Demise of ITT Tech

[Ormond]

The Education Department has forced ITT Tech to shut down all of its campuses (at least those that operate under that name):

https://www.insidehighered.com/news/2016/09/07/itt-tech-shuts-down-all-campuses

It seems to me that entirely too much of the news reporting about the student loan debt crisis in the USA focuses on students who have gone to "selective" colleges and universities who actually do have a very good chance of eventually paying off their loans after having gotten an excellent education. Much more disturbing are all the first-generation students from poor family backgrounds who have been fooled by for-profit places like ITT Tech to take out big loans for degrees which are much less valuable and sometimes are close to worthless in the marketplace. This is a real tragedy for thousands of students who've been going to ITT, and also for tens of thousands who have graduated from it and whose degrees will now be seen as even more tainted than they were before. But I am really happy to see in the article that one of the rulings of the Education Department is a prohibition on bonuses or severance packages for ITT's executives. That's how people who are technically not "owners" of fraudulent institutions make money off of their unethical practices.

And unfortunately there are some legally "non-profit" universities out there whose operations are skirting them close to the edge of practices like iTT's. There needs to be way more reporting out their by the media and by government to help students decide which places are promising way more than they can deliver just to get their student loan money.

[aceluby]

Another terrible thing that places like this does is target veterans.  Govt money is easier to get while they promise the world and only deliver heartache to many returning from overseas, just trying to make it post-military.

There needs to be MUCH more regulation when it comes to secondary education.

[Iskaral Pust]

The explosion in student debt in past decade plus has lots of the same agency risk that contributed to the housing crisis:

- govt wants to expand access to minorities and low income citizens
- govt approaches problem by offering more debt without any attempt at price controls and/or rationing (in fact, makes the problem worse by reducing state funding for public universities)
- everyone is persuaded they need this and it becomes part of the accepted wisdom
- people stop examining the actual cost/benefit trade-off, plus providers/sellers manipulate information on benefits
- all providers/seller are in an arms race to "sell" increasing volume at increasing price: playing games with rankings, lowering admissions criteria, spending huge amounts on boondoggle amenities, because "while the music is playing you have to keep dancing"
- unprepared borrowers take on unaffordable loans and then claim afterward they were exploited
- taxpayers unknowingly underwrite the debt and will absorb losses from defaults and bad debts
- a political movement forms to demand a bailout for the exploited borrowers (Sanders)

ITT's closure is long overdue but all of their students, and probably all of their alumni, get to default on their student loans at taxpayer expense.  The ITT governors already milked this for an obscene fortune that will never be recovered.  The same thing is happening with lower tier law schools and will extend to lots of other nooks of this bloated scam.  And then in a few years we'll hear renewed complaints that minorities and low income students attend college at a lower rate.

[Martell Spy]

Thanks for posting this Ormond. Among other questionable practices, one of the things ITT does is lard students down with private loans. These are hugely destructive to students. They don't have the same protections as federal loans, such as income based  repayment. Yet at the same time, congress in 2005 made them harder to get rid of through bankruptcy. 

 

[Inigima]

Read about this as well. Shocking to hear just because they've been around so long, but good riddance

[Commodore]

When government gets involved in markets this is the garbage result.

Lots of socialized risk and playing with other people's money, companies that have little incentive to improve performance.But the same could be said for "non-profit" schools (with their skyrocketing tuition and armies of administrators with six/seven figure salaries), which aren't held to the same standard.

Personally I know electrical engineers where I work that also teach at ITT, and they've never described it as a scam or worthless. If the standard is what job you can get after, then every women's studies department should be cut off from federal funding. 

If the subsidies didn't exist, caveat emptor would put ITT out of business in short order if it's as bad as people claim (and it may be). 

Sometimes I spend money on things that don't end up having the value I expected. I'm not calling for the feds to shut down the company that sold it to me. 

Basic law of human nature and economics; anything that is subsidized results in higher costs and lower quality. 

And once you accept the subsidy, you accept their controls, that's how the feds sink their hooks in. When your business model depends on their funding, they effectively own you. 

