ITT Educational Services Inc. began liquidation proceedings in an Indianapolis bankruptcy court Friday after closing 136 technical schools, leaving over 35,000 students stranded in one of the largest college shutdowns in U.S. history, Bloomberg News reported on Friday. The 50-year-old for-profit college operator, which had campuses in 38 states, said that it was forced to close its doors after the U.S. Education Department demanded a steep increase in the security the company would have to post to guarantee federal student aid. More than 8,000 employees were affected by the shutdown, with the majority losing their jobs, Carmel, Indiana-based ITT said. The company announced this week that it would cease all operations on Friday. Since August 2014, ITT has been under financial and operational scrutiny by the Obama administration, which has been cracking down on the for-profit college business. The agency expanded its oversight in June, citing “significant concerns about ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students.” The U.S. Securities and Exchange Commission brought fraud claims against ITT and two executives in 2015 for allegedly concealing major losses in two student loan programs. That lawsuit is still pending in Indianapolis federal court. The Consumer Financial Protection Bureau sued the company in 2014, accusing it of overstating students’ job prospects and potential salaries and then pushing them into high-cost private loans that were likely to end in default. That case is also pending in Indianapolis. Read more.
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