The for-profit college chain ITT Educational Services Inc. is shutting down its schools nationwide, shortly after the U.S. Department of Education banned it from enrolling new students who use federal financial aid.
ITT said Tuesday that it has canceled the academic quarter that was supposed to begin this month and laid off most of its 8,000 employees.
“Our focus and priority with our remaining staff is on helping the tens of thousands of unexpectedly displaced students with their records and future educational options,” ITT said in a statement.
The company has operated vocational schools at 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.
Last month, in addition to the ban on enrolling new students who used federal aid, the U.S. Education Department also prohibited ITT from awarding its executives any pay raises or bonuses and said it must develop “teach-out” plans that would help current students finish their programs at other colleges if the chain shuts down. Current students, it said, could continue receiving federal grants and loans.
Education Secretary John King said the government was taking action to protect students and taxpayers following “troubling” findings about the company. Earlier in the month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
ITT blasted the federal moves. “We believe the government’s action was inappropriate and unconstitutional,” the company said Tuesday. “We were not provided with a hearing or an appeal. Alternatives that we strongly believe would have better served students, employees and taxpayers were rejected. The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.”
The day after the Education Department’s decision, California imposed further restrictions on the company: Citing concerns about ITT’s financial viability, the state Department of Consumer Affairs’ Bureau for Private Postsecondary Education issued an emergency decision banning ITT from accepting new students at its 15 California locations. The state also planned to seek to revoke ITT’s approval to operate in California.