Facing multiple lawsuits, the possible loss of its accreditation (from an accrediting body that is in trouble on its own), and demands from federal regulators that it have enough cash on hand to cover losses in case things do collapse, ITT Educational Services now says it will likely see new student enrollment drop by up to 60% this year.
ITT dropped this little bit of bad news in an SEC filing this morning, saying that all the financial demands on the for-profit education chain have forced it to make cuts to its marketing and recruitment budgets. That means fewer ads for ITT Tech during Maury and fewer recruiters trying to convince students to pay the school’s relatively high tuition.
As a result, projects ITT, new student enrollment will be down 45% to 60% between now and the end of the year, compared to the same time period in 2015.
“While we expect these modifications to result in an increase to our operating income and cash flow in the short-term, continued enrollment declines would have a negative long-term impact on our revenue, cash flows and financial condition,” acknowledges the school. In other words: Slashing these budgets saves money right now, but could really hurt the company in the long run.
ITT has teetering in this tight spot for more than a year. It revealed in 2015 that it was the subject of a federal fraud investigation. The Dept. of Education then placed restrictions on ITT’s access to student aid after the school failed to account for millions in federal funds.
The educator has been sued by the Consumer Financial Protection Bureau over its loan practices, nursing students who say they were misled about the school, Massachusetts for allegedly harassing students, and by a whistleblower who alleges that the school deceived applicants about the education they would receive and their job prospects.
Meanwhile, the school’s accrediting body — the Accrediting Council for Independent Colleges and Schools (ACICS) — is currently deciding whether or not to pull ITT’s accreditation, which could severely hamper its ability to operate. If that weren’t bad enough, a Dept. of Education advisory panel recently recommended revoking the agency’s recognition of ACICS, which would put a number of for-profit schools at risk.
by Chris Morran via Consumerist
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