ITT Educational Services Files for Bankruptcy After Shutdown

ITT Educational Services Files for Bankruptcy After Shutdown
http://www.bloomberg.com/news/articles/2016-09-16/itt-educational-services-files-for-bankruptcy-after-shutdown-it6byu6t

Dawn McCarty  Shahien Nasiripour
September 16, 2016 Updated on September 17, 2016

ITT Educational Services Inc. began liquidation proceedings in an Indianapolis bankruptcy court Friday after closing 136 technical schools, leaving over 35,000 students stranded in one of the largest college shutdowns in U.S. history.

The 50-year-old for-profit college operator, which had campuses in 38 states, said it was forced to close its doors after the U.S. Education Department demanded a steep increase in the security the company would have to post to guarantee federal student aid. More than 8,000 employees were affected by the shutdown, with the majority losing their jobs, Carmel, Indiana-based ITT said. The company announced this week that it would cease all operations Friday. Continue reading

The Clinton For-Profit College Standard ITT’s biggest mistake was not putting Bill Clinton on the payroll.

The Clinton For-Profit College Standard
ITT’s biggest mistake was not putting Bill Clinton on the payroll.

http://www.wsj.com/articles/the-clinton-for-profit-college-standard-1473204250

Sept. 6, 2016

415 COMMENTS

ITT Technical Institute folded on cue Tuesday after the Obama Administration issued a regulatory death warrant last month. ITT investors must be wishing they had ponied up for political protection like Laureate International Universities, the for-profit college that paid Bill Clinton $17.6 million to serve as its “honorary chancellor.”

ITT’s decision to close all of its 130 some campuses—stranding 40,000 students and 8,000 employees—comes after the Education Department barred new enrollees from tapping federal aid, delayed loan reimbursements and raised its collateral by $153 million. ITT had a mere $78 million on hand at the end of June and no way of meeting the Administration’s cash demand. Continue reading

ITT Technical Institute’s Closing Leaves For-Profit College Industry Struggling To Survive

ITT Technical Institute’s Closing Leaves For-Profit College Industry Struggling To Survive

SEP 7, 2016

CCAP ,   CONTRIBUTOR

http://www.forbes.com/sites/ccap/2016/09/07/the-obama-administrations-war-against-the-poor-and-capitalism/#3f3881802e6d

The announcement yesterday that ITT Technical Institute, with some 130 campuses and 40,000 students, was abruptly closing made page one in leading newspapers across the country, and is a major milestone in the Obama Administration’s war on for-profit colleges and universities. The ITT closure joins that of Corinthian Colleges last year, leaving a once vital and important segment of American higher education struggling to survive. Can the remainder of the industry last the 135 days or so until this administration is out of office? If Hillary Clinton is elected, will she continue to try to wipe out the vestiges of a once vibrant contributor to innovation in higher education? After all, husband Bill allegedly collected $17.6 million from a for-profit provider to serve as its bogus “chancellor”—will the potential of some future kleptomania keep the Clintons from doing to the for-profits what Attila the Hun did to the Roman Empire? Try to finish it off? Or, will Trump save the day? Continue reading

How ITT Tech Sold Itself To Students

How ITT Tech Sold Itself To Students

http://wlrn.org/post/youre-dealing-one-call-close-how-itt-tech-sold-itself-students

‘You’re Dealing With A One-Call Close:’ How ITT Tech Sold Itself To Students

By ROWAN MOORE GERETY 

Before he moved to Miami, Waltter Teruel sold antiques and life insurance in New York. Working as a recruiter at ITT Technical Institute in Hialeah was a welcome change. “I mean, if you’re a salesperson, you have to lie through your teeth,” he said, “but in this case, it’s one of the sales where you actually don’t have to lie at some point.”

Who’s Regulating For-Profit Schools? Execs From For-Profit Colleges

Who’s Regulating For-Profit Schools? Execs From For-Profit Colleges
And many of them come from schools that have been under investigation.

by Annie Waldman
ProPublica, Feb. 26, 2016, 5:55 a.m.

https://www.propublica.org/article/whos-regulating-for-profit-schools-execs-from-for-profit-collegesSpur Reform in 2016

 Albert C. Gray, president of the Accrediting Council for Independent Colleges and Schools, during a Senate hearing in June. (help.senate.gov)

This story was co-published with The Chronicle of Higher Education.

