ITT Technical Institute

ITT Technical Institute
ITT Tech's Canton, Michigan campus
Motto Education for the Future
Type For-profit technical institute
Active 1969 (1969)–2016 (2016)
Chairman Kevin M. Modany
President Eugene W. Feichtner[1]
Students 40,015[2]
Location Carmel, Indiana, United States
Campus 130
Campus locations Approximately 130 campuses
Affiliations ITT Educational Services, Inc. (1994–2016)
ITT Corporation (1965–1994)
Website itt-tech.info

ITT Technical Institute (often shortened to ITT Tech) was a for-profit technical institute. Founded in 1969 and with approximately 130 campuses in 38 states of the United States, ITT Tech was one of the largest for-profit educators in the US as of 2015.[3]

Starting in about 2004, ITT Tech came under fire for questionable practices, including allegations of high-pressure recruiting tactics, falsified paperwork, high rates of default on student loans for ITT Tech students, and inadequate educational standards. Following a series of state and Federal investigations, the US Department of Education prevented students from using federally guaranteed student loans at any ITT Tech location effective August 2016. All ITT Tech campuses were closed as of September 6, 2016, and on September 16, 2016, ITT Tech filed for bankruptcy.[4]

Students who attended ITT Tech may be able to have their debt forgiven by applying to the US Department of Education for a borrower defense to repayment.[5] However, US Secretary of Education Betsy Devos announced on July 25, 2018 that the borrower defense rule would be repealed and replaced with a stricter repayment policy starting July 1, 2019.[6][7]

Background

ITT Tech is owned and was operated by ITT Educational Services, Inc. (Grey Market: ESINQ), a publicly traded company headquartered in Carmel, Indiana.[3][8] The company also owned and operated Breckinridge School of Nursing and Health Sciences schools.[3][9]

ITT Technical Institute charged among the highest tuition fees in the industry. It also had the industry's highest rate of loans that go into default within two years of attendance.[10] In 2014, the annual tuition for attending an ITT Tech campus ranged from $45,000 to $85,000.[11]

A group of more than 3500 students and former students called the ITT Tech Warriors have protested that they received a subprime education and called for debt forgiveness.[12]

According to one source, early career pay for associate degree graduates of ITT Tech's Seattle campus in 2015 was $42,400, while mid-career pay was $66,500.[13] As of September 2016, College Scorecard reported that graduates of ITT Tech schools nationally earned an average income of $38,400, measured at ten years after graduation.[14]

History

In 1946, ITT Tech was founded as Educational Services, Inc.[15]

From 1965 until its IPO in 1994, ITT Tech was a wholly owned subsidiary of the ITT Corporation (as "ITT/ESI").[16]

During its years in operation, the school was headquartered in Carmel, Indiana.[17]

By 1986, all its institutions had become known by the common name "ITT Technical Institute".

By 1999, ITT Corporation (which had merged with Starwood Hotels & Resorts Worldwide the year before) had divested itself completely of ITT Tech's shares. The schools were allowed to continue using the "ITT" name under license.[18]

In the mid-2000s, CEO Rene Champagne cashed out more than $50 million in stock.[19]

In April 2007 CEO Rene Champagne had step down from his CEO position.[20] Mr. Kevin Modany was the newly appointed CEO with continuing all his current positions of president and as a director, he had from early June 2002.[21]

It acquired the financially struggling Daniel Webster College (DWC) in Nashua, New Hampshire[22] in June 2009 for $29.3 million.[23][24][25] The nonprofit college was converted into a for-profit institution.[26]

In 2013, ESI began operating public charter schools in three cities: Indianapolis, Tempe, and Troy, Michigan.[27] In charter documents, the company referred to potential students as "educational have-nots".[28]

In 2016, Chinese investors Zhifeng Zhang and Yude Zhang became ESI insiders, purchasing more than 3,000,000 shares of ITT Educational Services stock.[29]

