What the Closure of ITT Technical Institute Means for Other ACICS-Accredited Schools

On Tuesday, September 6, 2016, ITT Technical Institute announced that it is closing its 130 campuses due to the Department of Education’s (“DOE”) decision to restrict ITT’s federal funding known as Title IV. ITT Tech (a publicly-traded company – NYSE: ESI – whose stock traded at $12.68 two years ago and now trades at thirty-six cents) is/was an ACICS-accredited institution. In fact, ACICS’s allegedly poor oversight of ITT was the primary impetus behind the DOE’s June 2016 decision to seek withdrawal of ACICS’s ability to accredit schools that receive Title IV funding. If successful, the withdrawal will cause ACICS to close its doors as well. As a result, ACICS’s back is against the wall, and that is not good for you as an ACICS-accredited school.

After ACICS’s existence came under attack, it threatened to withdraw ITT’s accreditation, froze new accreditation applications, and deferred the applications of schools already in the pipeline even though many of them had paid tens of thousands of dollars for site visits which uncovered few if any violations. These aggressive moves toward self-preservation may be too little too late or they may indeed have a positive impact on a withdrawal proceeding that appeared all but certain to go against ACICS a few short months ago. But at what cost to ACICS-accredited schools?

In our experience, lax-regulation is followed by over-regulation. Expect a nitpicking mentality at ACICS for the next several years if they escape final withdrawal of recognition status. Plan to dedicate even more time than usual to compliance matters, and have a plan in place in the event that ACICS does not survive.

With respect to ITT’s disappearance from the marketplace, it is telling that in ITT’s announcement, it mentioned how many employees would be affected and how shareholders were being hurt, but nowhere did it say how many students were being displaced. But if you own a school near an ITT Tech campus and you have Title IV eligibility, ITT’s loss can be your gain. Students of closed schools have 2 options: (i) they can discharge their debts or (ii) they can continue their program of study at another school — your school. But note: the student will not be eligible for a discharge of the debt incurred at ITT unless the student starts over in a different program of study. For students wishing to continue in the same program at your school, you will need to accept ITT credits and bill only for the remaining credits that the student needs in order to earn a degree from your institution. Get our Industry Updates.

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