ITT Tech shuts down schools, including 2 in W.Pa.
ITT Educational Services Inc. abruptly shut down its eponymous for-profit technical schools, closing more than 130 campuses and leaving as many as 40,000 students stranded in one of the largest college closures in American history.
The company has seven campuses in Pennsylvania, including locations at the Pittsburgh Mills mall in Frazer and on Campbells Run Road in Robinson.
ITT said it terminated the “overwhelming majority” of its more than 8,000 employees.
“I got two quarters left to graduate. You’ve got to be kidding me,” said Joseph Myers, 32, of North Buffalo as he walked up to the locked doors at the Frazer location Tuesday morning. Myers, an Army veteran, said he was studying information technology at the school for about two years and was due to graduate in March.
Although the school was not accepting new students, Myers said, existing students like him were told that they would be able to finish their programs. He got an email saying classes would not begin as expected on Sept. 12.
In a statement, ITT blamed the Department of Education for its downfall. Last month, the feds demanded the company produce an additional $153 million in collateral — nearly double its $78 million in cash on hand — to cover possible losses that the government might incur if the company were to suddenly fail.
“We believe the government’s action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again,” the company said.
The exterior and interior doors to the Pittsburgh Mills school were locked. There were no signs indicating that it had closed.
The school’s closing will deal another blow to the beleaguered decade-old mall, which has suffered from declining occupancy and value. A recent analyst report stated its value had fallen to $11 million, and it was more than half empty.
Mall General Manager Jerry Crites said he was not permitted to comment.
The ITT campus at Pittsburgh Mills had 140 students enrolled and the one in Robinson had 145 students, according to the Department of Education. Tuition and fees for a full-time student were $18,048 for the 2015-16 academic year.
Closing up is a stunning fall for ITT, a company whose stock reached highs of nearly $129 per share in 2007 as investors bet that Americans would increasingly flock to for-profit colleges for credentials that would enable them to advance in the economy or gain a foothold in the jobs market. Key to that calculation was the assumption that the Education Department wouldn’t impede colleges’ access to federal student aid.
The for-profit college industry has struggled with declining enrollments and tightened oversight from the department. Regulators have investigated the industry’s recruiting practices and accused companies of saddling students with debt without training them for jobs that would allow them to pay it back.
Downtown-based Education Management Corp. has laid off more than 700 workers since June 2015 and moved to shutter 18 of its Art Institute campuses over the next few years. DeVry University last year closed its Pittsburgh campus and went online-only.
The government annually doles out more than $100 billion in loans and grants to students. Colleges rarely face any consequences if their students fail to graduate or subsequently default on their debt. But an increasing array of allegations that ITT misled students about its success at placing graduates in their fields while defrauding investors — the company faces pending lawsuits from the federal Consumer Financial Protection Bureau, Securities and Exchange Commission, and the Massachusetts attorney general — led the Education Department to restrict the company’s access to taxpayer funds. ITT has denied the allegations.
Students enrolled at the company’s schools have received close to $5 billion in federal aid since 2010, Education Department data show. About $3 billion of that was in the form of student loans. Most of that money went to the company.
Students enrolled at the company’s technical schools will be able to cancel any federal student debt they incurred for their education if they decide against transferring their credits elsewhere.
Other former students are pushing to have their debts canceled by alleging that the company defrauded them into taking out the debt by advertising false job placement rates.
Taxpayers will record a loss on the debt cancellations. It’s exactly the kind of situation that the feds tried to avoid by demanding that the company produce additional collateral.