ITT Tech's Castaways: Where Do We Go From Here?

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For 50 years, ITT Tech was a giant among for-profit technical schools. Its commercials were a fixture on day-time television and it had a certain reputation, if not for quality, at least for longevity and brand recognition. That all came to an end on September 6th, and at blinding speed. In August, the Department of Education determined that the school was no longer eligible to enroll students using federal loans. For a business that drew 70% of its revenue from exactly that source, this was a pretty swift deathblow. One month later, 35,000 students were locked out of their classrooms for good.

Scott Lang was one of those students, a 27-year-old aspiring slot machinist who was 12 weeks from earning his degree. He said he knew something was wrong when one of his professors intimated that he'd received his paycheck a week early. And then, just like that, Lang and thousands of others were set adrift.

They are part of a growing demographic, the lost tribes of a contracting for-profit sector, the wandering multitudes asking: What now? Where do we go? What options do we have?

When the Obama Administration declared war on corruption for-profit colleges, the reasons were pretty clear. The student debt crisis owes at least some portion of its enormity to the proliferation of an educational model which relies heavily on federal loans for its survival.

When Corinthian Colleges closed their doors last April in a haze of fraud, 16,000 students were swatted off of their respective educational paths. They got help in the form of loan forgiveness, which represented a whole new level of government empathy for hornswoggled students.

But with the yet-more-sudden dismantling of ITT Tech, it becomes increasingly clear that loan forgiveness is only part of the picture. There is yet the larger question, what becomes of those thousands of ITT Tech students who staked their future on the education and certification that they hoped to receive, that they, in many cases, mostly earned?

The for-profit college industry flourished inside a swelling bubble for these last two decades. That bubble has now burst, with a fair amount of government needling. In essence, this is the typical aftermath of a bubble. This is the correction, and an inevitable one given the predatory recruitment practices and inconsistent educational outcomes that permeated the industry.

But these events did not come about spontaneously. The Department of Education has been working toward this correction for years. The students at ITT Tech, by stark contrast, learned about it all in one sudden, shocking turn of events. Perhaps the most shocking detail of all is just how little was done to warn, prepare, or support these students as their educational and professional plans unraveled around them.

The For-Profit Implosion

When you crunch the numbers, it's hard to argue with what's become of the for-profit college industry. Without even stopping to dissect the various claims of fraud, exploitation, and racketeering that have haunted the sector for the better part of the decade, we need only reflect on their results. According to Politico, as of summer 2015, roughly 11% of all students attended for-profit colleges whereas for-profit students accounted for 44% of all defaulted student debt.

By many metrics, the for-profit industry failed to keep the twin promises of quality education and meaningful employment opportunities for its students. And it did so at great expense not just to individual students, but to the American economy as a whole. Indeed, the very structure of the for-profit industry was propped up on taxpayer dollars—roughly $22 billion in loans and Pell Grants in 2013 alone.

Such is to say that the worst of the for-profits weren't merely taking advantage of prospective students in search of new opportunities and brighter futures. They also took advantage of the American taxpayer, a broken student loan system, and a higher education sector growing bloated beyond the point of sustainability.

In fairness, the for-profit sector is not inherently corrupt. But federal policy orientation molded it into a sector inherently vulnerable to corruption.

Politico reports that enrollment in the for-profit schools shot up from 4.6% of all undergrads in 2000 to 10.3% in 2012. This was the consequence of a Bush Administration policy that created so-called “safe harbors,” allowing colleges to award recruiter salaries based on enrollment numbers. This both circumvented existing legislation and incentivized the recruitment of students to for-profit schools whether they were qualified or not, whether they stood to gain from the experience or not, whether they could afford it or not.

What followed was rampant proliferation of colleges operating on false pretenses, producing subpar courses, meaningless degrees and underemployed graduates. As the collective amount of student loan debt skyrocketed past the $1 trillion mark, the scrutiny came down hard.

The Obama White House descended as a referee on the for-profit free-for-all, blowing the whistle and handing out well-deserved penalties. It even began implementing its own rules, the most consequential of them being 2015's“gainful employment” rule. This dictates that any school whose average graduate makes annual loan payments in excess of 20% of discretionary income or 8% of total earnings is failing to produce gainful employment. The punishment for this failure is a disqualification from receiving federal loans.

Ultimately, the policy closed the floodgates of taxpayer money flowing through the for-profit pool. The biggest sharks in the tank were hit the hardest. And for those that wished to survive, the message was clear. Get better results.

What followed was the shuttering of Corinthian Colleges last spring, the contraction of stalwarts like DeVry Education Group, Career Education Corp. and Education Management Corp. in late 2015, and of course, the demise of ITT Tech just as most of us were getting ready to go back to school this year.

