{"id":4578,"date":"2016-09-16T11:59:41","date_gmt":"2016-09-16T15:59:41","guid":{"rendered":"http:\/\/ncjolt.org\/?p=4578"},"modified":"2020-06-04T20:53:00","modified_gmt":"2020-06-04T20:53:00","slug":"obituary-itt-tech","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/obituary-itt-tech\/","title":{"rendered":"Obituary: ITT Tech"},"content":{"rendered":"

\"dilley-blog-image\"We have all seen the commercials: people testifying to how ITT Tech enabled them to start a career in the tech industry<\/a><\/span> and how ITT Tech took them from nothing to everything<\/a><\/span>, wrapped up with a promising \u201ceducation for the future\u201d tagline. At first glance, it is easy to understand why ITT Tech \u201chad more than 40,000 students as of June 30[, 2016]\u201d<\/a><\/span> spread out over their \u201c137 campuses across 39 states.\u201d<\/a><\/span> However,\u00a0like the Transformers, there is more than meets the eye<\/a><\/span> when it comes to ITT Tech.
\nIn 2014, the Consumer Financial Protection Bureau (CFPB) sued ITT Tech, based on authority from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enables the CFPB \u201cto take action against institutions engaging in unfair, deceptive, or abusive practices.\u201d<\/a><\/span> The CFPB claimed that, among other things, \u201cthe for-profit college chain [was engaged in] predatory student lending,\u201d providing students with misrepresentations regarding post-graduation job prospects, and allowing students to take out high risk loans knowing that \u201cmost of its students would default on their . . . \u00a0loans.\u201d<\/a><\/span> ITT Tech \u201cprojected a default rate for its students of 64 percent.\u201d<\/a><\/span> However, these student loans \u201cprovide[d] critical revenue for ITT.\u201d<\/a><\/span> In fact, \u201c[n]early all of ITT\u2019s revenues [came] from tuition, which students [paid] using principally federal and state student loans.\u201d<\/a><\/span>\u00a0 In 2015 alone, \u201cITT . . . generated $850 million in revenue, about $580 million of which came from federal student loans\u201d<\/a><\/span> from \u201cprograms under Title IV of the Higher Education Act of 1965.\u201d<\/a> <\/span><\/p>\n

Richard Cordray, the CFPB director, \u201cbelieve[d] ITT used high-pressure tactics to push many consumers into expensive loans destined to default.\u201d<\/a><\/span><\/p><\/blockquote>\n

This was far from the last legal trouble to strike ITT Tech.
\nWith associate\u2019s degrees costing upwards of $44,000 and bachelor\u2019s degrees costing around $88,000<\/a><\/span>, ITT Tech was one of the most expensive for-profit colleges in the nation. The high tuition cost necessitated student loans, but the federal aid provided to ITT Tech students was not enough to cover the full cost of a degree. As such, students needed additional funding in order to complete their programs. Students were led by ITT Tech to take \u201chigh-cost private student loan[s]\u201d<\/a><\/span> which came from the PEAKS and CUSO student loan programs organized by ITT<\/a><\/span>. To encourage loans, \u201cITT provided guarantees that limited any risk of loss from the student loan pools\u201d<\/a><\/span> that would be triggered if \u201cenough students defaulted\u201d<\/a><\/span> causing ITT to \u201cbe responsible for payments to the loan program participants.\u201d<\/a><\/span> These student loans \u201cperformed so abysmally . . . that ITT\u2019s guarantee obligations began to balloon.\u201d<\/a><\/span> Instead of informing investors, ITT \u201cconcealed the condition of the student loan programs and ITT\u2019s guarantee obligations\u201d<\/span><\/a> through \u201cnumerous misstatements and omissions\u201d<\/span><\/a> in addition to \u201cdeceptive acts.\u201d<\/a> <\/span>This conduct led to the Securities and Exchange Commission (\u201cSEC\u201d) charging ITT Tech<\/a><\/span> and two of its executives with fraud in 2015.
\nIn late 2015, the Education Department began tightening its watch of ITT Tech with \u201cstricter financial oversight and reporting requirements on the embattled for-profit chain.\u201d<\/a><\/span> The Accrediting Council for Independent Colleges and Schools (ACICS) also began to turn up the heat on ITT Tech in April of this year by \u201corder[ing] ITT Tech[] to prove why it shouldn\u2019t lose its accreditation or otherwise be sanctioned.\u201d<\/a><\/span> Both the Education Department and ACICS pointed to the CFPB and SEC actions against ITT Tech<\/a><\/span> in their reasoning for vigilantly watching ITT Tech. Eventually, the Education Department ordered ITT Tech to increase its letter of credit, which is \u201ccollateral the government asks colleges to set aside when officials have concerns that an institution may be unable or unwilling to pay back money it owes to the government,\u201d<\/a><\/span> from $79 million to over $123 million in June of this year. This massive increase in letter of credit was aptly referred to as a \u201cdeathblow to ITT.\u201d<\/a><\/span>
\nOn September 6, ITT Tech announced that it was closing all of its campuses. In the press release regarding its closure<\/a><\/span>, ITT Tech said that the increase in letter of credit \u201cforced [ITT Tech] to conclude that [it] can no longer continue to operate . . . ITT Tech campuses and provide students with the quality of education they expect and deserve.\u201d ITT Tech went on to refer to ACICS and the Education Department\u2019s actions as \u201cunwarranted . . . taken without proving a single allegation\u201d calling \u201cthe government\u2019s action . . . inappropriate and unconstitutional.\u201d
\nITT Tech highlighted that it \u201chas helped hundreds of thousands of . . . students improve their lives through career-focused technical education.\u201d<\/a><\/span> For better or worse, however, ITT Tech is no longer an option for prospective students interested in a career in technology.<\/p>\n","protected":false},"excerpt":{"rendered":"

We have all seen the commercials: people testifying to how ITT Tech enabled them to start a career in the tech industry and how ITT Tech took them from nothing to everything, wrapped up with a promising \u201ceducation for the future\u201d tagline. At first glance, it is easy to understand why ITT Tech \u201chad more …<\/a><\/p>\n","protected":false},"author":1,"featured_media":4577,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4578"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=4578"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4578\/revisions"}],"predecessor-version":[{"id":7191,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4578\/revisions\/7191"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/4577"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=4578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=4578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=4578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}