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ITT Educational Services Inc. said that the shutdown will affect
“tens of thousands” of students who were preparing for the start of
classes this month and cost more than 8,000 employees their jobs.
The company has operated vocational schools on more than 130
campuses in 38 states, often under the ITT Technical Institute name.
Last year, it enrolled 45,000 students and reported $850 million in
revenue.
But like many other for-profit college operators, ITT has faced
federal and state investigations of is recruiting and accounting
practices.
The new federal sanctions include moving ITT to a tighter form of
financial oversight, dubbed heightened cash monitoring; a freeze
on new students receiving federal aid; an increase in the amount of
a required letter of credit to $247 million; and limits on the
compensation of the for-profit’s executives.
[...] could push the large for-profit chain toward bankruptcy and
closure. ITT is facing a wide range of federal and state legal
challenges, in addition to scrutiny by its national accreditor,
which believes the for-profit chain is unlikely to come into
compliance with its requirements. Department officials said the
“sweeping” sanctions were necessary to protect students and
taxpayer dollars.
Almost 650,000 federal student loan borrowers have defaulted on
their debt, new data shows. A handful of for-profit schools are a
big part of the problem.