ITT Is Closed. So What’s Next for Students?
By Brittany Hackett, Communications Staff
ITT Educational Services, Inc. (ITT) announced on Tuesday that it would be closing up shop at its more than 130 campuses in 38 states, citing recent actions taken by the Department of Education (ED) that essentially barred the institution from participating in Title IV programs, enhanced federal oversight, and restricted compensations for the company’s top executives.
The closures will impact about 45,000 students who were enrolled at ITT, including tens of thousands of federal student loan borrowers who are left asking, “What do I do now?”
As these students navigate their next steps, financial aid administrators are in a unique position to help them decide what their best option is.
“The biggest role financial aid administrators are going to play … is to help each individual student determine whether they are best off utilizing the credit hours they have already achieved or starting from scratch,” said Betsy Mayotte, director of consumer outreach and compliance for the Center for Consumer Advocacy at American Student Assistance. “For every student in every school, that answer is going to be very different.”
Here are five options financial aid administrators can explore with ITT students:
- Closed-School Discharge: Students may be eligible to have their Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans discharged if their school closes while they are enrolled, or within 120 days of their withdrawal. Students enrolled in a closed school are not eligible for this discharge if they withdraw more than 120 days before the school closes; if they are completing a comparable education program at another school, including through a teach-out agreement with another school; or if they have completed all program coursework, even if they have not received a diploma or certificate. ITT students interested in exploring a closed-school discharge should check out Federal Student Aid’s resource page for application criteria and information and monitor ED’s ITT announcements page for school-specific updates.
- Participate in a teach-out agreement: When ED took action against ITT on August 25 it told the institution that it must develop teach-out agreements with other institutions for students to complete their studies, which exist as a fallback for students whose institutions shut down before they complete their educational programs. In a message to students sent on Tuesday, Education Secretary John B. King Jr. reiterated that this option is available to ITT students who would like to continue their education and complete their program at a different school. ED said it is actively working with community colleges and other institutions in states where ITT had campuses to ensure that affected students will be able to transfer their credits. However, King cautioned, “[T]ransferring your credits may limit your ability to have your federal loans discharged. Closed school discharge may be an option if you enroll in a different program that does not accept your ITT credits.” Mayotte also cautioned that if students pursue a closed-school discharge and then decide to use their credits, they might be required by ED to repay the discharged loan.
- Apply for borrower defense to repayment: If a student believes the school committed fraud, the student may be eligible to have his or her Direct Loans discharged under borrower defense to repayment. However, ITT students would not be able to have their loans discharged under new proposed borrower defense to repayment regulations until they are finalized, which is expected to be on or shortly before November 1, and effective, which is expected to be July 1, 2017.. “It’s a tough call because people want to take action now, but it’s hard since the regulations do not become final” until later this fall, Mayotte said. ED has not issued any guidance or messaging about whether ITT students will be eligible for borrower defense in the same way students from Corinthian Colleges are eligible, but Mayotte said it remains a potential option for students. Students should also be aware of the new federal standard applied to borrower defense under the proposed regulations. The new federal standard would apply to loans made after July 1, 2017, but the new process would apply to all loans upon the effective date (July 1, 2017), regardless of when the loan was made. This July 2016 article from Today’s News outlines the proposed federal standard and corresponding limitation periods.
- Explore state resources: ITT has campuses in 38 states, each of which has its own procedures in place to assist students impacted by school closures.California, for example, has issued guidance to students impacted by the closures of three for-profit education companies, including Corinthian Colleges. The guidance addressed reimbursement of tuition prepaid by students, in addition to teach-outs and transfers, and discharge of federal student loans. Affected ITT students should contact their state to see what services and options they have regarding state aid, as well as for guidance on how to move forward.
- Explore legal options regarding private loans: Students who hold private student loans are in a difficult position, as they will not be able to include them in a federal closed-school discharge or borrower defense, Mayotte said. Instead, they will be restricted to filing lawsuits on their own or working with attorneys general and consumer protection groups to seek relief from these loans. Students should be advised to obtain copies of their transcripts and other financial aid documents, as well as any evidence of fraudulent behavior on the part of the school that can be used as evidence, Mayotte said.
Publication Date: 9/8/2016