ITT Tech Schools Go Bust

(RTTNews) - ITT Educational Services Inc., the company that operates for-profit ITT Technical Institutes, announced Tuesday its decision to shut down all its technical institutes.

The company blamed the actions and sanctions of the US Department of Education for its decision to close down after the federal regulator forced a series of prohibitions including a ban on new students who rely on federal aid.

"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. 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," the company said in a statement.

The company said it took the decision after searching for alternatives, including transfer of the schools to a non-profit or public institution. The shutdown will affect about 35,000 students.

The company said it has eliminated the positions of the overwhelming majority of its more than 8,000 employees, effective today.

The federal regulator had demanded the company to increase its collateral to $247 million, up from $94 million, with in 30 days.

The action of federal regulator to increase surety requirement to 40 percent of Title IV federal funding and place schools under "Heightened Cash Monitoring Level 2," forced ITT Educational Services to shut down, the company said.

"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.