[sologdin]

wut?

[Frog Eater]

he is referencing the subsidization of these for profit and other colleges through Federal Pell Grants and Federal Student loan guarantees, as well as State Level Scholarship programs and GI Bill benefits that enable colleges to charge exorbitant tuition and fees. 

If these subsidization programs did not exist, then the tuition could not be what it is. 

These programs began as a way to enable lower income individuals to attend college, the side effect is that middle class students who attend end up coming away from college owing a mortgage sized loan in student loans when they graduate. Some come away with a useful degree that makes them marketable, others graduate with a gender studies or art history degree that enables them to work at Starbucks

[DanteGabriel]

Making education available to poor people makes things more expensive for middle class people. Ignore the rich people profiteering in the corner! It's because of the poors and their damn appetite to better their situations. Just like poor people getting too much home loan credit were the cause of the financial collapse.

[Martell Spy]

 

Quote

 

When government gets involved in markets this is the garbage result.

Lots of socialized risk and playing with other people's money, companies that have little incentive to improve performance.But the same could be said for "non-profit" schools (with their skyrocketing tuition and armies of administrators with six/seven figure salaries), which aren't held to the same standard.

Personally I know electrical engineers where I work that also teach at ITT, and they've never described it as a scam or worthless. If the standard is what job you can get after, then every women's studies department should be cut off from federal funding. 

If the subsidies didn't exist, caveat emptor would put ITT out of business in short order if it's as bad as people claim (and it may be). 

Sometimes I spend money on things that don't end up having the value I expected. I'm not calling for the feds to shut down the company that sold it to me. 

Basic law of human nature and economics; anything that is subsidized results in higher costs and lower quality. 

And once you accept the subsidy, you accept their controls, that's how the feds sink their hooks in. When your business model depends on their funding, they effectively own you. 

 

 

 

Accreditation

The biggest problem here was the accreditation body. ITT is one of the worst schools about inflating numbers of graduating student job placement. This combined with massive advertising campaigns showcasing these inflated numbers leads to a huge number of damaged lives. Not only do many students not get a job in their chosen field, they waste years of their lives and are loaded down with debt. It was fraud.

The subsidies aren't relevant. ITT charges so much, that working class and middle class alike leave with a huge debt load. This went on because the accreditation body didn't cut them off from federal funding earlier. The debts aren't that big a problem if the students find jobs. But they just didn't, at least not as advertised.

[TerraPrime]

ITT is also notorious for marketing "majors" and "degrees" that appeal to the consumers but which have no academic foundation at all. Things like "video game design" for example. It's highly appealing to 17 year-old kids who love playing video games and wanting a career in designing games. But the degree itself means nothing. It's a fabricated thing that ITT drummed up. Try to articulate the course load to another school and you have a lot of problems. In fact, the local colleges and schools being urged to absorb the ITT students are finding this out - most of the ITT catalogue is bloated with bullshit courses.

 

The whole for-profit chain of schools is a shameful scam, fleecing on the lower and middle-income classes and first-generation students.

[Horza]

Just another chapter in ITT's glorious corporate history

 

[BloodRider]

Good riddance to these leeches.

[TerraPrime]

On 9/10/2016 at 8:31 PM, Horza said:

Just another chapter in ITT's glorious corporate history

 

 

Wait. That's the same ITT corporate entity that runs the chain of schools?

[Iskaral Pust]

1 hour ago, TerraPrime said:

 

Wait. That's the same ITT corporate entity that runs the chain of schools?

The corporation behind ITT Tech is a bastard orphan offshoot of the original ITT conglomerate, but completely unrelated to the original telephone & manufacturing business.  A conglomerate split up and one offshott of the split merged with a hotel business to become Starwood Hotels (Westing, Sheraton, W, etc), and a part of that business spun itself off to start ITT Tech.

But the ITT forbearer has an unsavoury history and looks like a poster child for corporate colonialism practiced by sprawling conglomerates in the 20th century.