Two weeks ago, the Education Department said ITT would no longer be allowed to enroll new students who rely on federal loans and grants. In 2015, ITT earned $850 million in total revenue. $580 million was sourced from federal aid. This decision by the Education Department caused a downward spiral for the school which is was not able to recover.
The final deathblow was caused by Education Department officials demanding that the company provide a letter of credit from a bank for $247 million (an increase of $123 million from the letter of credit ITT already had on file). This letter would protect students and taxpayers if the school was unable to cover federal student-aid liabilities. ITT could not secure the additional credit.
The beginning of a crackdown
The Education Department is beginning to scrutinize what schools promise their students and hold them accountable.
Is this the beginning of the end of predatory for-profit schools that over-promise and under-deliver? I certainly hope so.
ITT said its schools have helped “hundreds of thousands of non-traditional and underserved students improve their lives through career-focused technical education.”
Here are some facts about ITT
- In May the Securities and Exchange Commission filed civil fraud charges against the company for allegedly making false and misleading statements about the failure of two in-house student-loan programs.
- The Consumer Financial Protection Bureau filed a lawsuit in 2014 accusing the company of providing zero-interest loans to students but failing to tell them that they would be kicked out of school if they didn’t repay in a year. The CFPB said that when students could not pay up, ITT allegedly forced them to take out high-interest loans to repay the first ones.
- The company is being investigated by more than a dozen state attorneys general and two federal agencies.
At Treehouse, we believe all schools should be held accountable for these three things:
- Helping a high percentage of their Students achieve their stated goals
- Offering a high return on investment for the Student’s money
- Making their school accessible to all genders, races and income levels
I believe ITT wasn’t held accountable for #1 and #2 (I don’t have data on #3) and ultimately their students had to pay a brutal price.
Get the facts and #EducateYourself
- We believe in empowering people to make the right education choice, for their lives and their goals.
- We believe Students should be able to learn over the course of their entire life, whenever it’s optimal for them.
- We believe that people should educate themselves on all the facts, before making life-altering decisions on education.
At Treehouse we’re beginning to collect a lot of data so we can transparently share our students’ success rates and how we’re doing as a school. I believe sharing this data, and encouraging other schools to do the same, will help all schools get better at taking care of their students.