ITT Tech Closes All 130 Campuses - 35,000 Students Stranded With Worthless Degrees and Non-Dischargeable Debt

ITT Technical Institute abruptly shut down all 130 campuses across 38 states on September 6, 2016, stranding approximately 35,000 students mid-semester and displacing 8,000 employees. The closure came after the Department of Education banned ITT from enrolling new students receiving federal aid and demanded the company increase its surety bond from $94 million to $247 million within 30 days—a requirement ITT could not meet because its entire business model depended on continuous federal aid extraction.

ITT’s collapse followed the same pattern as Corinthian Colleges: a for-profit chain that relied on federal student aid for over 80% of revenue, engaged in deceptive marketing and recruitment practices, provided low-quality education with dismal job placement rates, and left students drowning in non-dischargeable debt for credentials that proved nearly worthless. The company had been under investigation by multiple state attorneys general, the Consumer Financial Protection Bureau, and the Securities and Exchange Commission for fraud including inflated job placement statistics and misleading representations about accreditation and transferability of credits.

Students faced a cruel choice: continue at another institution (where ITT credits often wouldn’t transfer) and take on additional debt, or withdraw and remain liable for loans already incurred for incomplete, worthless programs. Under the “closed school discharge” provision, students enrolled within 120 days of closure could apply for federal loan forgiveness, but many ITT students had attended earlier or faced complicated bureaucratic processes to obtain relief. Education Department Undersecretary Ted Mitchell estimated up to $500 million in federal loans would be discharged.

The ITT closure revealed how the 2005 Bankruptcy Act weaponized debt against students: ITT executives extracted salaries and profits for years while providing fraudulent educational services, the company entered bankruptcy protection when investigations closed in, but students remained personally liable for non-dischargeable debt incurred through the fraud. Students couldn’t bankruptcy their way out of ITT debt, but ITT could bankruptcy its way out of accountability.

The Department of Education eventually discharged $3.9 billion in loans for 208,000 ITT borrowers who attended from January 2005 through closure in September 2016, acknowledging the systemic fraud. But thousands of students spent years fighting for relief, facing collections, defaults, and credit damage while the relief process dragged on. The ITT closure came just months before Betsy DeVos—a billionaire investor with ties to debt collection companies and ideological opposition to for-profit college regulation—would be nominated as Education Secretary, foreshadowing a reversal of borrower protections.