On August 26, an emergency decision was announced by the for-profit technical institute, ITT Technical Institute, which stated that its California campuses would no longer accept new students who received federal financial aid. Much to the dismay of those in the technological field, ITT has recently been in hot water for misconduct and failure to meet several standards, especially on its recruiting, marketing, and accounting practices.
As the Obama administration began to target for-profit colleges, such as the Corinthian Colleges chain, which was cut from federal aid in 2014, the ITT chain was closely observed for its treatment of its students. The U.S. Department of Education stated that some costly degrees led to earnings lower than those of high school dropouts. In April, ITT was sued by a Massachusetts attorney general, who claimed that it “misled students about the quality of its programs…[and] pushed students into high-cost private student loans…” As ITT was late to submits its annual report of its finances to the government, the government began to keep a close eye on the chain.
As the institute’s ability to operate is currently in question, the department placed restrictions on the acceptance of new students. Under the United States Department of Education, California placed this ban on its 15 campuses in the chain, which may affect the output of technological advancements in our society and prevent students from getting the education they deserve.
According to KCRA, the institute has been ordered to pay the department $152 million within 30 days to “cover liabilities in case it closes,” as students may make claims that they were “misled by the school’s marketing efforts.” The department has placed several restrictions, especially on the finances that come in and go out of the institute, such as pay raises or bonuses. The department also stated that ITT must increase its reserves from $94.4 million to $247.3 million, and in case it closes, ITT has to provide a letter of credit for the students who have already been attending the school to help them finish their programs at other colleges.
“Looking at all of the risk factors, it’s clear that we need increased financial protection and that 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 student aid funds,” stated the Education Department Secretary John B. King Jr.