Editorial: ITT closure undermines higher education

ITT Technical Institute made millions selling overpriced training for skilled trade jobs and marketing it as the American Dream.

Now, it’s paying the price for selling education for a profit — unfortunately, so are its students.

This week, ITT Technical Institute announced that it will cease operations nationwide at more than 130 campuses in 39 states — two of which are in the Pittsburgh area — after the U.S. Department of Education said it could no longer enroll new students using federal financial aid funds such as Pell Grants and student loans. More than 8,000 employees will lose their jobs and about 35,000 students will be affected by the closure.

Over the last two years, ITT, one of the largest for-profit technical institutes in the nation, has been under federal investigation for allegations of fraud, deceptive marketing and steering students into predatory loans. In 2014, the Consumer Financial Protection Bureau sued the chain for exploiting its students by pushing them to borrow private loans that would likely end in defaults.

Although the tech school claimed to give an education to underserved populations, its business practices proved to hurt the very people — typically older adults coming back to school for the first time since high school — it was trying to serve. Instead of giving its students jobs, thousands of them fell into crippling debt and loan defaults similar to that of the 2008 financial crisis.

Once again, we’ve learned the hard way that using a public service such as education to make a profit only leads to excessive practices that fail to serve people adequately.

In 2015, ITT reported almost $850 million in total revenue — $580 million of which was sourced from federal aid. At the same time, ITT had one of the highest for-profit tuition rates. Bachelor’s programs could cost up to $88,000. Given that the majority of its revenue came from the federal aid, ITT abused the assistance that was meant to give thousands of students access to a decent education.

According to ITT, the default rate of its student loans has increased, growing from 21.1 percent for students in 2005 to 26.3 percent for students entering repayment in 2008.

When almost a quarter of its students could not pay back their student loans, that should have been a warning that students at ITT Tech were not getting the quality education they were promised. And now, many of its students will not get any education at all. By closing its doors, ITT denies current students the diplomas they were counting on to go into the workforce.

Roughly 35,000 students will be impacted by these closures and will either have to apply for loan discharge or transfer their credits to the few universities that accept them. With very limited options, countless students will have to start from scratch or go through a tedious process just to get the education they worked so hard to achieve.

The company blamed the U.S. Department of Education for its closures, not its risky, casino-style behaviors.

“With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected,” the company said in a statement.

The discredited school is partially right. ITT Tech should be embarrassed, but so should the U.S. Department of Education. The United States should be embarrassed at this educational malfunction. We let education become a profitable enterprise, and we let ITT make it one by exploiting people who would not otherwise have gone to college.

The U.S. Department of Education had every right to withdraw funding from its institutes. It should focus, in the future, on funding educational opportunities that actually benefit atypical college students. Now, it should also worry about all the students who cannot afford to pay off their loans and have no other options but to start over.

This is a pure example of how corporatizing higher education can be dangerous, and hopefully, it will serve as a cautionary tale for the future of the American education system: don’t offer students a second chance at education and job prospects if you can’t deliver.