ITT Educational Services shuts down, leaving Minnesota students out millions of dollars

Minnesota students will be out millions of dollars that they spent on tuition to attend a national for-profit college that abruptly shut down on Tuesday.

And for those who graduated from ITT Educational Services, which had campuses in Brooklyn Center and Eden Prairie, the institute's closing could mean their degrees will be questioned by employers or graduate schools, said Betsy Talbot, manager of registration and licensing at the Minnesota Office of Higher Education.

ITT Educational Service announced Tuesday that it was closing after being sanctioned in August by the U.S. Department of Education and banned from enrolling new students using federal aid.

Altogether, about 200 Minnesota students at the two campuses and about 1,000 other state residents enrolled in the institute's online courses could lose millions of dollars, Talbot said.

Some veterans won't be able to recoup GI benefits that they used to attend the institute, she said. Currently, 68 veterans were enrolled on the two campuses, Talbot said.

Students who took out federal Stafford loans could have those loans discharged if credits aren't transferred to another institution, Talbot said.

Meanwhile, federal officials are exploring options for ITT graduates who owe those federal loans, she said.

But students who paid cash or who secured private or state loans will be out money for school credits that likely can't be transferred to another school, Talbot said. The average student will lose about $30,000, and some as much as $70,000, she said.

State officials are scrambling to determine how to minimize the effect of ITT's closing on current students in the school's two-year and four-year degree programs, Talbot said.

Creating an agreement with other schools to accept some of the credits is a priority, especially for veterans, Talbot said.

"Our veterans served, and they're losing these benefits," she said.

Transferring ITT credits to other institutions will be difficult because the programs are highly technical and schools aren't obligated to structure their programs the same way, she said.

ITT officials at the Twin Cities campuses couldn't be reached for comment.

Federal education officials took action against ITT in late August, saying it is "not in compliance, and is unlikely to become in compliance" with accreditation criteria.

"Our responsibility is to protect students and taxpayers," U.S. Secretary of Education John B. King Jr. said in August. "It would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds."

ITT, which has been the subject of multiple state and federal investigations into allegations of fraud, deceptive marketing and steering students into predatory loans, operates more than 130 campuses in 38 states and enrolls students in online programs throughout the country, according to the U.S. Department of Education.

About 45,000 students were enrolled in ITT programs in 2015.

Last year, the institution reported nearly $850 million in total revenue, with about $580 million of that coming from federal aid.

It was unclear Tuesday how many Minnesota residents have graduated from ITT's Minnesota campuses.

Minnesota officials said they have received some complaints about the institute. "But not a large number," Talbot said. "They're not even in the top ten of the schools we receive complaints on," she said.

In its announcement Tuesday, ITT said it had eliminated most of the jobs for its 8,000 employees.

"Our focus and priority with our remaining staff is on helping the tens of thousands of unexpectedly displaced students with their records and future educational options," the statement said.

For more information, contact the Minnesota Office of Higher Education at 651-259-3965 or go to https://www.ohe.state.mn.us.

Mary Lynn Smith • 612-673-4788