ITT Technical Institute Closing All Its Schools Nationwide, Including North Austin Campus

AUSTIN, TX -- ITT Technical Institute officials announced Tuesday they are shutting down their schools nationwide -- including the campus in North Austin -- after losing access to federal funding.

The mass closures are the culmination of various legal entanglements with federal agencies and several attorneys general. The for-profit educational company based in Carmel, Ind. has been in operation for 50 years and has an enrollment of 43,000 students across 130 campuses in 38 states.

The school was set to start its fall quarter Sept. 5, but those classes are now cancelled, company officials said. That includes instruction at the Austin campus located at 6330 E. Highway 290. The company also operates nine more campuses in Texas, including three in Houston and two apiece in San Antonio and the Dallas area.

According to its website, ITT Technical Institute offers courses in information technology, electronics technology, drafting and design, business, nursing and health sciences classes, both in a classroom setting or online. But its closure now leaves its students "scrambling" for other options and more than 8,000 employees out of work, company officials said.

“Despite our ongoing service to this nation's employers, local communities and under-served students, these federal actions will result in the closure of the ITT Technical Institutes without any opportunity to pursue our right to due process," company officials wrote in a prepared statement.

But the closure is long in coming. Last year, the Department of Education placed more restrictions on the school's use of federal grants and loans, saying ITT failed to account for millions of dollars of aid (in the form of Pell grants) that was distributed to students over the preceding five years, the Washington Post reported.

Those discrepancies landed the ITT on the department's "watch list," known internally as "heightened cash monitoring" for missing a key deadline for filing financial statements, the Post reported.

The Department of Education's actions alone were viewed by industry observers as nothing short of a "death sentence," reports the site Gizmodo.com. The agency's sanctions not only prevented ITT Tech from securing federal aid money, but required the school to bolster its cash reserves from $94.4 million to $247.3 million, as referenced in its statement.

Those increased reserves were designed to protect students in the event the company were to close. Now that that ITT Tech is closing, company officials didn't make clear how it will use its financial reserves. "Please see today's press release," officials said to Gizmodo via email when it posed the question to them. "This will be our only comment."

The New York Times reported ITT Tech received an estimated $580 million in federal money last year, according to the Department of Education.

Concurrently, the company faced additional scrutiny from other federal agencies. In September of last year, company officials revealed the U.S. Department of Justice was investigating whether it lied to the Department of Education about executive compensation, the Post reported. Additionally, ITT also was the object of two lawsuits from the Consumer Financial Protection Bureau and the Securities and Exchange Commission, according to the Washington Post.

ITT also was being investigated, at last count, by at least 18 attorneys general.

But ITT Technical Institute officials struck a defiant tone in their statement, positing the imminent closure as the result of overzealous regulators.

"It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service," company officials said in their prepared statement. "With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected."

Company officials placed the blame on their closure squarely on the Department of Education: "The actions of and sanctions from the U.S. Department of Education have forced us to cease operations of the ITT Technical Institutes, and we will not be offering our September quarter. We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution."

School officials went so far as to labeling the actions of regulators as "unconstitutional" in their statement. They painted their experience as something of a cautionary tale, expressing hopes others might not fall victim to what they perceive to have been unwarranted government action forcing their closure.

"We believe the government's action was inappropriate and unconstitutional," officials wrote. "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 operated nine other Texas campuses in addition to the one in Austin:

• South Dallas - DeSoto, TX
• Dallas - Richardson, TX
• Ft. Worth area campus - Arlington, TX
• Houston West (South Gessner) campus - Houston, TX
• Houston North (North Freeway) campus - Houston , TX
• Houston South (Webster) campus - Webster, TX
• San Antonio East area campus - San Antonio, TX
• San Antonio West area campus - San Antonio, TX
• Waco area campus - Waco, TX

>>> Image of ITT Technical Institute campus via Google Earth