Current students face uncertainty with future of national for-profit school in jeopardy
By David Guest
Tacoma Daily Index editor
The Washington State Student Achievement Council ruled Friday, Aug. 26, that for-profit private educator ITT Technical Institute would no longer be eligible to receive state financial aid for students enrolled on on-campus or online courses. The decision follows an announcement by the U.S. Department of Education that ITT students may no longer pay tuition with federal financial aid.
ITT Tech has campuses in Spokane Valley, Everett and Seattle, with the majority of students receiving either state or federal financial aid, according to the WSAC. More than 200 ITT students in the state used federal veterans’ education benefits. The WSAC said in a press release that of the state’s ITT Tech students, 480, or more than half, received State Need Grant aid in 2015-16, while over 90 percent received federal aid.
On Monday, Aug. 29, ITT announced that it has stopped all new student enrollment nationwide after the U.S. Department of Education banned the continuing education chain from enrolling students who use federal financial aid to pay tuition. The company enrolls more than 45,000 students in 39 states.
ITT has been under multiple state and federal investigations since 2014, facing questions over recruiting and accounting irregularities. The Securities and Exchange Commission charged two ITT executives in 2015 with lying to investors to an attempt to hide financial losses. Massachusetts filed a lawsuit this year alleging that the school lied to prospective students about the success rate of students finding jobs after graduation – claims of 100 percent employment were found by the state to be half that, or less.
The U.S. Department of Veterans Affairs released a statement that said the Education Department’s actions do not apply to GI Bill benefits. However, the VA warns that GI Bill benefits used at ITT Tech would not be restored in the event that the school closes before the student finishes his or her program.
The Accrediting Council for Independent Colleges and Schools called out ITT in the spring of this year to make a case with the organization as to why the accreditation granted to the Carmel, Indiana-based educator shouldn’t be removed or suspended. The ACICS claimed that ITT was not in compliance and they believed ITT was “unlikely to become compliant” with accreditation criteria. Accreditation is a condition for ITT to receive federal student financial aid which constitutes 80 percent of of the school’s revenue.
If ITT Tech is forced to close due to lack of accreditation and the resulting loss of federal funds, students who are enrolled at the time of closing (before they complete their program and if they haven’t transferred their credits to another school) may be able to apply for federal student loan forgiveness. Finding an institution willing to accept transfer credits from an unaccredited school is likely to be a difficult task. Former students are still responsible for repaying their loans, even in the event the schools close.
The prospect for loan forgiveness for some students caused the DOE to demand ITT set aside more money to cover the potential loan losses. DOE officials want a cash or credit line of $250 million, but ITT reportedly only has half that amount in a line of credit.
A 2014 report by the Brookings Institute found that ITT had 191,225 borrowers who stood $4.6 billion in debt.
ITT Educational Services was founded in 1969. ITT Tech stock (ESI), which stood at $3.65 per share on March 21, 2016, plunged from $2.25 per share on Aug. 19 to just 44 cents a share Monday, Aug. 29 at the close of the New York Stock Exchange. In 2009, the stock traded at over $100 per share.
Washington ITT students who have questions about state financial aid can email finaid@wsac.wa.gov or call 888-535-0747 and select option 4.
On the web:
U.S. Department of Education
U.S. Dept. of Veterans Affairs
