Private college giant ITT Tech announced it was closing down on Tuesday, becoming the latest higher education profiteer to buckle under federal investigations into alleged wrongdoing.
The shut down is the culmination of the company’s death spiral, which began last month when the Department of Education formally sanctioned it by preventing taxpayer dollars from funding future enrollees.
For-profit colleges overwhelmingly depend on taxpayer-funded student loans to enroll new students. ITT Tech received nearly $600 million in federal money in 2015 alone.
“The actions of and sanctions from the US Department of Education have forced us to cease operations of the ITT Technical Institutes,” the company said in a statement. It further added that it believes the government’s enforcement was “inappropriate and unconstitutional.”
The department turned off the spigot to ITT Tech at the end of August “based on the operational and financial risk they pose to students and taxpayers,” Under Secretary Ted Mitchell noted at the time.
An accrediting organization found that the college failed to meet basic education standards.
Although the department did not find that the company had defrauded students, other federal agencies, including the Securities and Exchange Commission (SEC) and Consumer Financial Protection Bureau (CFPB), are currently probing that question.
Following the education department’s decision, ITT Tech announced last week that it would no longer be enrolling new students. The company was required by the government to develop plans to assist the 40,000-plus students it has enrolled around the country to find new schools to continue their studies.
Now that ITT Tech is closing, students who were enrolled could have all their federal loans forgiven.
“If ITT closes you may be eligible for a closed school loan discharge,” the Department of Education said in a blog post for students last month.
Last year, Corinthian Colleges, another for-profit educator, ceased operations after the CFPB found the company had defrauded students with false promises of job placement. Corinthian was slapped with a $530 million fine that it was unable to pay after it declared bankruptcy.