ITT Technical Institute shuts down after federal aid cut

CARMEL, Ind., Sept. 6 (UPI) -- ITT Educational Services, Inc. on Tuesday announced it was shutting down ITT Technical Institute following the U.S. Department of Education's decision to prevent the parent company from enrolling students who use federal financial aid.

"It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service," the parent company said in a statement. "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."

Previously, students enrolled at the for-profit ITT Tech who have not begun classes were not allowed to use federal aid, as of the Education Department's Aug. 25 ruling. Students who were already enrolled could have used federal aid as long as ITT Tech remains open but the school will cease operations immediately.

The "overwhelming majority" of the school's employees have had their positions terminated.

"We believe the government's action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again," the parent company added.

The Education Department's ruling 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 was also prohibited from paying raises, bonuses or severances to management or directors without government approval.

ITT Tech said it operated more than 130 campuses nationwide in 39 states and online with more than 40,000 students in undergraduate and graduate programs. The school received about $580 million in federal funding last year.