The Challenges of the ITT Tech Closure

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On September 6, 2016, ITT Technical Institute suddenly closed all of their 130 locations, displacing roughly 35,000 students, and leaving 8,000 employees without a job. Unfortunately, this is not the first time one of the nation’s largest for-profit education chains has been closed.

After more than a decade of federal and state investigations, the Department of Education (DOE) was forced to ban ITT Tech from enrolling new students using federal funds. With 80% of their student population relying on federal aid, the school had no choice but to file for Chapter 7 bankruptcy protection only 10 days later.

With a multitude of complaints, the DOE was compelled to take a closer look at for-profit schools and universities to ensure student satisfaction. The DOE announced last year that it would be investigating these institutions since they account for a high amount of student federal debt. Some for-profit schools have also earned a bad reputation for recruiting students with misleading job placement statistics and skirting accreditation standards.

For-profits systems are funded by and accountable to their shareholders, whereas institutions operating as nonprofit receive funding from a variety of sources such as the government, tuition fees, grants, and donations.

Accreditation across Institutions

ITT Tech was nationally accredited by the Accrediting Council for Independent Colleges and Schools (ACICS), however, the DOE began the process of revoking ACICS’ recognition in June. On September 22, ACICS was officially shut down after investigations revealed multiple failures to properly hold universities accountable.

Accreditation is critically important to the quality of an institution, including the value of the education students receive, students’ eligibility for federal aid, and ability to transfer credits to other universities.

Compounding the issue, many regionally accredited schools do not recognize nationally accredited school credit. This is an especially important factor to consider if students think they may transfer to another university or pursue post-graduate degrees. In the case of CSU-Global, the university evaluates the content and outcomes of courses from other programs when considering transfer credit to CSU-Global.

In addition, CSU-Global’s competency-based credit award programs can support students as they seek to make institutional changes, capitalizing on the skills they’ve mastered from previous experiences.

CSU-Global was created as a high quality, regionally accredited, 100% online university. We’re at the forefront of the educational paradigm shifting traditional education out of the classroom and into the digital world to meet the needs of modern learners while maintaining the academic rigor expected by students, accrediting bodies, and the DOE.

Universities are regularly required to go through the reaccreditation process to ensure they meet the standards of quality education. Following a comprehensive two-year evaluation including self-study, review, and a site visit concluded in May 2016, CSU-Global was successfully reaccredited by the Higher Learning Commission (HLC) through 2025-2026.

Maintaining Integrity in Higher Education

Transparency in the college and university systems helps to ensure that students and financial granting organizations are confident in educational program quality, as well as best-business practices.

ITT Technical Institute has been accused of fraudulent practices for over a decade. In 2004, federal agents temporarily closed ITT Tech schools in eight states to investigate allegations of fraud. The next year, ITT Tech paid a $725,000 settlement after employees revealed that the company inflated grades to qualify students for state financial aids. Since then, the company has fought securities fraud lawsuits from investors, whistle-blower suits from former employees, and complaints from state prosecutors and regulators, the DOE, and lawmakers.

According to the New York Times, complaints against ITT Tech included deceptive marketing; strong-arm recruitment tactics; misleading information about costs, courses, graduation and job placement rates; inflated enrollment numbers; bait-and-switch schemes; subpar instruction; and more.

Unfortunately, these tactics aren’t specific to ITT Tech and appear to be prevalent in the for-profit sector. Corinthian Colleges also abruptly shut their doors after allegations of deceptive acts in March. Westwood College closed in the same month and now Ashford University, Kaplan University, the University of Phoenix, DeVry, and over 20 others are also under investigation, according to the Government Accountability Office (GAO). Each institution is different. To see updated developments for these sanctioned institutions click here.

What’s next for ITT Tech Students?

In an attempt to support the students caught suddenly without the ability to continue their studies at ITT Tech, the DOE has stepped in to offer next steps. In a letter from Ted Mitchell, the secretary of education, students were provided two options:

  1. If you currently or were recently enrolled at ITT, you may be eligible to have your federal student loans for your program at ITT discharged. Your federal loan would be wiped away and you will have the option of restarting your education somewhere new.
  2. If you wish to continue and complete your program at a different school – especially if you are close to graduating – you may be able to transfer your credits. It is important to note that transferring your credits may limit your ability to have your federal loans discharged. Closed school discharge may be an option if you enroll in a different program that does not accept your ITT credits.

As it stands, students taking option one may have to start over on their education to ensure their federal loan debt is completely forgiven. The DOE says it will put a maximum of $500 million toward federal loan forgiveness for former ITT Tech students.

If students take option two they’re tasked with finding a university who will accept the now unaccredited coursework previously provided by ITT Tech. This presents many students with a challenge since many nonprofit schools with regional accreditation are reluctant to accept unaccredited, or nationally accredited courses.

The DOE has received thousands of emails and calls from students seeking guidance on how to move forward. Mitchell says some are looking for a pathway to complete their education, others are applying for federal student loan discharge, and others, “are so deeply frustrated, discouraged and angry at ITT’s closure that they’re considering abandoning their education.”

CSU-Global is working diligently to reach out to these students and support them as they map out their future goals. ITT Tech courses are currently being reviewed to evaluate the transfer of coursework to CSU-Global.

The Future of Online Education

The landscape of education is changing with long established universities developing online models. For-profit universities are facing increased scrutiny but they’re no longer the only online options for students. In the latest report on online education from the Babson Group, 70% of academic leaders surveyed said that “online learning is critical to their institution’s long-term strategy.” Highly regarded schools like the Massachusetts Institute of Technology (MIT) and Harvard have recently launched online education models to keep up with modern demands.

The 2015 Students Before Profits Act that spurred the recent investigation of for-profit universities, is hoping to reinforce quality education by increasing oversight. According to the College Affordability Guide, the goal of the bill, “is to protect students from deceptive practices and bad actors in the for-profit college sector by:

  • Ensuring students have access to accurate information.
  • Holding executives and owners responsible for violations and poor performance.
  • Enhancing civil penalties on institutions and executive officers if it is determined that the college misrepresented its cost, admission requirements, completion rates, employment prospects, or default rates.
  • Strengthening oversight and regulation, including the oversight of any default rate manipulations.

Under the terms of this bill, owners and executives of for-profit colleges would assume liability for financial losses associated with Title IV funds. The Department of Education would be able to pursue claims against these groups after discharging borrowers’ student loans.”

Closer scrutiny of the industry as a whole ensures quality, accountability, and a positive future for students and higher education. CSU-Global strives to be supportive of students coming from all backgrounds and providing the academic excellence and career-relevant skills higher education was designed to deliver well into the next century.

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