Many of us are familiar with the exploitative nature of for-profit colleges.Well, a recent decision by the federal government may soon lead to death of one of the oldest and most prominent of these colleges.
The Education Department on Thursday handed down a series of devastating restrictions that could put Carmel-based ITT Educational Services Inc. out of business within weeks. The government banned ITT from enrolling new students who depend on federal aid, the source of most of the company's revenue, and required it to warn current students that its accreditation is in jeopardy.
Even more onerous, though, is a requirement that ITT must increase its reserves from $94.4 million to $247.3 million, or 40% of federal student aid the company received in 2015. ITT has been ordered to provide a letter of credit for the beefed-up surety, which is meant to support students in case the company closes, within 30 days.
- First Coast News
For those unaware of ITT’s history:
ITT Tech was founded in 1946 as Educational Services, Inc. and has been headquartered in Carmel, Indiana, since 1969. From 1965 until its IPO in 1994, ITT Tech was a wholly owned subsidiary of the ITT Corporation telecomunication major (as "ITT/ESI"). By 1986, all institutions became known by the common name "ITT Technical Institute". By 1999, ITT Corp. (which had merged with Starwood Hotels & Resorts Worldwide the year before) divested itself completely of ITT Tech's shares but the schools still use the "ITT" name under license. It operates over 130 ITT Technical Institutes across the US, which primarily provide career-focused degree programs to approximately 45,000 students.
- Wikipedia
So what's the exact nature of the problem in for-profit colleges? From one of our very own diarists:
One study by the National Bureau of Economic Research in 2012 found that students who attend for-profit institutions do not receive any benefits in earnings, unlike their non-profit counterparts. Essentially, students who attend for-profit colleges do not earn better wages than those who do not attend college at all.
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Unfortunately, at least one article from EdCentral in 2014 found that job placement rates are not only far from stellar at for-profit colleges, but many times they are deceptive or inflated.
For-profit colleges may have originated with some noble intent, they have become synonymous with extortionist third party loans, low placement rates, and bankrupt students with little future in their career field. The looming death of ITT Tech is yet a further step in the right direction over the past years and yet another positive that Democrats can point to when they proudly tout the accomplishments of this administration. Alongside the death of Corinthian Colleges, this is yet another step in removing the easy commercial environment that led to these colleges defrauding students only seeking an education and a future.