{"id":55819,"date":"2025-01-29T16:16:04","date_gmt":"2025-01-29T16:16:04","guid":{"rendered":"https:\/\/peraltafinancing.com\/activist\/the-death-of-itt-tech-what-happened\/"},"modified":"2025-01-29T16:16:04","modified_gmt":"2025-01-29T16:16:04","slug":"the-death-of-itt-tech-what-happened","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=55819","title":{"rendered":"The Death of ITT Tech: What Happened? |"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>Less than two weeks after it was slammed with <a href=\"https:\/\/studentactivism.net\/2016\/08\/26\/department-of-education-cracks-down-on-predatory-for-profit-college-itt-tech\/\">stiff new sanctions<\/a> by the Department of Education, and just days before its fall semester was scheduled to start, giant for-profit college chain ITT Tech has closed its doors.<\/p>\n<p>ITT announced the shutdown in a blistering statement, released early this morning, in which it called\u00a0last month\u2019s\u00a0sanctions \u201cunwarranted . . . inappropriate and unconstitutional.\u201d The statement described \u201cthe damage done\u00a0to our students and employees, as well as to our shareholders and the American taxpayers\u201d as \u201cirrevocable.\u201d<\/p>\n<p>The Department\u2019s actions, however, reflected ITT\u2019s <a href=\"https:\/\/www.washingtonpost.com\/news\/grade-point\/wp\/2016\/09\/06\/itt-technical-institutes-shut-down-after-50-years-in-operations\/?postshare=3461473172470204&amp;tid=ss_tw\">ongoing corporate malfeasance<\/a>. The chain is currently the subject of lawsuits and investigations by a long list of\u00a0state and federal agencies, and it has been out of compliance with Department of Education oversight mandates for months.<\/p>\n<p>And ITT Tech\u2019s misbehavior was of particular concern to the Department because the company\u2019s revenue came overwhelmingly from the American taxpayer. Since 2010, some <a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2016-09-06\/itt-technical-institutes-shuts-down-leaving-a-hefty-bill?cmpid=yhoo.headline&amp;yptr=yahoo\">$5 billion in federal money<\/a> has flowed to ITT in the form of grants and loans, outlays\u00a0for which the chain had steadfastly refused to be held accountable.<\/p>\n<p>Last month\u2019s sanctions were designed to rectify that. Limits were placed on ITT\u2019s ability to divert revenue to its management and investors. Enrollment of new students using federal loans and grants was paused. And crucially, ITT\u2019s letter of credit was hiked dramatically.<\/p>\n<p>This last provision is worth explaining in more detail, because it clarifies both why ITT failed and what will happen next. When the Department requires that an educational institution post a letter of credit, that institution essentially places a specific amount of money in escrow, setting it aside so that it will be available to\u00a0use to, for instance, compensate students if the company fails while their studies are ongoing. It\u2019s an insurance policy, in essence, imposed to ensure that the taxpayer isn\u2019t left holding the bag in the event that a college collapses.<\/p>\n<p>If a company is healthy, a letter of credit will be a straightforward cost of doing business\u2014either they\u2019ll be able to cover it themselves, or someone will be happy to lend them cash to do so. If a company is already failing, securing a substantial letter of credit becomes more crucial (because the risk of inaction on the part of the Department is greater) but also more dangerous (because more robust oversight could expose and compound structural weaknesses).<\/p>\n<p>In the past, the Department of Education has often delayed taking action against predatory and mismanaged for-profit colleges until they were in such dire straits that any attempt to impose even mild sanctions would lead to\u00a0disaster. (Chris Hicks and I discussed\u00a0this problem, and proposed ways of fixing it, in <a href=\"http:\/\/www.aft.org\/sites\/default\/files\/hied_toobigtofail2016.pdf\">a report we released this summer<\/a>.)\u00a0Thus, when the Department announced in the summer of 2014 that it was placing a three-week delay on disbursements of federal financial aid to\u00a0Corinthian Colleges, it sent that chain into a tailspin. Corinthian imploded in the months that followed, taking an additional $35 million in emergency taxpayer funding with it.<\/p>\n<p>In some ways, the fall of ITT Tech seems to mirror that of Corinthian\u2014after years of gentle treatment by the Department of Education, a crackdown was followed almost immediately by a collapse. In other ways, however, the Department\u2019s actions in regard to ITT\u00a0reflect lessons learned from Corinthian, suggesting that the ITT crackdown is less Corinthian II than a first step toward a new model of for-profit college oversight.<\/p>\n<p>I\u2019ll be discussing the\u00a0similarities and differences between Corinthian and ITT, and what the Corinthian debacle tells us about how the Department should handle the ITT aftermath, in a later\u00a0post.<\/p>\n<p>\u00a0<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Less than two weeks after it was slammed with stiff new sanctions by the Department of Education, and just days before its fall semester was scheduled to start, giant for-profit college chain ITT Tech has closed its doors. ITT announced the shutdown in a blistering statement, released early this morning, in which it called\u00a0last month\u2019s\u00a0sanctions [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4302,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12022],"tags":[4121,21703,31885,5107],"dealstore":[],"offerexpiration":[],"class_list":["post-55819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-activist","tag-death","tag-happened","tag-itt","tag-tech"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Death of ITT Tech: What Happened? | - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=55819\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Death of ITT Tech: What Happened? | - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Less than two weeks after it was slammed with stiff new sanctions by the Department of Education, and just days before its fall semester was scheduled to start, giant for-profit college chain ITT Tech has closed its doors. 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