[Last updated (9/6/2016, 6:54 p.m.) with news of a lawsuit filed by ITT employees, and more context.]
The more than 40,000 students and 8,000 employees of ITT Educational Services Inc. on Tuesday grappled with the fallout of the for-profit’s announcement that it would close in response to heightened scrutiny from the federal government.
“It is with profound regret that we must report that ITT Educational Services Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after more than 50 years of continuous service,” the company said in a statement on Tuesday morning. “With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected.”
The department announced last month that it was cutting off federal aid to new students on ITT campuses, among other things. That extraordinary step followed much high-profile scrutiny of ITT’s practices. Then, just days later, the company announced it would cease enrolling new students.
It’s unclear what options remain for the tens of thousands students enrolled at ITT institutes. In its announcement the company said its “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.”
In a message to current ITT students the U.S. secretary of education, John B. King Jr., wrote that they have two options: apply to the department to have their loans discharged, or transfer their credits to a different institution.
“Whatever you choose to do, do not give up on your education,” Mr. King wrote. “Higher education remains the clearest path to economic opportunity and security.”
Meanwhile, The Wall Street Journal reported on Tuesday evening that two ITT employees had filed a lawsuit asserting that the company had violated a federal law requiring that 60 days’ notice be given for any large-scale layoffs to occur. The suit seeks class-action status.
In Tuesday’s news release the company said it had eliminated the jobs of the “overwhelming majority” of its roughly 8,000 employees.
A spokeswoman for the company did not respond to the Journal’s requests for comment on the lawsuit.