Home / General / Obama administration essentially puts ITT Technical Institute out of business

Obama administration essentially puts ITT Technical Institute out of business



The Obama administration took steps Thursday that could effectively force the closure of one of the nation’s largest for-profit college chains, banning ITT Technical Institute from enrolling new students who receive federal aid.

ITT, which has about 43,000 students nationwide, is facing accusations from its accreditor of chronic mismanagement of its finances and using questionable recruiting tactics. The company is also under investigation by state and federal authorities.

The Education Department said Thursday it had lost faith that ITT would survive the scrutiny and banned its schools from accepting new students that receive federal loans and grants to pay for the school’s tuition. Such aid provided 68% of the company’s $850 million in revenue last year.

While ITT can continue to collect aid from current students, without a future source of revenue the company would almost surely be forced to close many, if not all, of its campuses, analysts said. Private lenders have largely stopped making loans to students at for-profit schools since the recession. . . .

The move is part of a broader crackdown by the Obama administration on the for-profit college industry, which officials have accused of using deceptive marketing to enroll vulnerable students who go thousands of dollars into debt for low-quality educations.

Last year, Corinthian Colleges Inc., another major for-profit chain, liquidated in bankruptcy after the Education Department banned it from receiving federal aid amid allegations of inflating the career outcomes of graduates. Corinthian officials denied the allegations.

“Millions of dollars in taxpayer money and tens of thousands of students are in jeopardy,” Ted Mitchell, the Education Department’s undersecretary, said in a call with reporters about the move against ITT. “We have both a legal and ethical responsibility to strengthen safeguards in accordance with the public’s trust.”

The government would likely be forced to absorb losses on student loans if ITT closes under a federal law that relieves students of the obligation to repay their loans under such circumstances.

Many former ITT students have also applied to a federal program that forgives debt if they can prove their schools used illegal recruiting tactics, such as running advertisements with misleading statistics on the career success of graduates. The government has forgiven $171 million in student debt owed by former Corinthian students.

It’s also nice to see that Obama’s DOE has some appropriately cynically-minded regulators:

The Education Department also prohibited ITT from giving raises, bonuses or severance payments to its executives. Agency officials say that under federal law, it can impose executive-compensation limits on companies like ITT that enter contracts with the department to receive federal aid.

Oh the humanity! If the Free Enterprise System stands for anything, it’s for the principle that Emergency Golden Parachutes should be funded by the public. In fact I believe that’s actually in the Constitution, somewhere towards the back. (Leave to a socialist to trample on these sacred tenets).

Luckily this kind of thing obviously has nothing whatsoever to do with law schools:

It’s a mere formality. Every five years, the Department of Education renews the ABA’s power to accredit law schools. The June 2016 session before a DOE advisory committee (NACIQI) was supposed to be just another step in the rubber-stamping process. The NACIQI staff had recommended approval. The committee’s three-day session contemplated action on a dozen other accrediting bodies, ranging from the American Psychological Association to the American Theological Schools. Sandwiched between acupuncture and health education, the agenda contemplated an hour for the ABA.

What could go wrong?

For the next several hours, the ABA Section of Legal Education was much to its evident surprise subjected to the — well-deserved — regulatory equivalent of a root canal:

The ABA’s culture of self-interest and insularity has now created a bigger mess. Some NACIQI members favored the “nuclear” option: recommending denial of the ABA’s accrediting authority altogether. The committee opted to send a “clear message” through less draconian means.

The final recommendation was to give the ABA a 12-month period during which it would have no power to accredit new law schools. Thereafter, the ABA would report its progress in addressing the committee’s concerns, including the massive debt that students are incurring at law schools with poor JD-required placement rates.

As one member put it, “It is great to collect data, but they don’t have any standard on placement. What’s the point of collecting data if you can’t…use the data to help the students and protect the students…”

Another member summarized the committee’s view of the ABA: “This feels like an Agency that is out of step with a crisis in its profession, out of step with the changes in higher ed, and out of step with the plight of the students that are going through the law schools.”

The day of reckoning may not be at hand, but it’s getting closer.

See also Deborah Merritt, who provides a link to a complete transcript of the meeting for the S&M crowd.

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  • BiloSagdiyev


    (Edited for a family blog.)

    Discovered this last night: Samuel Jackson’s version of Walter White’s “one who knocks”:

  • Karen24

    Back in the day part of my job was regulating vocational schools like this one. Based on that experience, I conclude that the biggest rip-off in education is in post-high-school vocational schools. While the Right likes to complain about unmarketable degrees in poetry or Latin, those students generally don’t have a lot of debt and can use their BA to get any number of jobs, even though the jobs aren’t likely to be particularly great. In the case of the vocational schools, the entire point is to complete enough classes to pass a licensing or certification exam, and if the student doesn’t complete the course or fails the test, all the time and money has been wasted completely. Completing 95% of a cosmetology course is worthless since the student can’t use anything she’s learned until she gets licensed, and every day she isn’t using her skills, those skills are decaying. Good on Obama.