Update, Feb. 26, 2016:

ACICS has responded to our story with a letter to the editor.

College accreditors have come under scrutiny recently for allowing for-profit schools to collect billions in federal aid despite low graduation and high default rates.

Accreditors are supposed to be watchdogs for college quality. They are not government agencies but colleges need an accreditor’s seal of approval so students can qualify for federal loans. Continue reading

WATCH: At For-Profit Colleges, Large Loans and Broken Promises

WATCH: At For-Profit Colleges, Large Loans and Broken Promises

SEPTEMBER 13, 2016

by PATRICE TADDONIO

http://www.pbs.org/wgbh/frontline/article/watch-at-for-profit-colleges-large-loans-and-broken-promises/

 

FRONTLINE’s “A Subprime Education,” part of PBS’s “Spotlight Education” week of programming, investigates the troubled for-profit college industry. (Shutterstock)

Last week, the for-profit college chain ITT Technical Institute abruptly closed its doors, leaving around 35,000 students in the lurch.

It was among the largest college shutdowns in history — and it followed years of increased federal scrutiny of for-profit schools’ recruitment techniques and job placement claims.

As correspondent Martin Smith explores in tonight’s new FRONTLINE documentary, A Subprime Education, for-profit colleges have often been advertised as the best option for low-income students who can’t afford a more traditional four-year degree. But for years, for-profits had charged students nearly five times as much as community colleges, while getting the bulk of their revenue, up to 90 percent, from student loans and grants — often from the federal government.

“This is the most heavily subsidized private business sector in America,” U.S. Senator Dick Durbin (D-Ill.) tells Smith in the below excerpt from tonight’s documentary. “No one compares. Defense industry, agriculture don’t hold a candle to these boys.”

And yet, Smith finds, some of these colleges have been collecting money and leaving students in debt, without degrees, and unprepared to face the job market — despite aggressive recruitment pitches promising the contrary.

“The problem is, is that for many of these students, they think they’re talking to an admissions adviser,” Elizabeth Baylor of the Center for American Progress tells FRONTLINE. “They think they’re talking to someone with some sort of ethical standards. And they don’t realize that they’re talking to a person who is selling them something and that they might be better off to just walk away.”

With the for-profit sector in the hot seat, Smith tonight returns to the story of for-profit colleges — which FRONTLINE first examined in the 2010 documentary College, Inc. — to investigate allegations of fraud and predatory behavior in the troubled industry.

“In an effort to get students in the door, and federal student loan money flowing their way, many for-profit colleges have acted like banks did during the subprime mortgage bubble: signing up virtually anyone, including homeless people and drug addicts,” says Smith. 

Drawing on interviews with regulators, executives, and former students, the film asks tough questions about the government’s role in this troubled industry. A Subprime Education also examines the collapse of the for-profit Corinthian Colleges chain in 2015.

Produced by Marcela Gaviria, A Subprime Education airs tonight at a special time — 9 p.m. EST/8 p.m. CST — as part of PBS’s “Spotlight Education”, a week of primetime programming focused on the challenges facing America’s education system. A second FRONTLINE segment, The Education of Omarina, will follow A Subprime Education, tracing how a unique program aimed at stemming the high school dropout crisis has impacted one girl’s journey. Check your local PBS listings for exact airtimes.

 

Death of a Diploma Mill: University of Phoenix Going Down in Flames?

Death of a Diploma Mill: University of Phoenix Going Down in Flames?

The troubled online university might have finally been dealt dual deathblows as they announced an FTC investigation and a 54% drop in enrollment.

http://www.thedailybeast.com/articles/2015/07/31/death-of-a-diploma-mill-university-of-phoenix-going-down-in-flames.html?account=thedailybeast&via=twitter_page&medium=twitter

SAMANTHA ALLEN   07.31.15;  11:15 PM ET

A phoenix is a bird that rises from the ashes, but the University of Phoenix is a diploma mill that may soon go down in flames.

