ITT Technical Institute announced on Tuesday, September 6, 2016 their plans to shut down all of their remaining campuses.
The decision comes as the U.S. Education Department announced the previous week they would no longer allow new students to use federal financial aid to fund their education to attend ITT Tech. Considering federal financial aid is the lifeblood and main revenue source to many for profit institutions, including ITT Tech, this proved too much for the embattled school to overcome.
With this decision, it opens up a handful of questions and concerns that deal with the ramifications in shutting down a major university. The decision is said to impact “tens of thousands” of students who were preparing for the start of their classes. Additionally the school will have to lay off its more than 8,000 employees.
To put in perspective the amount of dollars we are talking about, the school enrolled 45,000 students and reported $850 million in revenue last year. While the exact amount of said revenue that was funded by student loans will not be available for some time, it is widely believed that the majority of that revenue share was paid for through student loans.
So the U.S. Government is now holding the notes on these loans for coursework that will not lead to a degree. U.S. Education Secretary John B. King Jr. said the decision was not made lightly and that “The school’s decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk.”
What Will Happen to the Students Attending ITT Tech?
Now most importantly, what will happen to students who were attending the school and had used federal student loans to finance their education? What happens to the loan balances for current and even existing students? Will this lead to other schools being shut down in the future? We will provide some basic answers to some of these questions and hopefully provide clarity to these students.
Current Student Options Students who were planning to attend ITT Technical Institute this fall are now scrambling trying to determine their options.
First and foremost, students who are currently enrolled or have been enrolled in the last 120 days will essentially have two options: 1st-Current students can either transfer their credits to a similar program at another school or they may apply for a federal student loan closed school discharge.
Students who looking to transfer will need to contact the school they are looking to transfer and find out the amount of credits that will transfer over. It may prove likely that many of the credits will not transfer as ITT even acknowledges on their own site that credits are unlikely to transfer.
Here is a big sticking point that ITT students need to recognize, if students do transfer credits to another school and continue your program of study, you can’t have your loans discharged.
2nd-If you have been a student within the last 120 days, you will be eligible to file for a cancellation of your debt that was taken on at ITT Tech. The discharge program will work for federal student loans but will not cover Parent PLUS loans or private bank loans. This is a matter of completing the necessary paperwork required by Department of Education to verify your eligibility. Former Students If you are a recent graduate or have attended ITT Tech beyond the 120 day mark, unfortunately you will not be eligible to receive the loan forgiveness.
This comes even though the Department of Education has acknowledged that the education received was not worthwhile investment and led to them cutting off federal financial aid programs to begin. It certainly seems like a hard pill to swallow for former students. But former student/borrowers could apply for what is known as a “borrower’s defense to repayment” if you can prove the school defrauded you.
There is a lot of ongoing information with respect to this program and currently legislation is in some respects hoping to widen the net of those who feel they may have been misled with respect to student loan. Future of For-Profit schools ITT Tech is not the only for-profit company that former students may have felt misled. There have been a good deal of publicity with respect to high levels of debt that for-profit educators have placed on borrowers. ITT Tech is certainly the biggest school that has been targeted thus far and this certainly sends a message that all schools should be put on notice.
Tuition expenses and student loans have become a major talking point in the primary election cycle. It seems currently elected officials are trying to rein in the student loan issue which is not surprising considering the vast amount of people it is currently impacting. Corinthian Colleges recently shut down and the Federal Trade Commission recently announced a lawsuit against DeVry University for allegedly deceiving consumers about the likelihood that graduates would find jobs in their fields. Also they stated that DeVry graduates would earn more than those graduating with bachelor degrees from other schools or universities.
Other for-profit colleges have gone out of business leaving their students with little options. As with all decisions it becomes imperative to do your homework before making the decision to attend a school. Completing the necessary paperwork to get yourself into tens, sometimes even hundreds, of thousand dollars in student loan debt. A little time and effort put forth in the beginning will certainly be worth the investment when evaluating your higher education needs.
Were You Attending ITT Tech? Need Answers?
Getting the help you need Our firm works with students facing many difficult and complicated student loan issues. So if you’re looking for a knowledgeable student loan professional who understands the various processes, call us today (480-420-4028) for a free consultation. During the consultation, we can discuss your student loan situation and determine the best steps on your behalf.