    • john fremont

      Long time reader /lurker of this blog. I definitely agree with you on technical vocational schools in that they have gotten even more exorbitant in the tuitions they charge. I’m employed in the aviation maintenance field as an avionics technician and there is a dearth of new mechanics and avionics techs coming into the business today. Outside of military trained mechanics who attend these schools with their GI Bill benefits most of the other students are civilian high school graduates who end up not being able to finish due to financial issues. 25 years ago these aviation tech schools were reasonably priced and a graduate could come out and look forward to a decent paying job. Today, there are still very decent paying aviation maintenance jobs available but they are mostly DoD contracts. Business aviation pays well but it that’s because it’s a lot of overtime and travel. Most young people looking to start a family don’t go into aviation maintenance due to the expense of school and the good paying jobs are long hours away from home. Now, the aviation industry is worried about shortages of new maintenance techs.

  • That’s in Article XII of the Constitution specifically.

  • DrDick

    About time they shut down these kinds of operations.

  • Steve LaBonne

    Obama is doing a piss-poor job of being a neoliberal sellout.

    • McAllen

      He didn’t. Even. TRY.

    • LWA

      I attended ITT and majored in “FEMA Camp Counselor” and now all I have is a ton of debt and books on how to run death panels.

      Maybe I can apply for a grant to become a lesbian farmer. I’m a dude, but times are tough and sacrifices have to be made, man.

  • N__B

    The MTA is gonna take a hit. Who'll buy all that ad space on the subways?

    • efgoldman

      Who’ll buy all that ad space on the subways?

      Not to mention the otherwise unsold commercial time that Phil Swift and Flex Seal, Bret and the copper sleeves, and the copper pan lady don’t use?

    • Scott Lemieux

      Has Interboro already gone bankrupt? I think when I first moved to NYC they were responsible for roughly 85% of the MTA’s revenue.

      • N__B

        I’ve lost track but I think they’re still around, along with Metropolitan College (nee Audrey Cohen College) and the School for Practical Philosophy.

        The peak of subway ads was when I was in high school and we had, simultaneously, ads for the proctologist who was known as MD TUSCH and the dermatologist whose actual name was Dr. Zizmor.

  • How the hell did a 9/11 truther get into the NACIQI meeting? (page 219).

    ABA rep Mr. Currier, page 190: “There nothing in our standards that requires yoga rooms, childcare facilities, rock climbing walls, et cetera. ”
    There’s a long way to go.

    • (((Hogan)))

      To be fair, the guy does know something about inadequate legal education.

      • Funkhauser

        Harumph! Barry Currier, rep of the ABA, was dean of one of the most prestigious online law schools out there!


        • efgoldman

          As long as John Yoo has tenure somewhere….

          (Although Ken Starr the panty sniffer is gone from Baylor.)

        • Unemployed_Northeastern

          Irony: the actual head of the ABA Section on Legal Education and Admission to the Bar was once the dean of an unaccredited, online-only, for-profit law school in California that was owned by Kaplan.

    • twbb

      It’s a public hearing; the sad thing is not the he showed up, but that nobody from the public was there to make a rational plea to punish the ABA (I think there was one other guy who was pushing a personal agenda that he tried to vaguely connect to the ABA).

      If I’d known about it I would have invited some of the people on jdunderground.com to show up…

  • Scott Lemieux

    Oh the humanity! If the Free Enterprise System stands for anything, it’s for the principle that Emergency Golden Parachutes should be funded by the public. In fact I believe that’s actually in the Constitution, somewhere towards the back.

    Opposing them is definitely as bad as apartheid.

  • Musashi

    S&M crowd? I take it that’s some sort of lawyering thing, right? I’d google it, but I’m afraid to google it.

    • rea

      S&M crowd? I take it that’s some sort of lawyering thing, right?

      Uh, no, it’s hardly unique to lawyers.

  • Ghostship

    Perhaps they should have stuck to overthrowing governments, they were more effective at that than NED, DNI, IRI, USAID, CIA and George Soros combined.

    • brad

      Not to mention MCI, L&O:SVU, all the MLB NRIs, and Ricardo Montolban.

      • efgoldman

        …all the MLB NRIs, and Ricardo Montolban.

        In fairness, Montalban threw over entire planets.

      • Ghostship

        I don’t see what Mild Cognitive Impairment has to do with overthrowing nation states.

  • spottedtoad

    I did some quick-and-dirty analysis of Trump’s vote share in the GOP primary; within states, you can predict his vote share from 3 of Raj Chetty’s variables on economic mobility taken from IRS data:
    *Places with poorer households in the 80s and 90s (when Chetty’s sample were kids) voted more for Trump.
    *Places where kids who grew up upper middle class in the 80s and 90s did better as young adults in the 2000s voted more for Trump.
    *Places where kids who grew up working class in the 80s and 90s did worse as young adults in the 2000s voted more for Trump.

    So it’s not just the places “left behind by globalization,” it’s places where there’s a fair amount of long-term economic hardship, combined with a divergence between upper middle and working class outcomes (ie, places where college educated people are doing well but nobody else is.)


    In general, that you can get such good fit with such a simple model does suggest that Erik is right that counting out economic explanations of Trump’s rise altogether is just wrong.

    • efgoldman

      Didn’t this belong in another thread?

  • Calming Influence

    ITT Tech, AKA “Close Cover Before Striking School of Quantum Physics and Small Engine Repair”.

  • Awesome! Now if they would take those standards to the charter school grift.

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