With the recent closure of 137 campuses in 39 states, ITT Tech has left a lot of people wondering if going to college is a wise use of their time and hard earned money.
Recently, ITT Technical Institute closed the doors to all of its campuses nationwide. This move has left 8,000 people unemployed and more than 43,000 students with quite a dilemma on their hands.
This abrupt closure was the result of several investigations alleging fraudulent and deceptive marketing practices by government authorities. In April, ITT’s accrediting agency said that the institute had not demonstrated compliance with certain accreditation standards. And finally in August, the U.S. Department of Education imposed a series of sanctions on the school including one prohibiting them from enrolling students receiving financial aid. This was a devastating blow for the school—forcing them to cancel the fall semester and shut their doors.
Unfortunately, this scenario is not new. Earlier this year, the six Washington campuses of Everest College, a for-profit school similar to ITT Technical Institutes, were put up for sale after the parent company ran into financial and legal trouble. In May of last year, two major for-profits announced campus closures and sell-offs. This trend is predicted to perpetuate as the industry continues its long slide caused by regulatory crackdowns, competition and bad publicity.
This trend is affecting traditional educational institutions as well. In fact, closure rates of small colleges and universities will triple in the coming year, and mergers are expected to double.
So What Should you do?
Today, with more colleges and universities than ever having trouble making ends meet, experts are urging students to pay closer attention to warning signs.
Mike Reilly, executive director of the American Association of Collegiate Registrars and Admissions Officers (AACRAO) urges consumers to do a bit of investigating before they spend their hard earned money, incur thousands of dollars in student loans and waste valuable time.
“In this day and age, when there’s so much at risk, it doesn’t hurt to do some legwork and investigate,” he advises.
Here are some warning signs that a college, university or other for profit educational institution may be in trouble:
• The Accreditors become more involved: Reputable institutions are overseen by regional accreditors, which keep an eye on schools’ academic and financial health. Accreditors give schools several rounds of warnings before taking the rare step of ordering them to close.The accreditors post warnings and other actions after each meeting. These documents can be helpful for students who want to keep track of their school’s financial health.
• The credit rating agencies are raising red flags: Another resource to pay attention to is the credit-rating agencies, such as Moody’s, which warn bond investors about at-risk schools.
• The U.S. Department of Education gives the school poor ratings: The U.S. Department of Education also provides a measure of schools’ financial strength through its annual “financial responsibility composite scores,” on which a score of less than 1.0 indicates problems.
• Merger talk: Several colleges and universities have tried to avoid shutting down by merging with other schools. Some mergers work out, but others fail and leave students without transferrable credits.
“A merger to me seems like a very tenuous strategy,” AACRAO’s Reilly says. “That seems like a trigger in my mind. I’d get a copy of my official transcripts at that point.”
• The administration refuses to be transparent:
“One of the things is for students to look at whether an institution is being realistic about its future,” Reilly says. “Once a school closes, your options become a little more limited. I would start asking questions about what the plan is for the institution. If they’re doing nothing but making assurances to students, I’d be concerned.”