ITT Tech Shutdown: Loan Forgiveness For Students Possible As For-Profit College Chain Closes

ITT Technical Institute, a huge for-profit college chain with 40,000 students at about 130 campuses in 38 states, announced Tuesday morning it was shutting down after a series of sanctions, scrutiny and complaints.

"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," ITT Educational Services, the company that owns the college, wrote in a news release. "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 announcement wasn't entirely unexpected. Last week, ITT Tech revealed it wasn't taking any new enrollments, a development that came after the Education Department forbid the chain from admitting any students who used federal financial aid, Business Insider reported.

ITT's Tuesday statement placed the blame for the shutdown squarely on the Education Department, referencing in part the advanced "heightened cash monitoring" status the department recently gave the chain. Heightened cash monitoring is a way for the department to oversee federal aid disbursements due to compliance issues, according to its website.

ITT said Tuesday it decided to close down "only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution." The company also lambasted the Education Department for making it eliminate most of its employees.

"Our focus and priority with our remaining staff is on helping the tens of thousands of unexpectedly displaced students with their records and future educational options," it added.

When Corinthian Colleges, Inc., fell apart last year, its students were faced with two choices: keep their credits and try to transfer, or lose their course credits and hope to get their loans discharged. In ITT Tech's case, the Education Department has thought ahead. It wrote in an Aug. 25 news release that "in the event of a school closure, students may be eligible for federal loan discharge."

Former students who feel defrauded by ITT Tech may have good cases for borrower defense to repayment claims, as was the case with Corinthian, as well. Alumni have alleged the chain recruited them too aggressively and misled them about the jobs they’d receive after graduation.

ITT Tech's website remained up Tuesday morning, advertising "Endless Possibilities" and encouraging visitors to "Discover your Path."