Student Aid in the Aftermath of ITT Tech Closures

Other colleges, organizations and the U.S. Education Department are stepping up to help students continue their education.

by Tanya Roscorla / September 22, 2016

After Corinthian Colleges closed last year due in part to federal sanctions, the U.S. Education Department learned a lesson that it's been putting into practice since ITT Technical Institutes closed on Sept. 6 for similar reasons: Communicate directly with loan borrowers as quickly as possible. 

The department emailed all 35,000 enrolled students to let them know their options and pulled together a team of federal financial aid professionals to answer calls and emails. It's also held interactive webinars for students, worked with colleges and state authorizing agencies, and partnered with other federal departments to help both students and employees. In the first two weeks since the closures, the department has had 22,000 interactions with students.

"We are all aiming to help former ITT students move foward," said Ted Mitchell, U.S. under secretary of education.

Since August 2014, the for-profit technology education provider ITT Educational Services, Inc. which launched in 1969, has been under federal financial and operational oversight, which expanded in June 2016 after the department saw reason to be concerned about the company's financial practices and student services, among other things. The situation came to a head in August when the department told the company that its colleges could not enroll any new students who were eligible for financial aid and increased the amount of money the company needed to have on hand from $94.4 million to $247.3 million. A number of attorneys general had been investigating the company, and its accreditor said it no longer met accreditation standards.

"The actions that the department took were both very important and very appropriate and fair," said Iowa Attorney General Tom Miller. ITT Educational Services disagreed.

As a result of the increased regulations, the company closed more than 130 ITT Technical Institute locations in 38 states on Sept. 6 and filed for Chapter 7 bankruptcy the following week, which involves liquidation of nonexempt assets and distributing the funding from those sales to creditors. 

Students have two options if they were enrolled at the time of the closure or left the college after May 6 without a degree:

1. Apply for a closed school loan discharge that would transfer their federal loan balance from their name to the U.S. Treasury and lose all of their credits.

2. Transfer their credits to another institution while keeping the loan balance.

The department has been communicating directly with colleges and accrediting agencies to ensure that they'll work with students if they do decide to transfer their credits. While the message was initially unclear, Mitchell cleared up the confusion by saying that regionally accredited colleges can accept transfer credits from nationally accredited institutions if they choose to. But those colleges can require potential transfer students to meet other criteria as well, and it's at their discretion whether to accept transferred credit. 

For example, Pellissippi State Community College in Tennessee said it would work with students and can't guarantee that credits will transfer, but is figuring out which courses might be eligible for credit in its programs. The college tells students on an ITT-dedicated webpage that it's considering offering entrance exams or prior learning assessments for some courses to help make this determination. 

Colleges and counselors can find resources on how to help these students on the Federal Student Aid website. Meanwhile, students that need help figuring out what to do can go to the Federal Student Aid informational site on ITT Technical Institutes, where they can register for webinars, find the number to call a help hotline, and see if their questions have been answered on the Q&A page.

If students' questions aren't answered there, they can go to Next Steps EDU, an online collaboration between the nonprofit Beyond 12, which seeks to increase the number of underserved students who earn college degrees, and the National Association of Student Financial Aid Administrators. Through this collaboration, college and financial aid advisers have volunteered to give one-on-one counsel to students who fill out a form on the website, as they did with Corinthian College students.

"What's vitally important," said Alexandra Bernadotte, founder and CEO of Beyond 12, "is to help them see that the time and money they have invested hasn't been wasted."

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