AUSTIN - ITT Educational Services announced Tuesday that it is closing all of its ITT Tech schools across the United States.
The company blamed the closure on the U.S. Department of Education saying that the “action of our federal regulator to increase our surety requirement to 40 percent of our Title IV federal funding and place our schools under “Heightened Cash Monitoring Level 2,” forced the company’s hand.
Late last month, the Department of Education banned ITT Educational Services Inc. from enrolling new students using federal student aid funds, and increased oversight over the school. The move by the federal government came after the school’s accreditor found the institution is not in compliance and is unlikely to become in compliance with the accreditation critiera.
“Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds,” Secretary of Education John B. King, Jr. said in a statement last month.
According to Bloomberg, ITT had only $78 million in cash and cash equivalents at the end of June. As part of the penalties imposed by the Education Department, ITT also had to increase its surety from $94.3 million to $247.2 million, or 40 percent of all Title IV aid the school received in 2015
ITT operated over 130 campuses in 38 states, including Texas, and also enrolled students in online programs nationwide. The school self-reported $850 million in total revenue, of which roughly $580 million was from federal aid dollars. In 2015, the Department of Education said there were approximately 45,000 students enrolled in ITT programs, making it the fifth-largest for-profit college chain by revenue, according to the Wall Street Journal.
In addition to the 45,000 students who will now look for a new educational opportunity, ITT said it would eliminate the “overwhelming majority of our 8,000 employees.”
The closure of ITT Tech comes as the White House has pursued a crackdown on for-profit colleges across the country. The government has accused for-profit colleges of preying on vulnerable students who end up going thousands of dollars into debt for lower quality educations.