In July 2016, ESI reported that enrollment was projected to drop 30% to 40% from 2015 to 2016.[2]

In August 2016, the company was barred from enrolling new students who use government loans; on the 30th of the same month, ITT Technical Institute stopped accepting applications for new enrollment.[30] [31] At that time, ITT Tech said that existing students could still finish their studies, and ITT Tech would continue to operate until the last of its enrolled students either graduate or drop out.[31] However, on September 6, 2016, ITT Technical Institute announced that it was shutting down all its campuses effective immediately.[32] [32]

At the time of its system-wide closure on September 6, 2016, the school had more than 130 ITT Technical Institute campuses across the United States,[33] with more than 40,000 students and 8,000 employees.[34]

ITT Educational Services filed for Chapter 7 bankruptcy liquidation on September 16, 2016.[4]

As for DWC, Southern New Hampshire University (SNHU), a non-profit college in Manchester, New Hampshire, hired most of the college's faculty and staff allowing the 2016-17 academic year to proceed as usual. DWC's aviation and engineering programs were effectively absorbed into SNHU, which had offered to buy the Nashua campus.[35][36] However, its bid was rejected and SNHU instead opted to build a new science and engineering building on its own campus.[37][38]

Student loan debt

In 2014, Time magazine ranked ITT Technical Institute No. 2 on its list of "The 5 Colleges That Leave the Most Students Crippled By Debt".[39] Among ITT Tech graduates with loans due in 2011, 22% had defaulted by 2014. This compares with a default rate of about 13.7% for student loans generally. According to the Time magazine report, ITT Tech's default rate ranked second; the for-profit University of Phoenix had a lower default rate by percentage (19% at Phoenix versus ITT Tech's 22%), but the total number of students in default from Phoenix was much higher (45,123 Phoenix students versus 11,260 ITT Tech students).[39]

According to the College Scorecard, as of March 2016, 39% of ITT Tech graduates are paying off their debt, compared to the national average of 66% among all schools nationwide.[14] This percentage represents the number of graduates who were able to repay at least $1 in student loan debt in the three years after their graduation.[14]

In 2018, a settlement to a class action lawsuit was tentatively reached to wipe out student loans for attendees from 2006 to 2016.[40]

Academics

ITT Tech students were characterized by the school as "older and balancing family obligations with underemployment."[41]

The company's web site stated: "The programs employ traditional, applied and adult-learning pedagogies and are delivered through traditional, accelerated and distance methodologies in a learner-centered environment of mutual respect."[42]

ITT Tech offered associate, bachelor's, and master's (business-only, online) degrees. The state of Pennsylvania was the only state which forbade ITT Tech to offer master's degrees. As of December 31, 2015, the ITT Technical Institutes were offering 49 education programs in various fields of study.[3]

At the vast majority of campuses, the academic schedule was organized on the basis of four 12-week academic quarters in a calendar year, with new students beginning at the start of each academic quarter. Using that calendar, students taking a full course load could complete associate degree programs in seven or eight academic quarters, bachelor's degree programs in 14 or 15 academic quarters or a master's degree program in seven academic quarters.[3]

Depending on student enrollment, class sessions at ITT Technical Institute campuses were generally available during the day and evening. The courses for education programs that were taught online were delivered through an asynchronous learning network and had a prescribed schedule for completion of the coursework. At the vast majority of ITT Technical Institute campuses, the class schedule for education program residence courses and the coursework completion schedule for online courses generally provided students with the flexibility to maintain employment concurrently with their studies. Student surveys indicated that a majority of ITT Technical Institute students worked at least part-time during their programs of study. A significant portion of classes involved practical study in a lab environment.[3]