On Wednesday, University of Phoenix’s parent company Apollo Education Group announced that the business and marketing practices of the for-profit school are now under investigation by the Federal Trade Commission (FTC).CNNMoney reports that Apollo will “cooperate fully” with the FTC investigation, which requires them to provide the federal agency with documents on their finances, marketing, accreditation, and military recruitment practices from the last four years.

Apollo’s stock (APOL) predictably took a nosedive following the announcement.

For the University of Phoenix, which is the largest for-profit higher education institution in the U.S. with an emphasis on online programs, a federal investigation is the latest in a long series of disasters that could topple a once-thriving enterprise.

With this latest investigation, University of Phoenix is under particular scrutiny for recruiting veterans. The Associated Press reports that the school’s online program has collected over $488 million in tuition and fees from veterans, not including the hundreds of millions in GI Bill money that individual campuses have collected. Over the last several years, the school has come under fire for allegedly soaking up this GI money while leaving veterans strapped with debt.

New federal rules require schools with career-training programs to produce graduates who can repay their student loans in order to receive federal student aid. For a school that already has notoriously low graduation rates, this bar may be out of reach.

According to Department of Education data, the University of Phoenix online campus has a graduation rate of 7.3 percent and a loan default rate of 19 percent—5 percent higher than the national average. A report from the Center for Investigative Reporting (CIR) claims that 24,000 Iraq and Afghanistan war veterans were enrolled in the online program last year.

Earlier this month, that CIR report prompted Senator Richard Durbin to askthe Department of Defense to investigate allegations pertaining to the school’s recruiting on military bases.

In response to Wednesday’s news of the FTC investigation, Durbin released a statement saying, “I wish I could say I am surprised by the news that the FTC is investigating the University of Phoenix for unfair and deceptive practices, but these allegations are all too familiar when it comes to the for-profit college industry.”

The investigation also comes after a long line of financial defeats for the for-profit school.

In 2012, University of Phoenix shuttered 115 of its physical locations and laid off over 4 percent of its staff. These closings came on the heels of a damning 2010 report by The Education Trust (PDF) that found the school had a six-year graduation rate of only 9 percent for students seeking a bachelor’s degree.

Student debt, on the other hand, seems to be a fairly reliable outcome for University of Phoenix students. In 2013, USA Today listed several of its campuses as “red flag” schools for posting graduation rates that were significantly lower than the rates of students defaulting on their loans—in Metro Detroit, for example, graduation rates were just 10 percent, but over 25 percent of students defaulted on their loans.

The school has also come under scrutiny for its enrollment of veterans in the past. Last July, the state of California asked the University of Phoenix to halt veteran enrollment in seven of its programs to prevent violations of the Veterans Affairs 85/15 rule, which requires that programs do not enroll more than 85 percent veterans. The rule is intended to prevent schools from exploiting federal aid for veterans.

This seemingly endless stream of bad news has taken its toll on the school’s bottom line: tuition. According to a CNNMoney report from March of this year, University of Phoenix enrollment has dropped from 460,000 students five years ago to 213,000—a precipitous 54 percent dip.

Apollo declined further comment to AP about the FTC investigation into the University of Phoenix and has not released further statements. The federal government, on the other hand, has already warned that other for-profit schools with poor performance numbers could be next.

In a July statement, U.S. Secretary of Education Arne Duncan said: “The clock is ticking for bad actors in the career college industry to do right by students. We know many have taken steps to improve or to close programs that underperform, but we believe there is more work to be done across the board so students get what they pay for: solid preparation for a good job.”

 

Ties to for-profit colleges trip up several GOP senators

Ties to for-profit colleges trip up several GOP senators

By Steve Benen    07/13/16 10:40 AM
http://www.msnbc.com/rachel-maddow-show/ties-profit-colleges-trip-several-gop-senators?cid=sm_fb_msnbc

 The “Trump University” scandal hasn’t done Republicans any favors. Donald Trump’s controversial enterprise, which is already the target of a major lawsuit, has been accused of being a con job, ripping off students who trusted the developer’s name.

