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AFR Statement: ITT Tech’s Business Model was Entirely Dependent on Government Support

Submitted by on September 6, 2016 – 12:45 pm
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FOR IMMEDIATE RELEASE: Sep. 6, 2016

CONTACT: Alexis Goldstein, Americans for Financial Reform
alexis@ourfinancialsecurity.org / 202-973-8005

The Department of Education took important steps to protect both students and taxpayers when on August 25, it prohibited the for-profit college ITT Educational Services, Inc. (ITT) from enrolling new students using federal financial aid. ITT’s announcement of its closure today shows that its business model was entirely dependent on government support.

With ITT’s closure, we call on the Department of Education to inform all enrolled students and those who have recently withdrawn of their right to cancellation of their federal student loans, also known as a closed school discharge.

ITT’s troubles go much further back than the Department’s decision to limit enrollment. ITT has long abused not only its students but also U.S. taxpayers through their misconduct. Over the years, they have faced numerous lawsuits and investigations by regulators and law enforcement, including a lawsuit by the Securities and Exchange Commission for fraud, a lawsuit by the Consumer Financial Protection Bureau for predatory lending, and an investigation by 13 states attorneys general for lying to students. Given this record, we also call on the Department of Education to vigorously investigate the past misconduct of ITT, and release any findings publicly.

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