And now, there is the question of those who were pushed out into the cold…educationally that is. As the for-profit industry has often argued in defense of its high dropout and loan default rates, many of its students inherently fall into high-risk groups. The convenience, flexibility, and accessibility of for-profit schools makes them attractive to working adults seeking to improve their qualifications, servicemen and women returning from overseas duty, and students who for various reasons may lack a broad array of educational alternatives.

This means that any number of students now-deposed from their respective paths of education are without a landing spot, a plan, or a path forward. For many, ITT was the plan.

The Fallout

They say if you want to make an omelette, you have to break a few eggs. Well, the federal government is working on cleaning up the whole educational frittata right now, which means that eggs are getting smashed left and right.

By many metrics, the for-profit industry failed to keep the twin promises of quality education and meaningful employment opportunities for its students.

One such egg, Joshua Battistin, was six months away from earning his certification to be a registered nurse when ITT literally just padlocked the doors to his Tampa campus. And that's how it was. With little warning and even less explanation, ITT sent an email to its students letting them know they were calling it a day. Nice knowing you. Best of luck.

That's a pretty rough way to find out you've wasted the last several years of your life.

Now, Battistin and thousands of others just like him are in educational purgatory, left to navigate without guidance. And what are their options?

Obviously, for those approaching completion of their respective programs, transferring credits to a new school would be ideal.

The easiest way to transfer for-profit credits is to apply to another for-profit school. But take note. The federal investigation that toppled ITT is underway on for-profit campuses across the U.S. right now. Students who wish not to find themselves in a similar predicament a year or two down the line should, at the very least, conduct due diligence on business practices, student outcomes, and legal entanglements before joining another for-profit community.

Former ITT students who view this as an opportunity to take the next step should ready themselves for a harsh reality. Transferring credits from a for-profit college recently destroyed by its own malfeasance is not easy.

Some state and local colleges have expressed a willingness to review transcripts and determine transferrable credits on a case-by-case basis, especially given the recent glut of unaffiliated students on the market. But for the most part, private and public schools alike simply won't abide the flimsy accreditation underlying these credits. ITT castaways will have their work cut out for them, not just finding schools to accept their credits, but finding programs and majors that accept enough of them to justify the continued investment.

Just exactly how many credits transfer is important, because In other words. if one manages to transfer only 1/3 of one's ITT credits to a new school, one is still on the hook for the full boatload of credits purchased at ITT.

For many, the most obvious course of action will be the one that optimally minimizes just how many dollars and years will have been flushed down the toilet.

This is an unenviable dilemma. And yet, the significant number of military veterans in ITT's student population don't even have that. The Department of Education's loan forgiveness program does not yet extend to the GI Bill. The money that our military veterans earned for their education? It's gone. The only thing to show for it are the credits.

Cleanup in the Post-ITT World

So let's get back to this whole educational frittata that the federal government is cooking up. Even the eggs who have been cast out by ITT's closing admit that the school's appeal was not necessarily in its quality or credibility so much as its expedience and accessibility. As for the Department of Education, its intentions were basically good.

The “gainful employment” metrics are appropriate and conscientious of the relationship between education and economy. The federal government does indeed have a responsibility to intervene when predatory and deceptive business practices threaten our nation's fiscal health. The student loan debt crisis suggests this characterization is hardy exaggerated. This is a meaningful measure of quality control in a sector which has desperately needed it. Those for-profit schools that survive the scrutiny will ultimately become bearers of a far higher standard. Ultimately, all of this will serve for the greater good of the for-profit sector by eradicating the wrong-doers that have tainted its reputation.

But this is where the glowing feedback ends. The students impacted by these actions were given little warning, limited support, and few options. The Department of Education is pursuing its well-intended crusade with the same callousness that allowed for-profits to grow so wildly beyond their control in the first place. Student needs, interests and hardships seem always an afterthought.

The likely reality for far too many ITT students is that this will have been their last stop on the way out of the educational system for good. For many, the promise of loan forgiveness will simply be too great to pass on, especially as many are forced to seriously question the value of the education they've just received.

Those who actually wish to continue their education are left dangling. It is incumbent upon the Department of Education to put a safety net beneath them. There are a few rational fixes that, let's be honest, should probably have been suggested before this all went down:

This last one is especially noteworthy. The blindsiding of ITT's students is perhaps the most egregious of offenses, one for which the ED and ITT bear mutual responsibility.

Students must be made aware of what is at stake as their schools fall under the microscope, and they must be given the opportunity to make preparations before it all comes crashing down.

No matter how it pans out for each of the 35,000 ITT students now without a classroom, every one of them is scrambling for a new plan. Every one of them is in a holding pattern, their ambitions in suspended animation, practical realities pushing at them from all sides.

The recommendations above are a bare minimum of the ED's responsibilities to the effected students. And the imperative to adopt these recommendations is pretty urgent. As the “gainful employment” rule sends tremors across the for-profit landscape, too many students are falling through the cracks.

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