselves. There is a whole line of people out there who want to go to school or back to school, but don’t want to pay for English composition and art history when it has nothing to do with their course of study. And they want to be able to do it online or at night because they still need to work to pay their bills and support their families while they better themselves. Take away a need and someone comes in to fill it. That’s how it works. And until traditional schools realize that not all of their students are 18 and riding off mommy and daddy’s dime, those schools will continues to pop up. As they should.