But as it turns out, this is part of a broader area of concern for the GOP – because several other Republicans are caught up in their own messes surrounding for-profit colleges. Continue reading

The for-profit education company targeting the whole world

The for-profit education company targeting the whole world

Gary Gately, special to CNBC.com

Tuesday, 15 Dec 2015 | 12:01 PM ETCNBC.com

 

With the reputation of U.S. for-profit colleges in tatters, one company has found a convenient way to circumvent regulation in this country: by operating primarily in overseas markets.

Baltimore-based Laureate Education, the world’s largest for-profit higher-education company by enrollment (with about 1 million students now enrolled worldwide), operates in a sector plagued by government scrutiny in the U.S. and in which one major for-profit education company, Corinthian Colleges, declared bankruptcy earlier this year.

But Laureate gets 84 percent of its revenue from outside this country, most of it from Latin America. There, nations lack the infrastructure of established universities that the U.S. has, and their development means a steady demand for educated workers and training, the company argues in its IPO paperwork. (It filed for an IPO in October, but IPO watchdogs don’t expect the deal to occur until next year.) Continue reading

Student Loan Debt Clock

 

 

 

 

Student Loan Debt Clock

http://www.finaid.org/loans/studentloandebtclock.phtml

FinAid
This clock reports an estimate of current student loan debt outstanding, including both federal and private student loans.

Total student loan debt outstanding exceeded total credit card debt outstanding for the first time in June 2010. The seasonally adjusted figure for revolving credit in the Federal Reserve’s G.19 report (current reporthistorical data) was $826.5 billion in June 2010. (Credit card debt represents as much as 98% of revolving credit.) Revolving credit started declining in September 2008 when it reached a peak of $975.7 billion. The decrease is probably due a combination of higher minimum payments on credit cards, which were increased to 4% from 2%, lower credit card limits and tighter credit underwriting. Student loan debt, on the other hand, as been growing steadily because need-based grants have not been keeping pace with increases in college costs. Federal student loan debt outstanding reached approximately $665 billion and private student loan debt reached approximately $168 billion in June 2010, for a total student loan debt outstanding of $833 billion. Total student loan debt is increasing at a rate of about $2,853.88 per second.

Note that these figures do not include capitalized interest on the total outstanding for federal education loans. When federal agencies publish debt figures, those figures usually include only the portion of the original principal balance remaining. This might not matter much for credit cards, auto loans and mortgages, but it has a much greater impact on education loans. Students routinely defer repaying student loans during the in-school and grace periods by capitalizing the interest. This increases the total federal student loan debt outstanding by about 6% to 7%, or about $50 billion.

If one were to include capitalized interest, total federal and private student loan debt probably hit the $1 trillion milestone in late 2011. But since there is not a reliable source of data concerning capitalized interest, the student loan debt clock does not include it. The student loan debt clock reached the $1 trillion milestone on May 8, 2012 at about 6:40 am ET.

Practical tips for minimizing debt and reducing the cost of education financing include:

  • Borrow federal first. Federal loans are cheaper, more available and have better repayment terms than private student loans. The unsubsidized Stafford and PLUS loans are available without regard to financial need, so you don’t have to be poor to qualify.
  • Live like a student while you are in school so you don’t have to live like a student after you graduate.
  • Do not borrow more for your entire education than your expected starting salary after you graduate. Otherwise you will find it difficult to repay the debt and will be at higher risk of default.
  • If you are borrowing more than $10,000 per year for college, switch to a less expensive school.
  • Submit the Free Application for Federal Student Aid (FAFSA) atwww.fafsa.ed.gov to apply for federal and state grants and search the Fastweb scholarships database to find scholarships for which you are eligible. Every dollar you get in grants and scholarships is a dollar less you will need to borrow.

See also Fastweb’s article on How to Minimize Student Loan Debt for additional advice on reducing the need to borrow to pay for college costs.

This student loan debt clock is intended for entertainment purposes only. The actual total debt outstanding demonstrates more volatility at the beginning of each semester, when most student loans are disbursed. (Most colleges are required to disburse federal education loans in two installments per period of enrollment.)

To add the student loan debt clock to your site, just cut and paste the following HTML
http://www.finaid.org/loans/studentloandebtclock.html