Sep 6, 2016 3 min read

The announcement Tuesday that all 130 of the ITT Technical Institutes across the country will be closing is undoubtedly unwelcome news for its 8,000 employees. Investors in the chain of for-profit colleges are surely not rejoicing either.

Taxpayers, on the other hand, should be thankful. And so should ITT Tech students, who will, with any luck, be able to continue learning and gathering career credentials at institutions untroubled by the questions that swirled around ITT Tech about the quality of its programs, recruitment methods and its prodigious hoovering up of federal student loan dollars.

ITT Tech is the latest for-profit college chain to crumble after coming under federal scrutiny. Last year, Corinthian Colleges Inc. filed for bankruptcy and shuttered its schools after state and federal prosecutors and the Consumer Financial Protection Bureau started putting its practices under a microscope. Other companies cut campuses or otherwise restructured operations. What has drawn the attention of the watchdogs is the way many of these schools promise quick degree programs in vocational areas like criminal justice, nursing and computer technology, draw students who need large federal student loans to pay tuition, and then have poor rates of job placement for students who do complete their coursework and get degrees.

Before it folded, ITT Tech was facing a fraud lawsuit courtesy of the Securities and Exchange Commission, a predatory-lending suit from the Consumer Financial Protection Bureau and the possibility its accreditation was going to be withdrawn by the Accrediting Council for Independent Colleges and Schools. ITT blamed its difficulties on sanctions levied by the U.S. Department of Education, which demanded it freeze the compensation of its executives and increase its surety funds – the money it would need to cover its debts – from $94 million to $247 million within 30 days. In a statement, ITT officials bemoaned a “challenging regulatory environment that now threatens all proprietary education.”

But the “challenging regulatory environment” these schools must navigate has largely been created as a result of their own operations. Consider ITT received 79 percent of its revenue from the federal student loan program last year. Other for-profit schools like ITT Tech have a similar dependence on federal loans, with billions of dollars from Uncle Sam’s coffers going to them. However, only 27 percent of students at private, for-profit colleges end up graduating, according to the National Center for Education Statistics, leaving many students without a diploma and, often, without a way to pay back their loans. And for those students who do graduate, they discover that the promises that were made about job placement were excessively rosy. For instance, Illinois sued one company for telling students they could land jobs as FBI agents, police officers or sheriffs after they completed its program, but most ended up as security guards or in retail – jobs they could have gotten with just a high school diploma.

The federal student loan program provides a boost to all of us, as an educated populace enhances the nation’s economic and cultural life. But those dollars should go to schools that offer real learning opportunities and solid employment prospects. Too many for-profit colleges do not clear that bar.

Most of these schools don’t have Latin phrases affixed to their walls, the way venerable colleges and universities do, but it looks like ITT Tech and some of its brethren should have deployed one in particular – “caveat emptor.”