After completing a two-year program in electrical engineering technology at the ITT Technical Institute in Chattanooga last month, Jake Oliver thought he was getting his associate's degree on Thursday and starting a bachelor's program at the school next week.
But Oliver and more than 35,000 other ITT students learned this week the technical school is shutting down and won't open its campuses in Chattanooga and 130 other cities this fall.
"It's devastating to me and I'm trying to figure out what to do next," said Oliver, who earned his degree after serving in the U.S. Army. "The classes and instructors I had were great, but I'm worried now how valuable my degree will be considered from a school that has shut down."
The Indiana-based parent company ITT Educational Services said it is shutting down its campuses this fall due to the decision on Aug. 25 by the U.S. Department of Education to cut off the use of federal financial aid for ITT students. The closing forced the layoff of more than 8,000 ITT instructors and other employees.
The federal agency said too many ITT students were not graduating or were unable to find jobs after students received millions of dollars in federal students loans and grants to enroll in the school's college programs in electronics, IT, business, criminal justice and nursing.
The Education Department ordered ITT to pay $152 million within 30 days to help cover student refunds and other liabilities if the chain closed.
Days before those sanctions were announced, ITT's accreditor reported the chain had failed to meet several basic standards and was unlikely to comply in the future. It had also been investigated by state and federal authorities who accused ITT of pushing students into risky loans and of misleading students about the quality of programs.
Joanna Bailey, a 48-year-old former student of the ITT Tech School in Chattanooga from 2012 to 2015, said federal Pell grants and student loans totaled more than $30,000 for her night-time classes, yet she had to quit the program before she ever completed her associate's degree. Bailey claimed Monday she was charged for room and board in Chattanooga even though the local campus at the Eastgate Town Center has no dorms or student housing.
Bailey said she had a similar experience at McKenzie College before that private school closed.
"All of the money went to the school, but we had to fight just to get computer laptops and other supplies," she said. "There were some good courses, but some of the instructors, in my opinion, were not very experienced and I know a lot of graduates didn't land jobs as quickly as they had expected."
On its website, ITT claims that more than 14,000 companies have hired ITT Tech grads.
ITT Educational Services CEO Kevin Modany told reporters on a conference call Tuesday that ITT was the victim of a "regulatory assault" and never had the chance to defend itself.
"For what appears to be political reasons, there seemed to be an outcome in mind that was going to be forced here," Modany said.
Other education companies had made overtures to buy the chain's schools over the past year, Modany added, and ITT had offered to "wind down" its operations gradually if federal officials eased some of the sanctions against it, but he said federal officials rejected those options.
Department Undersecretary Ted Mitchell, however, said ITT never made a formal proposal, and that the department's "informal conversations" with potential buyers had failed.
"We just didn't see that there was a path forward providing a quality education to the students of ITT Tech," Mitchell said.
One of the biggest for-profit chains in the nation, ITT had been closely monitored by federal officials since 2014, when the chain was late to submit an annual report of its finances to the government.
About 200 ITT employees will help students obtain grade transcripts and apply to other schools, and the chain said it is seeking agreements with other schools that would help students transfer class credits.
The Tennessee Higher Education Commission said Tuesday it will work with more than 1,900 students at ITT schools in Chattanooga, Cordova, Johnson City, Knoxville, and Nashville with information and resources following the school's announcement that it is closing.
Students with questions regarding the closure can contact THEC at (615) 741-5293 or online at www.tn.gov/thec.
"This is an unprecedented occurrence and we are working with officials at ITT Tech, the U.S. Department of Education, and other higher education institutions around the state as this rapidly-evolving situation develops," said THEC Executive Director Mike Krause. "We are focused on pursuing every possible resource for these students."
Several students said the closure leaves them in limbo, with little time to find other options. Ed Donayre had eight courses left at a campus in Chantilly, Va., before he'd earn an associate's degree as a medical assistant. He'd like to transfer to a community college, but classes have already started.
"I might have to wait for the spring, so basically I've wasted two years of my life dealing with ITT Tech," Donayre said.
Students who were enrolled at ITT within the last 120 days can apply to have their federal student loans erased by the Education Department. That's an estimated $500 million worth of loans, a cost that would be covered by taxpayers and $90 million in insurance that ITT previously paid the department.
The Associated Press contributed to this report.
Contact Dave Flessner at email@example.com or at 423-757-6340.