ITT shutdown sad but necessary

The shutdown of ITT Educational Services, including the school in Spokane Valley, was an inevitable consequence of the shaky status of for-profit colleges reliant on federal financial aid.

In 2015, it was Corinthian Colleges that closed after federal and state complaints about its recruiting and loan practices. That came after the U.S. Department of Education began demanding more accountability from for-profit schools and the entities that grant them accreditation.

In June, the feds slammed the Accrediting Council for Independent Colleges and Schools, which accredited Corinthians and ITT Tech. The council failed to stop a misleading recruiting and marketing pitch, and failed to stop schools from falsifying data, according to a Department of Education report.

On Aug. 25, the Department of Education banned ITT from enrolling students who use federal financial aid programs, in part because ACICS determined the chain was “not in compliance, and is unlikely to become in compliance.”

The chain of vocational schools could not survive without its students being able to take out taxpayer-subsidized loans. Hence, Tuesday’s announcement that ITT was ceasing operations.

The problem with questionable for-profit colleges is they are expensive and often fail to fulfill their promises.

To defray the high cost, recruiters urge students to apply for federal loans, and the default rates are high. A 2010 Education Trust report traced 46 percent of loan defaults back to students at for-profit schools. Only 22 percent of students seeking a bachelor’s degree earn one – compared with 55 percent at public universities and 65 percent at private, nonprofit colleges.

In addition, the report found, students who attend for-profit colleges ultimately earn less and are more likely to be unemployed.

Another issue is that credits earned may turn out to be worthless. Nursing students, for instance, may find their credits won’t transfer to programs offering a bachelor’s of science in nursing. Similarly, students may not be adequately prepared to pass state board exams. The Massachusetts attorney general and nursing students in Tennessee sued ITT over such issues.

The federal government, which already operates at a deficit, was right in cracking down on for-profit colleges that were siphoning off millions of dollars in federal aid without much to show for it.

The sad part is the fate of students who have already enrolled. The Department of Education’s blog notes that ITT students may be eligible to have their student loans discharged. The blog says the agency will be contacting students by email to explain the options, whether it’s starting over or trying to transfer credits to another institution.

The ITT shutdown is certainly painful for students, especially those close to graduating. But the government could not afford to let millions of dollars in federal aid remain at risk.

As for prospective students at other for-profit colleges, our advice is twofold: Do your homework, and buyer beware.