George Leef at the Pope Center said the following about the Department of Education’s overreach in their sanctions of ITT Tech, a longtime vocational school:
On September 6, ITT announced that it was closing its 130 campuses located in 38 states. The company had come under fire from several state attorneys general and the Consumer Financial Protection Bureau, with allegations that students had been misled, taken unfair advantage of, and defrauded by ITT.
With those allegations hovering over the company, in August the Department of Education decided to require ITT to put up over $247 million as surety to cover taxpayers in the event that it would close and thus trigger student loan defaults. When it couldn’t do that, the Department moved to “protect” students from ITT by forbidding the company to enroll any new students for this academic year who would pay with federal student aid funds.
Since nearly all ITT students use federal grants or loans to pay their tuition, the Department’s action was tantamount to ordering ITT to shut down. With its federal lifeline cut, the company had no choice. Some 40,000 students have had their educational plans interrupted and about 8,000 employees are out of work.
That is quite a lot of damage to inflict, yet it appears that federal officials didn’t even try to minimize it. We read in this Wall Street Journal story that ITT Chief Executive Kevin Modany had looked into the possibility of having its operations taken over by other schools, but that the government rejected all proposed alternatives.