ITT Educational Services abruptly shut down more than 130 ITT Technical Institute campuses on Tuesday, including in Wichita, in one of the largest college closures in American history.
The company also laid off nearly 8,000 staff members and stranded up to 40,000 students part-way through their educational programs.
The for-profit company blamed the U.S. Department of Education for its downfall in a statement released Tuesday.
On Aug. 26, the feds banned ITT from enrolling new students using federal financial aid and demanded the company produce an additional $153 million in collateral — nearly double its $78 million in cash on hand — to cover possible losses that the government might incur if the company were to suddenly fail.
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That follows tightened financial oversight announced by the department in 2014 and expanded in June 2016 because of significant concerns about ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students. The institution is the subject of multiple state and federal investigations.
"We believe the government's action was inappropriate and unconstitutional, however, with the ITT Technical Institutes ceasing operations, it will now likely rest on other parties to understand these reprehensible actions and to take action to attempt to prevent this from happening again," the company said in a statement.
It's a stunning fall for a company whose stock hit nearly $129 per share in 2007 as investors bet that Americans would increasingly flock to for-profit colleges for credentials that would enable them to advance in the economy or gain a foothold in the jobs market.
Key to that calculation was the assumption that the Education Department wouldn't impede colleges' access to federal student aid. Last year, ITT reported almost $850 million in total revenue, roughly $580 million from federal aid.
Other for-profit colleges have gone bankrupt or closed in the last year, including Wright Career College, which shut down abruptly in March.
At the ITT Tech location in Wichita, near 29th Street North and Rock Road, a recording said that the campus is closed, but that messages will be returned at some point.
Wichita ITT student Amy Lawson, a certified nursing assistant with four children, said she was looking to advance in a career she absolutely loves.
She quit work to go to school and said she was six quarters into a two-year program to become a registered nurse.
“Six months away and I get to start the whole thing over again, and I’m not happy about it,” she said.
She said she has taken out about $60,000 in loans to fund her nursing studies and now faces a difficult quandary.
The Department of Education website said that she can transfer the credits from ITT and finish her education at another, probably for-profit, school. Or, it will waive the debt because ITT shut down and she can start from scratch.
“That means starting all over again: new application, new interviews, taking everything all over again,” she said. “But it’s the only way to get out from under the crushing debt from ITT.”
She said she was interviewing Tuesday at Hutchinson Community College.
Contributing: Dan Voorhis of The Eagle and Bloomberg