Sep 12 2016
Profiting on the Failure of a For-Profit University?
On September 6, 2016, ITT Technical Institute announced that they were closing 130 campuses.
The U.S. Department of Education prohibited ITT from enrolling new students who use federal financial aid. The department also tightened its already enhanced oversight of the company, including a prohibition on ITT awarding raises, bonuses or severance packages to the company’s executives. In addition, the department increased the company’s letter-of-credit requirement from about $124 million to approximately $247 million. A letter of credit is collateral 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 the government.
The for-profit’s collapse means taxpayers may have to cover approximately $500 million in federal student loans owed by current and recent ITT Tech students. While the department had recently increased ITT’s letter of credit, the company had set aside only about $90 million so far. ITT had also been facing several state and federal investigations and legal actions, including lawsuits from the Consumer Financial Protection Bureau and the U.S. Securities Exchange Commission. But it was ITT’s issues with its accreditor that spurred the department to take its recent action. The Accrediting Council for Independent Colleges and Schools last month determined that ITT was not in compliance and “unlikely to become in compliance” with its criteria. ACICS also is facing federal scrutiny.
A few days later, the University of New Orleans released the following press statement regarding ITT students in the New Orleans area.
So why would a New Orleans ITT student decide to transfer to UNO? In order to do this, let’s compare some of the basics.
Full time tuition at UNO is $7,150 per year (excluding University Fees). Full time tuition at ITT averages $17,748 per year (excluding University Fees). UNO offers 42 degrees (bachelor’s). New Orleans ITT offers 13 degrees (associate’s and bachelor’s), which most are offered by UNO.
What happens to students who had one or two semester left before graduating from ITT?
According to Inside Higher Ed, Jimmy Bilbo, was close to graduating this spring from ITT Tech with a bachelor’s degree in cybersecurity.
“I’ve heard a lot of my credits wouldn’t transfer,” Bilbo, 36, of Marrero, Louisiana, said. “They said it was the luck of the draw and whatever school I was trying to transfer to. I was looking over the list they gave me, and none of the schools in the area have the same program I’m studying. It just seems like I’ve been going to school for three years now and I’m about to have nothing to show for it, and at the same time I’ve used my entire Post-9/11 GI Bill [benefits] on going here.”
Is there any way to help these students? Are 2-year and 4-year colleges looking to capitalize on the failure of ITT?
Rachel Kinzer Corell
September 14, 2016 @ 16:07
Great discussion idea!
I’m not kidding when I say I’ve lost sleep over this (mostly by debating the legitimacy of for-profit universities with friends who support them, but eh). That said, I’ll admit it somehow never occurred to me that two-year colleges/four-year universities would actually see this as an opportunity to capitalize on so many students who were so horribly underserved (sometimes I’m an optimist after all, I guess).
It’s horrifying to me to consider that this could be a real problem further contributing to an already tragic situation. (Nevermind the fact that the students already attending these two-year colleges/four-year universities have mountains of debt we are already concerned with; nevermind the fact that maybe I am also one of the students this refers to.)
I think education is looking at a massive overhaul before the effects of this situation can really be addressed at all, though I’m at a loss for how I think this should exactly be implemented… well, after the for-profit schools are dismantled piece by piece, that is. I can’t say I’m not looking forward to that in the case where it is warranted. (Remembering the students keeps me in line here; otherwise there would probably be a fair amount of gleeful cackling on this end.)