WASHINGTON, D.C. – Today, Congresswoman Jackie Speier (D-San Francisco/San Mateo Counties) wrote a letter to the U.S. Department of Education (ED), demanding an investigation into what appear to be deceptive and predatory lending practices by for-profit college operator ITT Educational Services, Inc.
“If these allegations are accurate, ITT has engaged in deceptive and predatory lending practices, pushing students into high-interest loans they know cannot be repaid, at costly taxpayer expense,” Speier wrote. “These students become saddled with unforgivable debt, and their inability to repay it ruins their future job prospects while harming taxpayers who are stuck with the bill.”
ITT Educational Services (ITT) is one of the largest operators of for-profit colleges in the United States. It has more than 140 institutions in 39 states, as well as an extensive online teaching operation. Its schools have been plagued with large cohort default rates (CDRs), nearly twice the national average. From 2009 to 2010, 45 ITT schools had a higher CDR than their graduation rate.
In 2012 ITT received 80 percent of its revenue from federal aid programs, and a large proportion of the remaining 20 percent from private loans made through predatory lending programs run by ITT Educational Services. These practices have led to charges filed by multiple federal agencies, including the Securities Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB).
Following the model of ED’s increased oversight of for-profit operator Corinthan College in July 2014, Congresswoman Speier’s letter requests that the department (1) Investigate the predatory lending practices, CDRs, and compliance with gainful employment regulations of ITT Educational Service-run for-profit colleges; and (2) Conduct active oversight and exercise enforcement options to safeguard students and taxpayers.