Another for-profit college in trouble: ITT Tech sanctioned by government

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.

VFW recently widened the scope of its need-base emergency grant program of $5,000 for student veterans affected by school closures like the one facing ITT, Gallucci said.

In a release announcing the ban, U.S. Undersecretary of Education Ted Mitchell wrote that the decision was the cumulative result of multiple state and federal investigations conducted over the past year and at least two instances where the university was found out of compliance with accreditation standards.

ITT also is being ordered to pay the department $152 million within 30 days to cover liabilities in case it closes, and the company is barred from giving pay raises or bonuses to its executives.

Ben Miller, the senior director for postsecondary education at the Center for American Progress, said the Education Department’s timing likely saved many new students from starting classes at colleges that eventually would close anyway.

The company also will face increased financial oversight.

“Our responsibility is first and foremost to protect students and taxpayers”, U.S. Secretary of Education John B. King Jr. said during a phone call with reporters. The consumer watchdog has accused the company of providing zero-interest loans to students but failing to tell them that they would be kicked out of school if they didn’t repay in a year.

ITT will be able to continue collecting aid from its current students, but the Education Department said it was already taking steps to prepare students to transfer if ITT goes bankrupt.

Officials also handed down a series of other restrictions, noting that ITT had failed to address the concerns of its accreditors, which included its financial stability, administrative capacity, and student achievement.

Those actions come on top of an earlier move to slow down student-loan payments from the government to ITT, which the department described as a precaution “to ensure that ITT is handling its finances properly”.

The government has responded with increased its financial oversight over ITT.

Government programs are in place to forgive loans listed under Title IV, which are federal student aid loans and grants, if students prove they were deceived by illegal or deceptive recruiting practices. The federal student aide announcement page plans to post all updates on loan developments. It also said that accepted students who haven’t started classes yet also can not use federal financial aid at ITT schools. Several state attorneys general have sued the company, and the Securities and Exchange Commission in 2015 charged that ITT concealed information from investors about the poor performance of the company’s in-house loan program. According to the department, ACICS questioned ITT’s compliance with standards such as financial stability, management, record keeping, admissions, recruitment standards, retention, job placement and institutional integrity, in an August 17 letter sent to the department.