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ITT Technical Institutes Shuts Down, Leaving a Hefty Bill

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posted on Sep, 6 2016 @ 10:33 AM
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Happy Tuesday everyone-

It looks like one of the largest closures of a college in the U.S. has just happened basically overnight. As is usually the case (even if it's forced or otherwise), when you suckle at the teat of government for too long to prop you up, eventually that government cheese will kill you.

Let's just look at the state ment put out by ITT today:

It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service. With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected.

The actions of and sanctions from the U.S. Department of Education have forced us to cease operations of the ITT Technical Institutes, and we will not be offering our September quarter.

...[snip]

This 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 us to conclude that we can no longer continue to operate our ITT Tech campuses and provide our students with the quality education they expect and deserve.

...[snip]

We have always carefully managed expenses to align with our enrollments. We had no intention prior to the receipt of the most recent sanctions of closing down despite the challenging regulatory environment that now threatens all proprietary higher education. We have also always worked tirelessly to ensure compliance with all applicable laws and regulations, and to uphold our ethic of continuous improvement. When we have received inquiries from regulators, we have always been responsive and cooperative. Despite our ongoing service to this nation's employers, local communities and underserved students, these federal actions will result in the closure of the ITT Technical Institutes without any opportunity to pursue our right to due process.

These unwarranted actions, taken without proving a single allegation, are a "lawless execution," as noted by a recent editorial in The Wall Street Journal. 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.

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.


Basically, here's what happened in a very brief point: The Department of Education demanded that ITT Technical Institute provide an additional $153M as collateral against their business collapsing. In doing so, it caused the business to collapse. This is a perfect example of the irony that is government.

According to the story in Bloomberg, the company had a stock-value high of $129/share back in 2007, but then the recession happened, and the government began dolling out billions of dollars to U.S. companies, and ITT Tech was no exception. Since 2010, $5 BILLION dollars of taxpayer money has gone to ITT Tech, most of which was in the form of student loans, but regardless, most of that $5B went directly into the company's coffers.

That is $5,000,000,000 dollars of OUR money having basically been wasted, as the school has been and is being accused of misleading students in reference to post-graduate job placement...well, from the story:

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.


Look, I don't believe that ANY business is ever too big to fail, but the reality that there are now nearly 8,000 employees losing their jobs and, according to ITT Tech's statement, hundreds of thousands of current students and alumni being negatively affected from this reality is pretty damn disgusting. And to consider that ITT Tech may have been misleading students and defrauding investors, and it makes this reality even that much worse--criminal, IMO (assuming the allegations are true).

I'm not going to go on a rant about government intrusion into the private market and how I truly believe that it is detrimental to many, many aspects of our economy, but really, this is a perfect example of that. It may not be the only ingredient in this s**t pie, but it's certainly the base ingredient that overwhelms the flavor. I'm interested to see how this affects things in the coming days on the stock market--I mean, I don't think it's going to cause any long-term issues, but watching the knee-jerk reactions ought to be interesting.

What do you all think will be the result of this on the economy? Did any of you get a degree through ITT Tech? I must assume that an issue like this would really have negative connotations on having a degree from a failed school.

Thoughts?
edit on 6-9-2016 by SlapMonkey because: (no reason given)




posted on Sep, 6 2016 @ 10:38 AM
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a reply to: SlapMonkey

Guess I won't be seeing any more of those commercials then.

What's next, Devray University, Phoenix, or Walden University? JK, but I could go without their commercials as well.

Will this have implications for people who have degrees from ITT? Does it look bad on their resume now?


edit on 6-9-2016 by FamCore because: (no reason given)



posted on Sep, 6 2016 @ 10:43 AM
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a reply to: FamCore

I would believe that any of those schools could be next--my money would be on the University of Phoenix.



posted on Sep, 6 2016 @ 10:46 AM
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a reply to: SlapMonkey

I have some personal experience with watching Burlington College go down (Bernie Sanders' wife, Jane has been criticized for poor management of the college, where she oversaw the purchase of a property for something like $10 million, but the college only has something like 200+ enrolled students). If I had Burlington College credentials I would want to find another school and another, more advanced degree to attach to my resume so that Burlington College wasn't the last thing I had for education.

Students from ITT might not be as concerned since those degrees specialize in an area that is in high demand, but Burlington College was a liberal arts school which is a notable difference.



posted on Sep, 6 2016 @ 10:47 AM
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Students now 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


I'm guessing this offer will be embraced by many. I guess it's only fair considering the carpet was pulled out from underneath them.
edit on 7/16/2016 by Zarniwoop because: spelling



posted on Sep, 6 2016 @ 10:51 AM
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How many ways is this wrong? Over borrowing, unpayable debt, corruption in the institutions, the banks and the state directed at the education system. State controlled Capitalism is Fascism.



posted on Sep, 6 2016 @ 10:51 AM
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My thoughts are there are two sides to every story in life and I want to hear what the Govt justification for this is.

