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ITT Tech stops enrollment following federal crackdown

MADISON, Ala. (WHNT)-- ITT Tech has ceased enrollment of new students, according to a notice its website.  This comes after the U.S. Department of Education banned the for-profit college chain ITT Educational Services from enrolling new students who use federal financial aid.

Department officials announced the ban Thursday among a series of measures meant to increase financial oversight of the company, which has been the subject of state and federal investigations focusing on its recruiting and accounting practices.

ITT also is being ordered to pay the department $152 million within 30 days to cover liabilities in case it closes, and the company is barred from giving pay raises or bonuses to its executives.

Education Secretary John King says it would be irresponsible to let new students enroll amid concerns about the chain's ability to operate.

ITT officials did not immediately comment. The company enrolls 45,000 students in 38 states. According to US Department of Education data, there are 372 students enrolled at the Madison location.

While this ban comes from the Federal government, we asked Alabama state Board of Education member Mary Scott Hunter what it means. Hunter has experience serving as a trustee for multiple schools, and is familiar with the reasons why schools count on students' ability to get federal aid to pay for classes.

"This doesn't happen very often," she said. "It's a very, very serious situation."

Hunter said if the school has stopped enrollment, and can't get money from students (most of whom rely on aid in some way), it's more than crippling for the institution.

"You're pretty much out of business," she said. "Your ability to attract and keep a student body is pretty much taken down to zero."

Understandably, this may worry some students. Hunter has words of encouragement for students who attend, now, though.

"Make sure you're investigating all the other great tech options in the Tennessee Valley," she explained, listing community colleges Drake and Calhoun. "There are other places to get a fabulous tech education, for less money."

The problem is right on the ITT Tech website, though: a consumer disclaimer stating credits are unlikely to transfer. Hunter, and a US Department of Education spokesman, say it's worth a shot though.

This US Department of Education blog post is a great resource for students who go to ITT now, or just found out they can't enroll. The US Department of Ed spokesman writes that the federal crackdown on ITT doesn't affect current students' aid, and they can continue to go to classes with their federal student assistance. It also has no effect on alumni, whose degrees are already earned. It lists some options for students:

As a current ITT student with federal loans, you have some options:

  1. You can continue your courses at ITT with your federal student aid. There’s no immediate change to your program.
  2. You can transfer your credits to a new school (if that school accepts them) and complete your education.
  3. You can pause your education and wait to see how this matter resolves itself in the coming months. If ITT closes before you finish your program and you don’t transfer your credits, you will likely be eligible to discharge your federal loans.

Many question if the institution can recover from this ban on enrollment.