ITT Technical Institute suddenly shut down all of its campuses and online courses on September 6, 2016. By doing so, it puts approximately 8,000 employees out of work without warning. Those employees are fighting back. Former ITT Tech employee lawsuits have been filed in Delaware and Indiana. At least one of those lawsuits has requested class action certification.
ITT Tech operated 130 campuses in 38 states and also offered online courses. In April 2016 it received a show cause letter from the Accrediting Council for Independent Colleges and Schools, ACICS, to prove that ITT Tech was serving its students in compliance with ACICS standards. That notice prompted the U.S. Department of Education, DOE, to issue a letter to ITT Tech in June 2016 requiring it to increase its surety to 20 percent of Title IV Funding it had received in the fiscal year ending December 2015. Title IV funds are used for federal student loans.
ACICS held a hearing and determined that ITT Tech was still not in compliance with hits standards and was not likely to become compliant. This prompted DOE to issue another letter on August 25 that, among other requirements, increased the required surety to 40 percent of the Title IV Funding resulting in a total of $247,292,364. DOE gave the institute 30 days to pay over $152 million that was needed to bring the surety on file up to that amount. Rather than meet the additional requirements, ITT Tech closed the doors of its campuses and online classes.
The employee lawsuits allege that ITT Tech was in violation of the federal Worker Adjustment Retraining and Notification Act. That Act requires employers to give at least 60 days notice before mass layoffs. The employees are seeking all of the wages and benefits they would have received during the 60 days after they should have received notice of the closing. It is not clear whether ITT Tech campuses that have less than 50 employees on site fall under that Act.
The closure has left thousands of students nationwide hanging. Some had invested years in their education, and owe thousands of dollars in student loans for degrees they will not receive. For those that were fortunate enough to have just finished their degrees, ITT stated that they will receive their diplomas, but graduation ceremonies have been cancelled.
The DOE has stated that ITT Tech students that have federal student loans can file a claim to have those debts erased. But, if they do, they cannot transfer any credits they may have received from ITT Tech to other schools. It should be noted that there are very few schools or colleges that will accept ITT Tech credits.