Accreditation

ITT Tech was nationally accredited by the Accrediting Council for Independent Colleges and Schools (ACICS). According to ITT Educational Services' annual report for fiscal year 2015, 31 campuses and more than 400 programs were not meeting ACICS standards for student retention.[3] Per the ITT Tech web site, "it is unlikely that any credits earned at an ITT Technical Institute will be transferable to or accepted by any institution other than an ITT Technical Institute."[42] In April 2016, ACICS issued the company a "show cause" order to request information establishing why the accreditor should continue to accredit the institution, since its programs did not comply with certain standards.[43]

Rankings

In 2015, financial news site TheStreet.com ranked ITT Technical Institute-Seattle on a list of "10 Best U.S. Two-Year Colleges That Actually Pay Off."[13] According to TheStreet.com, ITT's Seattle campus ranked fourth in terms of alumni reporting rewarding careers, only after its sister ITT Technical Institute schools in San Antonio, West Houston and San Diego.[13]

In August 1998, 15 former students alleged misrepresentation, fraud and concealment by ITT arising out of their recruitment and education at ITT campuses. In September 1998, ITT settled all of the claims.[44]

On February 25, 2004, federal agents raided the company's headquarters and ten of its campuses in Indiana, Texas, Virginia, Florida, Louisiana, Nevada, California and Oregon.[45] The investigation negatively affected the company's stock and triggered several class action lawsuits by investors.[46][47]

In 2004 the Office of the Attorney General for the State of California ("CAG") investigated ITT Technical Institutes in California. The CAG's investigation was in response qui tam actions filed against the company under the state and/or federal False Claims Acts alleging that ITT Tech falsified records relating to student attendance, grades and academic progress, falsified student grade point average calculations used to qualify students for financial aid under the State's Cal Grant Program and retaliated against employees who may have complained about those alleged acts.[48]

In 2004, Omer Waddles, ESI's CEO, and a former counsel for Edward Kennedy, resigned.[49][50]

In October 2005, ITT agreed to pay $730,000 to settle a lawsuit with California in which employees alleged that it inflated students' grade point averages so they qualified for more financial aid from the State of California.[51]

A February 2011 investigative report by WTMJ-TV in Milwaukee found evidence of widespread grade inflation at the school's Milwaukee area location in Greenfield. In one instance, a student got 100% on a computer forensics assignment by emailing the professor a noodle recipe. The station believed this to be a way to increase federal student aid funding.[52]

In 2013, a complaint was filed against ESI and two ESI executive officers in US District Court for the Southern District of New York regarding securities. The Massachusetts Laborers' Annuity Fund filed a similar complaint and the cases were consolidated. The Plumbers and Pipefitters National Pension Fund and Metropolitan Water Reclamation District Retirement Fund were the lead plaintiffs.[53] Students continue to allege that private loans with JP Morgan Chase and other banks are predatory.[54] In 2013 USA Today listed more than 50 ITT campuses as "red flag" schools because their student loan default rates were higher than their graduation rates.[55]

On February 26, 2014, the Consumer Finance Protection Bureau (CFPB) sued ITT, alleging that they used high-pressure tactics to coerce students into high-interest private loans that were likely to end in default.[54][56] ESI is also being investigated by at least a dozen state attorneys general for allegations of fraud and deceptive marketing.[53][57][58] On October 19, 2015, the U.S. Department of Education announced that because of the company's failure "to meet its fiduciary obligations," it was being placed under "heightened cash monitoring".[59]

According to a July 2014 Senate Health, Education, Labor, and Pensions (HELP) committee report, 57% of ITT programs would fail the Department of Education's proposed Gainful Employment rule.[60]

In a 2015 federal whistleblower lawsuit, a former ITT Tech dean of academic affairs alleged that the company (1) directed recruiters to use coercive tactics to pressure students into enrolling, (2) admitted students who were unable to succeed at the school, (3) unlawfully paid sales commissions to recruiters, and (4) lied to students about their financial obligations and transferability of ITT credits to other schools, and about the jobs students could expect to get after graduating.[61]

In 2015, The California Department of Veterans Affairs (CalVet) temporarily ordered ITT Tech to stop enrolling new or returning students who fund their educations with GI Bill benefits.[62]

