Editorial: ITT Tech closure strands students
Throughout President Obama’s tenure he has zealously targeted for-profit education institutions, resulting in the closure of some of the largest schools. ITT Technical Institutes is the latest to go, leaving thousands of students out of classrooms as the new school year begins.
No doubt the government thinks this closure is in the best interest of students. But for the 40,000 individuals who attended ITT’s 130 U.S. campuses — five are in Michigan — the news this week that their academic plans are on hold was tragic.
The for-profit schools, with branches in Canton, Dearborn, Grand Rapids, Swartz Creek and Troy, were cut off from federal financial aid based on allegations — never proven — it defrauded investors and misled students about job prospects after graduation. The schools offered degrees in information technology, electronics, drafting and design, criminal justice, business and nursing and health sciences.
The company places full blame for its closure on the U.S. Department of Education, which had recently demanded ITT put up $153 million in collateral (double the cash it had on hand) to cover government losses if the company failed. ITT called the government’s actions “reprehensible.”
Yet the shuttering of this institution shouldn’t be surprising, given the Obama administration’s track record. Corinthian Colleges, one of the largest for-profit colleges, had to shut down last year for similar reasons. Expect others to follow.
Too bad ITT didn’t have Bill Clinton on its payroll. That’s apparently what it takes to keep a large for-profit out of the government’s crosshairs. As reported this week, Laureate International Universities paid the former president $17.6 million to serve as its honorary chairman. Conveniently, the school also contributed to the Clinton Foundation. Despite having a similar graduation rate to ITT and a greater student debt load, Laureate remains untouched.
Under Obama, the federal government has imposed a host of limitations on for-profits. The Education Department mandated gainful employment rules, forcing the schools to prove students are making it into jobs post-graduation and keeping close tabs on debt-to-income ratios.
The administration is suspicious because for-profit colleges account for about 13 percent of higher education enrollment, yet have nearly 50 percent of federal student loan defaults. Since the government controls roughly $150 billion each year in federal loans and grants, it has a lot of sway. Obama has tried to monitor all colleges and universities, with his college scorecard released last fall and the concept of “datapalooza” before that.
While the government should try to protect its huge taxpayer-backed financial aid investment, holding institutions solely responsible for the success or failure of their students isn’t fair.
It’s also ironic that education officials say ITT’s closure is in the best interest of taxpayers, given that they’ve admitted taxpayers are on the hook for an estimated $500 million in student debt.
Students are in a bind, too. Current students will be able to cancel federal loans if they don’t transfer their credits elsewhere. If they are able to transfer, they are responsible for the debt. Yet because of differences in accreditation, many community colleges won’t accept ITT transfer credits.
That means numerous students will have to start over.
The closure of ITT was handled clumsily, and the government has likely discouraged many of these students from attaining any sort of degree. Rather than protecting students and taxpayers, the Obama administration has done the opposite.