I know it's easy here to just assume: rich, govt, successful automatically makes you the bad guy but as the past has shown us that is far from the truth.

Basically I think we need more facts before making any final thoughts on it..



posted on Sep, 6 2016 @ 10:57 AM
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a reply to: Zarniwoop

As I understand it, the credits from ITT are not transferable, so yeah, I'm pretty sure most will take advantage of the offer.



posted on Sep, 6 2016 @ 11:07 AM
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originally posted by: Boadicea
a reply to: Zarniwoop

As I understand it, the credits from ITT are not transferable, so yeah, I'm pretty sure most will take advantage of the offer.



I went there in 90 to 91 and got an aassociates degree. Credits were not transferable at that time.



posted on Sep, 6 2016 @ 11:11 AM
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Good riddance.

I spent the better part of a decade paying off that mistake.



posted on Sep, 6 2016 @ 11:15 AM
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a reply to: Bluntone22

I went there too...credits were non transferable....and I owed...and paid off a large student loan.

More than once back then I was told... "Well...after all. Its not a college...mor a university...Its a Tech school".

Watch Ross Medical will be next too..
edit on 6-9-2016 by mysterioustranger because: (no reason given)



posted on Sep, 6 2016 @ 11:20 AM
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a reply to: Boadicea

Apparently you can transfer credits to some similar institutes.



posted on Sep, 6 2016 @ 11:22 AM
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originally posted by: FamCore
a reply to: SlapMonkey

Guess I won't be seeing any more of those commercials then.

What's next, Devray University, Phoenix, or Walden University? JK, but I could go without their commercials as well.

Will this have implications for people who have degrees from ITT? Does it look bad on their resume now?



That’s DeVry University and I doubt they go down any time soon.

DeVry is more of a legitimate college than ITT. It’s a great institution.


And they don’t promise you much but a degree


When I was young and went to change my career from the auto industry it was ITT or DeVry. DeVry at the time to me was much better like a real college.


But to the point. The next economic swindles are likely to revolve around educational school loans...this may just be the beginning.



posted on Sep, 6 2016 @ 11:31 AM
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a reply to: Zarniwoop

That's good to hear -- and would make sense. Hopefully that will help out students who were well into their program. I'd hate to see them lose that time and effort.



posted on Sep, 6 2016 @ 11:33 AM
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a reply to: SlapMonkey

This was originally a semi-automitive mechanic school.


There's a sucker born every minute



posted on Sep, 6 2016 @ 11:50 AM
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a reply to: FamCore

I don't think it will look bad(worse) for degree holders. By the time people forget what that college was, people will still be in careers or retired.



posted on Sep, 6 2016 @ 11:51 AM
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a reply to: SlapMonkey

Quite so, this is a logical extension of the long-standing policy of state intervention. Many private services (and products) have been attacked under the guise of "liberating the consumer" from the impossible task of deciding whether or not to choose to use that service. It's hard to think of an industry that hasn't been harassed.

Yes, ITT seems like a scam to me but then, so does UMASS. What are the chances of that being targeted?

The upshot is, if your business competes with a state alternative, you will be destroyed. If you propose an alternative to state services, you will be destroyed, especially if you interfere with state and state-approved 'educators'.

Good luck and God speed Mike Rowe, don't let them catch you!



posted on Sep, 6 2016 @ 11:55 AM
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originally posted by: FamCore
a reply to: SlapMonkey

Guess I won't be seeing any more of those commercials then.

What's next, Devray University, Phoenix, or Walden University? JK, but I could go without their commercials as well.

Will this have implications for people who have degrees from ITT? Does it look bad on their resume now?



I imagine most people drop education from their CV once they have some real experience, particularly trade degrees.



posted on Sep, 6 2016 @ 11:57 AM
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a reply to: Willtell

Can you please elaborate on what you mean by this?




The next economic swindles are likely to revolve around educational school loans...this may just be the beginning.


Really piqued my interest



posted on Sep, 6 2016 @ 12:00 PM
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originally posted by: Zarniwoop

Students now 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


I'm guessing this offer will be embraced by many. I guess it's only fair considering the carpet was pulled out from underneath them.


I don't believe that their credits are transferrable (for the most part) and any debt unpaid by the student is transferred to the taxpayer.



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