New Report Details Massive Scale of Fraud and Abuse at Notorious For-Profit College ITT Tech | Press Release

February 16, 2022

Borrowers call on Department of Education to act urgently to cancel all ITT loans immediately

 

BOSTON – The Project on Predatory Student Lending today released a new report detailing the massive scale of fraud and abuse by the defunct for-profit college ITT Tech. The report, Dreams Destroyed: How ITT Technical Institute Defrauded a Generation of Students was made public and sent today to Education Secretary Miguel Cardona. It presents the largest volume of evidence compiled on ITT, including thousands of ITT’s own internal records. The documents unequivocally show that ITT was not a legitimate educational institution: it systematically and brazenly lied to students in order to profit from their federal financial aid.

The Project, which represents borrowers in the ITT bankruptcy, is calling on the Department of Education to do right by students who were victims of indisputable and widespread fraud and fully cancel all ITT student loans. Hundreds of thousands of students attended ITT in its final decade, and the overwhelming majority still carry thousands of dollars in debt from this school despite common understanding amongst policymakers, elected officials, and this administration that ITT was a notorious fraud. This report delivers the indisputable evidence, from which the Biden-Harris administration cannot look away.

“The picture that emerges from our deep dive into ITT’s internal workings is of a large-scale loan-packaging operation. The loans were the object, not education or career training. It is genuinely shocking that this ‘school’ was able to fool regulators and accreditors for so long. But like any person who had the misfortune of being enrolled in ITT knows, students came last,” said Eileen Connor, Director of the Project on Predatory Student Lending. “Every student who attended ITT is a victim of its fraud and each one deserves justice. The cancellation of all remaining ITT debt is the only conscionable and reasonable course of action.”

The Department of Education is in the process of a negotiated rulemaking to determine the future of policies such as borrower defense and gainful employment. This report shows the need for even stronger regulations, so that there can never be another ITT.

“Let this be a wake-up call to the Department of Education of what will happen if it fails to commit to real oversight and enforcement,” said Eileen Connor. “The Department signed off on ITT, and gave it a free pass to abuse a generation of students. Regulations like gainful employment are not worth the paper they are written on if schools can easily evade them or flout them with impunity. Despite delivering truly terrible outcomes for its students, ITT was untouched by the gainful employment regulation. More than 80 percent of ITT students were enrolled in a program that should have been, but was not, subject to this regulation. And ITT failed for years to meet basic requirements of the Department and its accreditors, with no consequences.

As the report details, the ITT playbook included aggressively recruiting and pressuring students into enrolling, maxing out their student loans, and then leaving them out to dry by investing nothing in their education and leaving students with a mountain of debt and trauma. The documents show that this was a feature of the business model, not a bug, directed from the very top. Memos and comments from former CEO Kevin Modany show an over-the-top disdain and disregard for student borrowers and an interest only in lining the pockets of ITT executives and shareholders.

“Students should not be held accountable for ITT and the decades of damage that they have created,” said Jorge Villalba, former ITT student. “There are thousands of families that they have separated due to debt, have fallen ill, and have irreparable damage drowning in debt – they deserve a second chance in life. ITT cheated us out of an education and killed our dream to one day get ahead. The time that we have wasted there can never be brought back. The pain and suffering that we have endured have no dollar value.”

Examples in the report include:

  • An in-depth analysis of ITT’s Breckinridge School of Nursing, which was a notorious example of some of ITT’s worst abuses coalesced into a single program of study that caused great harm to students.
  • In the employee orientation video, CEO Kevin Modany said:
    • [I]t is our obligation to maximize the number of people that accepted our offer of assistance that ultimately progress through the recruitment part of the student success cycle. We then continue our focus on maximizing student success by assisting the transition of prospective students from the recruitment process into the financial aid process.
  • A memo from a Philadelphia, Pennsylvania campus in 2013 contained a handwritten comment that the recruiter was “doing well—didn’t give [prospective student] a chance to say no.”
  • ITT credits were not transferable — no other reputable institution would accept ITT credits. ITT even acknowledged this, in fine print. Yet one sample review of 2010 mystery shopper reports included 85 mystery shoppers in 28 states and at 63 different campuses who reported that ITT recruiters told them that transfer credits would be accepted or denied at the discretion of the receiving college.
  • In several instances, when it is noted that students complained about lack of equipment and resources — from a lack of internet on campuses to non-existent training equipment — Modany repeatedly refused any suggestion that ITT would invest money in these necessary costs. Yet ITT did spend:
    • $46 million in kickbacks to Sallie Mae on subprime student loans
    • $78 million in a single year to Deutsche Bank and other lenders because ITT students defaulted at extremely high rates.
    • $200 million on lead generation.
  • To work around government oversight and tell regulators that its programs were leading students to jobs in their field of study, ITT pushed the envelope on what could be considered job placement. They went so far as declaring that an exotic dancer was working in their field of study.
  • In another instance, one campus director created an entirely fictional company called Always Animal Clinic to say a graduate was employed. The company’s phone number was a direct line to an ITT employee.

These are just a few examples from the many thousands reviewed. For more information visit predatorystudentlending.org/itt.

 

 

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students. The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.

 

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