03.07.16

Durbin to ITT Tech's Accreditor: What Are You Doing to Protect Students?

[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) called on the President and CEO of the Accrediting Council for Independent Colleges and Schools – ITT Tech’s accreditor and gateway to federal Title IV funding – what it is doing to protect students and ensure institutional integrity, academic quality and financial stability.

   

In his letter, Durbin cited the long list of concerns, investigations, lawsuits, and other enforcement actions:  “ITT Tech is under investigation by at least 18 state Attorneys General related to marketing and recruiting, job placement rates, and other matters.  Further, the Consumer Financial Protection Bureau (CFPB) is suing ITT Tech for predatory lending.  According to CFPB, ITT Tech coerced students into high-cost private loans, with interest rates as high as 16.25 percent, that they knew were likely to end in default.”

   

“The Securities and Exchange Commission has charged ITT Tech, CEO Kevin Modany, and CFO Daniel Fitzpatrick with fraud for concealing the poor performance and looming negative financial impact of this loan program from investors.  Last October, the Department of Education placed additional reporting requirements on ITT Tech after finding that the company’s actions demonstrated ‘a failure by ITT to meet its fiduciary obligations…and to meet the standards of administrative capability required of institutions participating in Title IV, HEA programs…’”

   

Text of the letter is below.

 

   

Dr. Albert C. Gray

President and Chief Executive Officer

Accrediting Council for Independent Colleges and Schools

750 First Street, NE

Suite 980

Washington, DC 20002

   

Dear Dr. Gray,

   

I write today about ITT Tech, which is accredited by the Accrediting Council for Independent Colleges and Schools (the Council) and is facing broad scrutiny from state and federal regulators.

   

The New Mexico Attorney General is suing ITT Tech for making misrepresentations to students about their accreditation status and engaging in unfair, deceptive, and unconscionable practices.  According to the Attorney General, ITT Tech falsely told students its nursing program held programmatic accreditation, which was required for students’ ITT Tech credits to count toward an advanced nursing program in New Mexico and ultimately get a job in nursing.  The Attorney General also found that ITT Tech placed students into loans without their knowledge, falsely stated the number of credits a student had to take in order to push them into taking on more debt, failed to issue refunds of tuition and fees in compliance with federal law, and engaged in a variety of other despicable practices.  In addition, ITT Tech is under investigation by at least 18 state Attorneys General related to marketing and recruiting, job placement rates, and other matters.   

   

Further, the Consumer Financial Protection Bureau (CFPB) is suing ITT Tech for predatory lending.  According to CFPB, ITT Tech coerced students into high-cost private loans, with interest rates as high as 16.25 percent, that they knew were likely to end in default.  The CFPB’s complaint states that it believes ITT Tech misrepresented future job prospects to lead students to believe they would be able to repay the loans.  The Securities and Exchange Commission has charged ITT Tech, CEO Kevin Modany, and CFO Daniel Fitzpatrick with fraud for concealing the poor performance and looming negative financial impact of this loan program from investors.

   

Last October, the Department of Education placed additional reporting requirements on ITT Tech after finding that the company’s actions demonstrated “a failure by ITT to meet its fiduciary obligations…and to meet the standards of administrative capability required of institutions participating in Title IV, HEA programs…”  In its letter, the Department also noted a litany of other concerns including “ITT’s failure of the general standards of financial responsibility” set forth in law.  The Department also has placed ITT Tech on Heightened Cash Monitoring and required the company to provide payment of $79.7 million, to be held in escrow, to cover potential losses to taxpayers. 

   

            Given this long list of concerns, investigations, lawsuits, and other enforcement actions, I ask the following questions:

   

  • Is the Council concerned about the financial stability of ITT Tech and a potential precipitous cessation of operation by the company?
  • Has the Council required ITT Tech to submit teach-out plans for some or all of its campuses to provide options for students in the event of a closure?
  • What other actions has the Council taken related to ITT Tech to ensure institutional integrity, academic quality, and financial stability?

     

I appreciate your prompt response to these questions.

 

   

                                                Sincerely,