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ITT stops taking all new students in wake of federal sanctions

August 29, 2016

ITT Educational Services Inc. has stopped enrolling students altogether at its for-profit college campuses less than a week after the U.S. Department of Education banned the Carmel-based company from accepting new students who use federal financial aid.

A notice on the home page of ITT Technical Institute’s website simply says “We are not enrolling new students.”

ITT Educational operates more than 130 ITT Technical Institute campuses in 38 states.

"At this point we have voluntarily suspended new student enrollment as we assess our options," ITT spokeswoman Nicole Elam told IBJ in an email Monday. "This is our only comment."

ITT was hit hard Thursday by the education department’s mandate, which was made after ITT fell out of compliance with its accreditor’s standards and “put its students and millions of dollars in taxpayer-funded federal student aid at risk,” the department said.

Analysts say the ban is a likely death sentence for ITT, which last year received 79 percent of its cash receipts from the federal student loan program.

The department also placed several other sanctions on ITT, including a freeze on executive compensation and an order that it increase its surety funds from $94.4 million to $247.3 million within the next 30 days.

Shares in ITT fell 35 percent Thursday and 64 percent Friday before dropping another 19 percent Monday, to 44 cents per share.

On Friday, the company issued a regulatory statement that reiterated the education department’s sanctions.

“The company is evaluating these additional sanctions and requirements, as well as all options available to it,” the statement said.

Also on Friday, the California Department of Consumer Affairs’ Bureau for Private Postsecondary Education banned ITT from accepting any new students at its 15 campuses in the state.

In an emergency decision, the bureau said it would seek to revoke ITT’s approval to operate in California.

“The federal action raises grave concerns about the continued financial viability of ITT,” bureau chief Joanne Wenzel said in a written statement. “We took today’s action in the interest of protecting potential students who are considering enrolling in ITT.”

ITT was founded in 1946 as Educational Services Inc. and has been headquartered in Carmel since 1969. It filed its initial public offering in1994.

The company reported revenue in the latest quarter of $191.5 million, down almost 17 percent from the $230 million the company brought in a year ago.

Total student enrollment decreased 15.4 percent, to 43,293, as of March 31, compared with 51,201 as of March 31, 2015.

 

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