The U.S. Department of Education is banning Carmel-based ITT Educational Services Inc. (NYSE: ESI) from enrolling new students using federal aid. The department is also increasing its oversight of ITT, following the announcement by the Accrediting Council for Independent Colleges and Schools that ITT is not in compliance with accreditation criteria.
In a letter to ITT, the department said the school must also inform current students of its status with ACICS, is prohibited from awarding raises, paying bonuses or making retention or severance payments to executives and must inform the department of any "significant financial or oversight events including violations of existing loan agreements or extraordinary financial losses within ten days."
ITT must also use its own funds to cover any Title IV aid disbursements for current students. Once those funds have been given to students, the Department of Education will reimburse the school.
"Our responsibility is first and foremost to protect students and taxpayers," said U.S. Secretary of Education John King. "Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds."
The department says students currently enrolled at ITT can continue to apply for federal aid. ITT is also being required to develop teach-out agreements with other colleges in order for students to complete their coursework, should ITT close before that happens.
You can learn more about the U.S. Department of Education’s actions against ITT by clicking here. You can also view the letter the department sent to ITT regarding the most recent sanctions below: