Roosevelt Institute | Cornell University

The Demise of ITT Tech; Dealing with the Closure of a For-Profit College

By Emil KunkinĀ Published January 1, 2017

The closure of one of the biggest chains of for-profit schools following a ruling from the Department of Education has left former students reeling.

By Emil Kunkin   

Several years ago, the TV ads for ITT tech seemed to be ubiquitous. With their simple format, an ITT grad talking about how their education helped their career and their family, the ads appealed to people who wanted to improve their situation in life. In late August, the Department of Education ruled that ITT tech, one of the nation's largest chains of for-profit schools, would no longer be able to enroll students receiving referral student loans. This was essentially a death sentence for the chain; ITT's parent company ceased operations 2 weeks later. This decision was correct; ITT, as well as many other for-profit schools engage in predatory practices and offered poor value for their high costs, and target student who they know would not graduate, amongst myriad other claims. However, the Department of Education erred in failing to adequately help students prepare for the closure of ITT.
        In the last decade, the for-profit education sector has grown exponentially. Many operate on a very different model from traditional nonprofit schools. They rely on non-traditional students, including many working adults and veterans. Many of these students are seeking technical degrees. In this way, they compete more with community colleges than with 4-year universities, although many for-profit schools also offer 4-year degrees. Some use distance learning, while others are strictly in person, but most offer a combination of the two. Recently, the for-profit model has come under scrutiny for many school's deceptive recruitment practices, in which recruiters were caught lying to prospective students about job prospects and ability to transfer credits. More concerning, for-profit schools are extremely reliant on federal student loans and aid, particularly aid to veterans. In fact, 580 million dollars worth of ITT tech's 850 million-dollar revenue came from federal aid. Thus, taxpayers are on the hook for much of this sum, as students who were still enrolled at ITT upon its closing are able to receive loan forgiveness.
        However, former ITT students will still struggle with the school's closure. The Department of Education has not done enough to help them, and none of the options available are particularly appealing. If students receive loan forgiveness, they have to forfeit any credits that they earned while enrolled at ITT Tech. They can try to transfer to a nonprofit school, either a 2-year or 4-year institution, but the credits they earned at ITT would be unlikely to transfer. Some may try to transfer to another for profit school, but they may face the same issues at their new schools of sub-par education and the possibility of being shut down by the Department of Education as they did at ITT.
The Department of Education has tried to communicate the options to the former students of ITT Tech, but some students are confused or simply unaware of the options. Better communication would help, students need to be made aware of their options in a clear manor, but the biggest issue is that not enough is being done to help students from being, in the words of New Mexico's attorney general, "Re-victimized." A similar situation arose when another for-profit chain, Corinthian, closed. Students were lost, and many ended up transferring to other for-profits, including ITT. To prevent this cycle from continuing, the Department of education must do three things. First, more resources must be made available in a clear and concise form to students at failing or failed for-profit schools. Second, for-profits should be required to create "teach-out" agreements that cover all students in the event of the school's closure that would guarantee students the opportunity to finish their degree if the school were to close. Finally, The Department of Education must better regulate for profit schools and hold them to the same academic standards to which traditional and community colleges are held. Doing this will mitigate the damage from future closures, while decreasing the chances of their occurrence.