ITT Technical Institute shuts down enrollment after federal aid cut

CARMEL, Ind., Aug. 30 (UPI) -- ITT Technical Institute stopped enrolling new students days after the federal government prevented the for-profit school's parent company from enrolling students who use federal financial aid.

Students enrolled at ITT Tech who have not begun classes are not allowed to use federal aid, as of Thursday's Department of Education ruling. Students already enrolled can use federal aid as long as ITT Tech remains open.

"We are not enrolling new students," ITT Tech wrote on its website Monday, days after the Department of Education cut off future access to federal funding and required ITT Educational Services, Inc. to increase cash reserves and to provide a letter of credit that shows it is sufficiently funded. The school is also prohibited from paying raises, bonuses or severances to management or directors without government approval.

Peter Appert, managing director senior research analyst at Piper Jaffray & Co., told CNN Money that ITT is "effectively out of business."

"I don't see any way they survive this," "Appert said. "Frankly, it occurred to me they could file Chapter 11 pretty much any time ... I don't think they are going to be able to come up with the letter of credit the [Department of Education] is demanding."

ITT Tech said it operates more than 130 campuses nationwide in 39 states and online with more than 40,000 students in undergraduate and graduate programs.