Naperville Business Attorney Discusses the Closure of For-Profit College

ITT, closed school, Naperville business law attorneyGovernment regulations regarding recruiting and educational standards are being blamed for the second major closing in the for-profit education sector in recent years. ITT Technical Institute—one of the largest for-profit chain of colleges in the country—suddenly closed nearly all of its 130-plus campuses in 38 states, leaving some 40,000 students without a way to continue their education this semester.

As an experienced business law attorney, I recognize the importance of both successful corporate ventures and quality educational opportunities. I also know that many would-be students cannot afford the high costs of post-high school education without financial aid. When the federal government announced last month that federal student aid could no longer be used by new students at ITT-owned campuses, the writing seemed to be on the wall.

Slow Descent

ITT Educational Services is the parent company for the education provider that operates more than 10 dozen locations in almost 40 different states. ITT has come under fire in recent years for questionable recruiting practices, possibly inflated job-placement figures, and alleged predatory lending to students. The Wall Street Journal even reports that ITT was threatened earlier this year by it accreditor over such concerns.

Following the announcement last by the U.S. Department of Education prohibiting ITT from enrolling new students with the help of federal aid, the education company was on the verge of financial disaster. “Frankly, it occurred to me that they could file Chapter 11 pretty much any time,” said one market analyst close to the situation. He went to explain that ITT was never going to be able to demonstrate financial viability to its accreditors without students who rely on federal education programs.

Financial Impact

With the closure of ITT’s campuses, current and recent students could be about to seek forgiveness of more than $500 million in federal loans under the government’s closed-school discharge program. While students who transfer their credits to other institutions will not be eligible for this specific type of forgiveness, there may be other avenues available. Sources indicate that ITT has set aside about $90 million to cover forgiven loans, but the bulk of the burden is likely to be borne by taxpayers because most of the loans were granted out of federal funds. The company has not yet announced if it will seek bankruptcy protection.

Help With Government Pressure

ITT officials claim that the closure is a result of increased pressure from the federal government without due process. Regulatory concerns can also affect other types of businesses as well. If you are dealing with a situation in your company involving governmental regulations or pressure, speak with an experienced Naperville business law attorney right away. Call The Gierach Law Firm today and get the help you need to protect yourself and your business.

 

Sources:

Wall Street Journal

Washington Post

CNN Money