Federal government 'acting like judge and jury' over ITT, Indiana Senator says

ITT shuttered all 130 campuses nationwide this week.
ITT shuttered all 130 campuses nationwide this week. | Contributed photo

The federal government is acting like a judge and jury in forcing the closure of all ITT Technical Institute campuses, according to a member of the Indiana General Assembly’s Senate Education Committee.

State Sen. Pete Miller (R-Indianapolis), said he could not defend some of the business practices of the Carmel, Indiana-based for-profit college, but the Department of Education’s move to shut off the company from federal loans was done without an opportunity to launch a defense.

“If the government wants to provide information on the benefits and costs of going to for profit college, that’s fine,” Miller told the Higher Education Tribune. “I am not going to defend all of its business practices but the federal government is acting like a judge and jury to put in place penalties to put a company out of business. It is terrible for ITT without giving them the opportunity to defend themselves.”

ITT shuttered all 130 campuses nationwide this week, leaving 40,000 students without a college and 8,000 employees without a job.

It followed the decision by the Department of Education to ban the company from enrolling new students who rely on financial aid, and required it to set aside $247.3 million in case it shut down.

ITT’s main source of revenue -- $580 million out of $850 million last year -- came from federal student loans.

“Ultimately, we made a difficult choice to pursue additional oversight in order to protect you, other students, and taxpayers from potentially worse educational and financial damage in the future if ITT was allowed to continue operating without increased oversight and assurances to better serve students,” Secretary of Education John King wrote in a blog post directed at students.

ITT, in a statement, said it had no opportunity for hearing or appeal of the sanctions. The company said it asked for leniency and proposed alternatives that were not accepted.

The company employed 620 workers in Indiana, according to the Indianapolis Star.

Miller, a member of the Indiana Senate Education and Career Development Committee, said for-profit schools do have a role to play in higher education.

“And if you don’t think so, say that,” Miller said, adding that there should be a broader discussion about the funding of higher education.

The senator said the taxpayer is likely going to be on the hook for a lot of money following the closing of the campuses. Politico reported current students owed $485 million in federal loans, but ITT has just over $100 million in cash reserves.

“There is a chilling effect, for the federal government to make allegations and force them out of business, on employees, students, and past students,” Miller said.