In 2015, the Securities and Exchange Commission announced fraud charges against ITT Educational Services Inc., its chief executive officer Kevin Modany, and its chief financial officer Daniel Fitzpatrick.[63]

In 2016, Massachusetts Attorney General Maura Healey sued ITT Educational Services for allegedly "misleading and harassing students." [64][65] Breckinridge nurses also sued ITT Education for fraud.[66]

The following states issued subpoenas or Civil Investigative Demands against ITT Tech between the beginning of 2004 and the end of May 2014, under the authority of their consumer protection statutes: Arkansas, Arizona, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Tennessee and Washington.[67]

On August 25, 2016, the U.S. Department of Education banned ITT Tech from enrolling students who receive federal aid and at the same time doubled the surety funds that ITT Tech was required to have, and to produce those funds within 30 days. Stock markets reacted with a punishing 35% drop which triggered a halt in trading, raising concerns about whether ITT Educational would be able to survive this latest decision.[68] On September 6, 2016, ITT Tech ceased operations and closed all of its locations, issuing a statement that attributed the closing to the Department of Education's actions.[32]

References

  1. ↑ "Management & Directors".
  2. 1 2 "ITT Educational Services, Inc. Reports 2016 Second Quarter Results". Archived from the original on 2017-02-14. Retrieved 2017-01-15.
  3. 1 2 3 4 5 6 7 "Form 10-K Annual Report - For the fiscal year ended December 31, 2015". U.S. Securities and Exchange Commission. March 15, 2016.
  4. 1 2 "ITT Educational Services, Inc., et al". Retrieved October 31, 2016.
  5. ↑ https://studentaid.ed.gov/sa/about/announcements/itt
  6. ↑ https://www.rollingstone.com/politics/politics-news/betsy-devos-borrower-defense-703541/
  7. ↑ https://www.forbes.com/sites/prestoncooper2/2018/08/02/borrower-defense-trump-administration-sullies-otherwise-sensible-reforms/#7081bf6e56e8
  8. ↑ "FAQ." ITT Technical Institute. Retrieved on November 23, 2011. "Our principal executive offices are located at: ITT Educational Services, Inc. 13000 North Meridian Street, Carmel, Indiana 46032"
  9. ↑ "Breckinridge School of Nursing and Health Sciences @ ITT Technical Institute".
  10. ↑ Bill Alpert (April 14, 2012). "Clever Is as Clever Does". barrons.com.
  11. ↑ "2014/2015 Total Cost of Attendance Table" (PDF). ITT Educational Services, Inc. Archived from the original (PDF) on 2013-10-21. Retrieved 2013-08-22.
  12. ↑ "College Chain Faces Mounting Troubles". August 10, 2016.
  13. 1 2 3 McClay, Rebecca (October 31, 2015). "10 Best U.S. Two-Year Colleges That Actually Pay Off". Retrieved July 7, 2016.
  14. 1 2 3 "ITT Technical Institute". College Scorecard Data. United States Department of Education.
  15. ↑ http://www.nydailynews.com/life-style/itt-tech-institute-tv-ads-brand-building-best-article-1.2783203
  16. ↑ https://www.dailykos.com/stories/2016/8/27/1564468/-The-Death-of-For-Profit-Colleges
  17. ↑ https://www.indystar.com/story/news/education/2017/01/11/look-inside-itt-techs-closed-carmel-headquarters/96118888/
  18. ↑ http://www.ittesi.com/index.php?s=52
  19. ↑ http://www.insider-monitor.com/trading/cik922475-2.html
  20. ↑ "ITT Educational announces that Rene Champagne, Chairman and Chief Executive Officer, will step down". www.reuters.com. The Thomson Reuters. June 24, 2007.
