ITT Technical Institute

ITT Educational Services, Inc. (Grey Market: ESINQ), a publicly traded company headquartered in Carmel, Indiana, owned and operated ITT Tech.[3][7] The company also owned and operated the Breckinridge School of Nursing and Health Sciences schools.[3][8]

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.[9] In 2014, the annual tuition for attending an ITT Tech campus ranged from $45,000 to $85,000.[10] Starting in about 2004, ITT Tech came under fire for questionable practices. The allegations included high-pressure recruiting tactics, falsified paperwork, high default rates on ITT Tech student loans, and inadequate educational standards.

Following state and federal investigations, the United States Department of Education prevented students from using federally guaranteed student loans at ITT Tech locations effective August 2016. All ITT Tech campuses were closed by September 6, 2016. On September 16, 2016, ITT Tech filed for bankruptcy.[11] In 2018, ITT Tech's court-appointed bankruptcy trustee sued the United States Department of Education and lenders to repay $1.5 billion in claims against ITT. They alleged that regulators took advantage of low-income students and neglected their oversight duties.[12]

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.[13]

In 1946, ITT Tech established as Educational Services, Inc.[14] From 1965 until its IPO in 1994, ITT Tech was a wholly owned subsidiary of the ITT Corporation (as "ITT/ESI").[15] During its years in operation, it was based in Carmel, Indiana.[16] By 1986, all its institutions had become known by the common name "ITT Technical Institute." By 1999, ITT Corporation (which had merged with Starwood the year before) had divested itself completely of ITT Tech's shares. The schools were allowed to continue using the "ITT" name under license.[17]

In the mid-2000s, CEO Rene Champagne cashed out more than $50 million in stock.[18] In 2007 CEO Rene Champagne stepped down from his CEO position.[19] 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.[20]

It acquired the financially struggling Daniel Webster College (DWC) in Nashua, New Hampshire[21] in June 2009 for $29.3 million.[22][23][24] The nonprofit college converted into a for-profit institution.[25] In 2013, ESI began operating public charter schools in three cities: Indianapolis, Tempe, and Troy, Michigan.[26] In charter documents, the company referred to potential students as "educational have-nots."[27]

In 2016, Chinese investors Zhifeng Zhang and Yude Zhang became ESI insiders, purchasing more than 3,000,000 shares of ITT Educational Services stock.[28] In July 2016, ESI reported that enrollment was projected to drop by 30% to 40% from 2015 to 2016.[2] In August 2016, the U.S. Department of Education barred the company from enrolling new students who use government loans. On the 30th of the same month, ITT Technical Institute stopped accepting applications for new enrollment.[29] [30] At that time, ITT Tech said that existing students could still finish their studies. ITT Tech also said that they would continue to operate until the last of its enrolled students either graduate or drop out.[30] However, on September 6, 2016, ITT Technical Institute announced that it was shutting down all its campuses, effective immediately.[31][31]

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,[32] with more than 40,000 students and 8,000 employees.[33] ITT Educational Services filed for Chapter 7 bankruptcy liquidation on September 16, 2016.[11]

As for DWC, Southern New Hampshire University (SNHU), a nonprofit college in Manchester, New Hampshire, hired most of the college's faculty and staff. This arrangement allowed the 2016–17 academic year to proceed as usual. DWC's aviation and engineering programs were effectively transferred into SNHU, which had offered to buy the Nashua campus.[34][35] However, its bid got rejected, and SNHU instead opted to build a new on-campus science and engineering building.[36][37]

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".[38] Among ITT Tech graduates with loans due in 2011, 22% had defaulted by 2014. This statistic 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%). However, the total number of students in default from Phoenix was much higher (45,123 Phoenix students versus 11,260 ITT Tech students).[38]

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

In 2018, a settlement to a class-action lawsuit was tentatively reached to wipe out student loans for attendees from 2006 to 2016.[40] Students who attended ITT Tech may be able to have their debt forgiven by applying to the United States Department of Education for borrower defense to repayment.[41] However, Secretary of Education Betsy DeVos announced on July 25, 2018, that the borrower defense rule would be rewritten and replaced with a stricter repayment policy starting July 1, 2019.[42][43] On December 13, 2018, a U.S. federal court ruled that the Department's decision to do this was "arbitrary and capricious." The court sided with plaintiffs in invalidating the stay put in place by the Department of Education. There will be an additional hearing on December 14, 2018, to "address remedies."[44][45][46]

In June 2019, Student CU Connect CUSO, a private lender for ITT Tech, settled with the Consumer Financial Protection Bureau and 44 states and the District of Columbia. The settlement called for CUSO to forgive a reported $168 million in private student loans. CUSO agreed to stop collecting on, and discharge, all of the loans.[47]

The school characterized ITT Tech students as "older and balancing family obligations with underemployment."[48] 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."[49]

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, ITT Tech organizes the academic schedules based on 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 seventeen 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 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. A significant portion of classes involved practical study in a lab environment.[3]

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.[52]

In 2004, federal agents raided the company's headquarters and ten of its campuses in Indiana, Texas, Virginia, Florida, Louisiana, Nevada, California, and Oregon.[53] The investigation negatively affected the company's stock and triggered several class-action lawsuits by investors.[54][55] The same year, 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 to qui tam actions filed against the company under either state, federal, or both False Claims Acts. (Qui tam actions are writs through which private individuals who assist a prosecution can receive part or all of the damages or financial penalties recovered by the government as a result of the prosecution). The probe alleged that ITT Tech falsified records relating to student attendance, grades, and academic progress. It also said that ITT Tech 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.[56] Omer Waddles, ESI's CEO, and a former counsel for Edward Kennedy, also resigned.[57][58]

In October 2005, ITT agreed to pay $730,000 to settle a lawsuit with California. The involved employees alleged that it inflated students' grade point averages, to qualify them for more financial aid from the State of California.[59]

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.[60]

In 2013, a complaint was filed against ESI and two ESI executive officers in U.S. District Court for the Southern District of New York regarding securities. The Massachusetts Laborers' Annuity Fund filed a similar complaint, and the cases went consolidated. The Plumbers and Pipefitters National Pension Fund and Metropolitan Water Reclamation District Retirement Fund were the lead plaintiffs.[61] Students continue to allege that private loans with JP Morgan Chase and other banks are predatory loans.[62] 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.[63]

On February 26, 2014, the Consumer Financial Protection Bureau (CFPB) sued ITT. The CFPB alleged that they used high-pressure tactics to coerce students into high-interest private loans that were likely to end in default.[62][64] ESI is also being investigated by at least a dozen state attorneys general for allegations of fraud and deceptive marketing.[61][65][66] 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.[67]

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.[68] 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.[69] The same year, 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.[70] In 2015, the Securities and Exchange Commission also announced fraud charges against ITT Educational Services Inc., its chief executive officer Kevin Modany, and its chief financial officer Daniel Fitzpatrick.[71]

In 2016, Massachusetts Attorney General Maura Healey sued ITT Educational Services for allegedly "misleading and harassing students."[72][73] Breckinridge nurses also sued ITT Education for fraud.[74] 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.[75] On August 25, 2016, the U.S. Department of Education banned ITT Tech from enrolling students who receive federal aid. The Department also 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.[76] 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.[31]

• Official website
• ITT Educational Services, Inc., et al. bankruptcy website