The closure of ITT’s 136 campuses threatens to throw some 29,000 indebted students off their educational tracks, and to saddle taxpayers with nearly a half-billion dollars in losses.
Two employees who were terminated Tuesday as part of mass layoff by ITT Educational Services have filed a lawsuit claiming the Carmel-based firm violated federal law by failing to provide 60-days notice. The suit seeks class-action status for as many as 8,000 employees.
The company will begin the process of liquidating, which will include selling off its Carmel headquarters and other real estate.
Shares in ITT Educational Services Inc. went into a freefall Friday, one day after the U.S. Department of Education banned the company from enrolling new students who receive federal aid. Analysts said ITT isn’t likely to survive the decision.
The decision is a potential death blow to Carmel-based ITT, which derives most of its revenue from federal loans and grants. Its stock was halted Thursday after shares fell 35 percent.
Carmel-based for-profit college operator ITT Educational Services Inc. has received a brief reprieve from its accreditor, which has delayed making a decision that could potentially devastate the embattled company.
The state warned the institution about low passing rates earlier this year and asked for a “plan of correction”—the first step that could lead to a loss of state accreditation.
The Accrediting Council for Independent Colleges and Schools, a group that oversees about 900 campuses, is under scrutiny for lax oversight of its schools.
Without the Accrediting Council for Independent Colleges & Schools, Carmel-based ITT Educational, one of the largest publicly traded for-profit colleges in the country, could lose access to federal funding for student loans.
The Department of Education on Monday sent a letter to CEO Kevin Modany, asking the school to show that it has more than $123.6 million available to refund students in the event ITT shuts down unexpectedly.
Carmel-based ITT Educational Services Inc. on Friday reported a smaller quarterly profit and shrinking revenue amid dwindling student enrollment at its ITT Technical Institute campuses.
Kevin Modany will continue to lead the Carmel-based for-profit educator until the year’s end. But Chief Financial Officer Dan Fitzpatrick is expected to be replaced within days.
Shares of ITT Educational Services Inc. shot up by as much as 60 percent Friday morning after the company reported that its first-quarter profit had nearly tripled from a year ago.
Shares of ITT Educational Services nearly doubled in value Friday morning after the company reported a 2014 profit more than three times higher than analysts expected and said its CEO would stay on for another three months.
ITT Educational CEO Kevin Modany and Chief Financial Officer Daniel Fitzpatrick allegedly “engineered a campaign of deception and half-truths” to hide from investors the extent of losses ITT was suffering from student loan programs, the SEC said Tuesday morning.
Corinthian Colleges students, whose schools closed this week amid fraud allegations, are being steered by the U.S. Education Department to other for-profit chains also under investigation for similar misbehavior, including Carmel-based ITT Educational.
Corinthian Colleges Inc.—which once competed with the country’s biggest for-profit education companies, including Carmel-based ITT Educational Services—shut down its remaining 28 schools Monday, essentially completing the biggest collapse in U.S. higher education.