  21. ↑ "ITT Educational Services, Inc. Appoints Kevin M. Modany As President and Chief Operating Officer". www.prnewswire.com. PR Newswire. April 26, 2005.
  22. ↑ Blumenstyk, Goldie (April 23, 2009). "Parent of ITT Technical Institutes Buys Nonprofit Daniel Webster College". Chronicle.com. Retrieved June 17, 2009.
  23. ↑ "N.H. College: Without sale, accreditation would go". SeacoastOnline.com. May 4, 2009.
  24. ↑ "A-level results: grade inflation is just a cruel confidence trick".
  25. ↑ Jan, Tracy (July 3, 2009). "Financial Pressure Forces Reinvention at Small Colleges". Boston.com.
  26. ↑ "Daniel Webster College President Fired". Aero News Network. August 7, 2009. Retrieved September 17, 2016.
  27. ↑ Kamenetz, Anya (December 14, 2014). "A For-Profit College Tries The Charter School Market". NPR. Retrieved 2016-09-06.
  28. ↑ "The Early Career Academy Charter School: Application".Early Career Academy, Inc. March 15, 2013. "Each of the 147 ITT Tech campus' student population represents the communities in which they reside, and we believe this will be observed with The Early Career Academy. Based on the 2012, data the average age of the ITT Tech student is 28 years old and one in five has an average of 26.9 hours of transfer credit; and 68 percent take advantage of Pell grant. This tells us they that many of these students have tried other postsecondary institutions and for some reason it did not work for them. It also tells us that they do not have substantial means. Many are the first in their extended family to graduate from college. Many of these students have lost a decade of productive work in a career and consequently have not entered the middle class. They are part of the educational have-nots and are at ITT Tech to reverse course. We believe that we will attract these same types of students a decade earlier allowing them to forego the lost decade. The Early Career Academy will eliminate the lost decade, providing entrance into the middle class, the American Dream and a career of which they can be proud."
  29. ↑ "Form 4 ITT EDUCATIONAL SERVICES For: Jul 18 Filed by: Zhang Zhifeng". ITT Educational Services Inc. StreetInsider.com. July 18, 2016.
  30. ↑ Briggs, James (August 29, 2016). "ITT Tech ceases all student enrollment". IndyStar.com. The Indianapolis Star. Retrieved September 6, 2016.
  31. 1 2 Nunez, Michael (August 30, 2016). "Rest In Peace ITT Tech, You Bastards". Gizmodo.com. Retrieved 2016-09-06.
  32. 1 2 3 "ITT Technical Institute Closes All Campuses". WJZ-TV. September 6, 2016. Retrieved September 6, 2016.
  33. ↑ "Our Campuses". ITT Technical Institute. Archived from the original on April 22, 2016.
  34. ↑ Smith, Ashley A. (September 7, 2016). "The End for ITT Tech". Inside Higher Ed.
  35. ↑ Hayward, Mark (September 13, 2016). "SNHU to 'rescue' Daniel Webster College". New Hampshire Union Leader. Retrieved September 13, 2016.
  36. ↑ Houghton, Kimberly (September 19, 2016). "SNHU offers to buy Daniel Webster College campus". New Hampshire Union Leader.
  37. ↑ Carley, Shane (January 17, 2017). "SNHU Welcomes Daniel Webster Students (and Programs) to Campus". Southern New Hampshire University. Retrieved February 15, 2017.
  38. ↑ Swanson, Cassidy (July 30, 2017). "SNHU will not buy former Daniel Webster College campus, university rep says". Retrieved July 31, 2017.
  39. 1 2 Clark, Kim (September 24, 2014). "The 5 Colleges That Leave the Most Students Crippled By Debt". time.com. Time. Retrieved September 6, 2016.
