It looks like the beginning of the end for ITT Tech
The news came four days after the US Department of Education (ED) imposed sanctions on ITT Education Services, the college chain's parent company, barring the school from enrolling students who use federal financial aid and requiring ITT to provide a letter of credit showing it's sufficiently funded.
Those sanctions will likely cause the demise of ITT Tech, according to Ben Miller, a senior director at the Center for American Progress and a former senior policy advisor at the Department of Education (ED).
"It is highly unlikely ITT can meet the requirements requested by the Department," Miller told Business Insider. "It does not have the $153 million needed to satisfy the financial conditions and now will not have new students to help bring in revenue."
The ED has required ITT Tech to post a $153 million letter of credit on top of the $94 million reserve requirements that it must already meet. The sanctions prohibiting the enrollment of students who use financial aid struck such a blow to ITT Tech because, like most for-profit colleges, it's highly dependent on federal aid.
Since ITT Tech must meet the ED's conditions by September 5, Miller anticipates a bleak outlook for the company.
"Barring a big change, I would guess that by then [ITT] would either have tried to sell itself or will have declared bankruptcy, unless it sues and wins an injunction, which is a possibility but likely difficult," he said.
ITT Tech is under multiple federal and state investigations relating to the way the for-profit organization runs its operations. And The Accrediting Council for Independent Colleges and Schools (ACICS), ITT's accreditor, said that the company's "responses to ACICS requests for information ... call into question the Institutions' administrative capacity, organizational integrity, financial viability and ability to serve students in a manner that complies with ACICS standards."
Last year, the for-profit chain fall into hot water with the ED because of its refusal to provide the proper accounting of federal grants it distributes to students dating back to 2009, the department said in a letter to ITT. The ED then placed restrictions on federal financial aid at ITT.
The ED said its decision last week to completely prohibit the school from enrolling any new student who receive financial aid was made to "protect students and taxpayers."
ITT Tech did not immediately respond to a request for comment.