After 50 years of providing higher education services, ITT Technical Institute closed its doors abruptly in September, without offering its students a fall semester. With more than 8,000 ITT Tech employees now jobless and all students left without a clear plan, this news comes as a shock to many.
Exactly What Happened?
In a news release on September 6, ITT Technical Institute expressed its great displeasure with the U.S. Department of Education. After two years of tumultuous dealings, the Education Department had banned ITT Tech in August from enrolling new students on federal aid. To put things into perspective, ITT Tech made 80% of its revenue from federal aid — such as Pell Grants and student loans — in 2015. So this ban came as a big blow to the school.
To make things worse, the Education Department required ITT Tech to post an additional letter of credit worth $153 million. This was on top of $94 million that the school had already guaranteed, beginning back in 2014. As one could imagine, these two hits were too much for ITT Tech to handle. The school had to permanently shut down.
What Does This Mean For The Students?
The school closing puts a lot of students in limbo. They had planned to complete their degree programs and enter the workforce. Now, they are left with course credits, and are unsure of what to do with them.
Fortunately, ITT Tech has retained a small portion of its staff to help these students. They will help students gather their records, and assist them in navigating their future educational plans. There are two primary options for these displaced students:
- Credits transfer: No matter what, students will not be able to finish their current programs at ITT Tech. If they wish to continue their education, they’ll need to enroll in a college that offers a comparable program. That school will evaluate ITT Tech’s coursework and decide which — if not all — credits can be transferred over. Most ITT Tech students will find better luck transferring credits to community colleges rather than private universities.
- Student loan forgiveness: Those students who do not plan on transferring their credits are eligible for student loan forgiveness. This option gives students the chance to start over and pursue their education elsewhere without the financial baggage of this abruptly-ended education. According to the U.S. Department of Education, one is eligible for 100% discharge of federal loans if the school closes while one is enrolled or within 120 days after withdrawal.
The U.S. Department of Education has provided resources to help former ITT Tech students navigate this whole process. There is a dedicated hotline (1-800-4FEDAID) where staff members are equipped to answer questions. The U.S. Department of Education is also hosting webinars throughout the month to educate former students on their options.
What You Can Do To Protect Yourself
With this news, you may be wondering what the best course of action is to protect your higher education. One recommendation is to avoid for-profit colleges if possible. For-profit colleges are attractive to some because they tend to offer more night and weekend classes. They also tend to offer more job-specific degrees and claim to have high job placement percentages upon student graduation.
Unfortunately, that isn’t always the case. In fact, there is a lawsuit taking place right now against ITT Tech for misleading students regarding its job placement success for a specific program. The recommendation to avoid for-profit colleges doesn’t come without merit: numbers show that enrollment in for-profit colleges is already dwindling.
Another rule of thumb is to stick to schools that have been around for a while. These colleges and universities — mostly non-profits — have a proven track record of success. They are much less likely to close down in the near future. For example, New York University was founded in 1831 and the University of California, Berkeley was founded in 1868. It’s doubtful that they will go anywhere in the time it will take you to finish your education.
On the other hand, for-profit colleges like the University of Phoenix and DeVry University were founded in 1976 and 1931 respectively. Having less of a track record makes these schools a bit more risky.
The news of ITT Tech’s permanent closing is unfortunate. The good thing is that there are options for those students who were displaced. They can either transfer their credits to a comparable program at another college or opt for complete student loan forgiveness.
For those of you concerned about the outlook of your higher education, you can protect yourself by choosing a non-profit college or otherwise sticking to colleges that have been around for centuries.
Updated October 9, 2016 and originally published September 14, 2016.