  40. ↑ Plan to bring relief to ITT students gets preliminary OK
  41. ↑ Inc., ITT Educational Services,. "ITT Technical Institute Freezes Tuition for Sixth Straight Year".
  42. 1 2 "ITT Technical Institute". ITT Technical Institute. Archived from the original on 2005-10-25.
  43. ↑ "Under Scrutiny Itself, For-Profit Accreditor Gets Tough With ITT Tech". Inside Higher Ed. April 22, 2016.
  44. ↑ "Final Prospectus - Filed Pursuant To Rule 424(b)(4)". U.S. Securities and Exchange Commission. January 27, 1999.
  45. ↑ "Feds serve warrants at ITT Tech campuses". February 26, 2004. Archived from the original on February 6, 2006.
  46. ↑ "MCPmag.com – Microsoft Certified Professional Magazine Online". certcities.com.
  47. ↑ Mark Jewell (February 26, 2004). "ITT's CEO Expects Lengthy Federal Investigation, Stock Slips". Channel Web Network. Archived from the original on March 22, 2009.
  48. ↑ https://www.sec.gov/Archives/edgar/data/922475/000119312506026673/d10ka.htm
  49. ↑ http://www.ittesi.com/index.php?s=43&item=25
  50. ↑ http://www.prnewswire.com/news-releases/itt-educational-services-inc-announces-that-omer-waddles-joins-management-team-as-executive-vice-president-75074702.html
  51. ↑ "ITT, Calif. Settle False Claims Lawsuit". insidehighered.com.
  52. ↑ Diamant, Aaron. "I-Team: Easy A's". WGBA-TV. Archived from the original on February 18, 2011. Retrieved November 2, 2014.
  53. 1 2 "Form 10-Q Quarterly Report - For the quarterly period ended June 30, 2014". U.S. Securities and Exchange Commission. November 19, 2014.
  54. 1 2 "CFPB Sues For-Profit College Chain ITT For Predatory Lending". Consumer Financial Protection Bureau.
  55. ↑ Mary Beth Marklein, Jodi Upton and Sandhya Kambhampati, USA TODAY (July 2, 2013). "College default rates higher than grad rates". USA TODAY.
  56. ↑ Lopez, Ricardo. "Regulator accuses ITT for-profit college chain of predatory lending". latimes.com. Retrieved February 27, 2014.
  57. ↑ "State Attorneys General Open Major Investigations of Big For-Profit Colleges". The Huffington Post.
  58. ↑ Stephanie Armour; Alan Zibel (January 13, 2014). "CFPB, State Attorneys General Expand For-Profit College Probe – WSJ". WSJ.
  59. ↑ Nick DeSantis and Goldie Blumenstyk, "U.S. Tightens Restrictions on ITT's Access to Federal Student Aid", Chronicle of Higher Education, October 20, 2015 Accessed Oct 21, 2015
  60. ↑ "ITT Summary: 2012 U.S. Senate Committee Finding + 2015 Update" (PDF). SquareSpace.
  61. ↑ David Halperin (January 21, 2016). "Blockbuster Lawsuit Claims Abusive Practices Persist at ITT Tech". Huffington Post.
  62. ↑ "California Suspends ITT Tech GI Bill Eligibility". Military.com. May 18, 2015.
  63. ↑ "SEC Announces Fraud Charges Against ITT Educational Services". U.S. Securities And Exchange Commission. May 12, 2015.
  64. ↑ David Halperon (April 4, 2016). "Massachusetts Sues ITT Tech for Misleading and Harassing Students". Huffington Post.
  65. ↑ Bamzi Banchiri (April 5, 2016). "Massachusetts sues ITT Tech, alleging predatory practices". The Christian Science Monitor.
  66. ↑ Kevin Lessmiller (April 8, 2016). "Students Say ITT Recruiters Misled Them". Courthouse News Service. Archived from the original on April 17, 2016.
  67. ↑ "Government Investigations and Lawsuits Involving For-Profit Schools (2004 – May 2014)" (PDF). National Consumer Law Center.
  68. ↑ "Feds ban ITT Educational from enrolling students on federal aid (2016 – Aug 2016)". Indianapolis Business Journal.
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