WASHINGTON _ The company that operates ITT Technical Institutes said Tuesday it was permanently closing all its campuses nationwide, blaming the recent move by the U.S. Education Department to ban the for-profit college operator from enrolling new students who use federal financial aid.
The shutdown will affect about 35,000 students who were preparing for the start of classes this month and cost more than 8,000 employees their jobs.
But those students and those who left the school within the past six months would be eligible to have loans for their ITT education forgiven if they want to start over at another school, federal officials said.
The Education Department has begun reaching out to students as well as community colleges near ITT campuses, which are being encouraged to be flexible in allowing ITT students to transfer their credits.
ITT Educational Services Inc. said it would focus on helping its students obtain their records and pursue their educations elsewhere.
"We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a nonprofit or public institution," ITT said in a statement.
The company has operated vocational schools on more than 130 campuses in 38 states, often under the ITT Technical Institute name. Last year, it enrolled 45,000 students and reported $850 million in revenue.
But like many other for-profit college operators, ITT has faced federal and state investigations of its recruiting and accounting practices.
The day after the U.S. Education Department's August decision, California imposed further restrictions on the company. Citing concerns about ITT's financial viability, the state Department of Consumer Affairs' Bureau for Private Postsecondary Education issued an emergency decision banning ITT from accepting new students at its 15 California locations.
The state also planned to seek to revoke ITT's approval to operate in California.
ITT blamed its closure on what it called unwarranted federal action.
"The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable," ITT said.
"We believe the government's action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again," the company said.
U.S. Education Secretary John B. King Jr. said Tuesday that his agency did not take its action lightly and that federal officials were committed to helping ITT's students.
"The school's decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk," King said in a blog post.
"We made a difficult choice to pursue additional oversight in order to protect you, other students and taxpayers from potentially worse educational and financial damage in the future if ITT was allowed to continue operating without increased oversight and assurances to better serve students," he said.
King said current or recently enrolled students could be eligible to have their student loan debt forgiven and might be able to transfer ITT credits to another school.
The Education Department on Tuesday sent an email to ITT's 35,000 enrolled students to alert them of the closure and options available to them, said Ted Mitchell, the undersecretary of education.
The department has a team of employees ready to answer telephone questions at 800-4FEDAID, has a special website for ITT students and is planning a series of webinars to help them figure out their options, he said.
"We think that it is important for students to continue what they started," Mitchell told reporters on a conference call. "There's nothing more important than a college degree in today's economy."
Students who were enrolled or had withdrawn from ITT within the past 120 days have two options, Mitchell said.
They could apply to have their federal student loans forgiven. Information is available at the department's ITT website of by calling the loan servicer.
Students also could try to transfer their ITT credits to another school. But if those credits are transferred to the same program of studies at another school, the loans for the ITT credits would not be eligible to be forgiven, Mitchell said.
"Each student will have to carefully evaluate his or her options and situation," he said.
Any students who feel they were defrauded can apply to have their federal student loans forgiven, Mitchell said.
Last month, in addition to the ban on enrolling new students who used federal aid, the U.S. Education Department also prohibited ITT from awarding its executives any pay raises or bonuses. It said the company must develop "teach-out" plans that would help current students finish their programs at other colleges if the chain shuts down. Current students, it said, could continue receiving federal grants and loans.
Earlier in the month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
Sen. Richard Blumenthal, D-Conn., said ITT's announcement "should put the entire for-profit college industry on notice: Predatory practices, the exploitation of taxpayers and the deception of students have no place in our higher education system."
"ITT Tech has cheated students, taxpayers and veterans for far too long," he said. "Now that this bad actor has collapsed under the weight of its own wrongdoing, we must do everything we can to ensure that its former students aren't left holding the bag."
