type: timeline_event
ITT Technical Institute, one of the largest for-profit technical school chains with over 130 campuses, abruptly closed all locations permanently after the U.S. Department of Education banned it from enrolling students receiving federal financial aid. The shutdown came after investigations by the SEC, 18 state attorneys general, and the Education Department uncovered systematic fraud. The SEC filed civil fraud charges against CEO Kevin Modany and CFO Daniel Fitzpatrick for lying to investors about high rates of late payments and defaults on student loans backed by the company. ITT falsified job placement records and graduation rates to maintain access to federal student loan money, which provided the vast majority of its revenue. The company's business model depended entirely on federal aid flowing to students who were often left with debts exceeding $50,000 for degrees that employers did not recognize. The closure stranded 35,000 students mid-semester and left taxpayers with an estimated $500 million bill for loan forgiveness, though ITT's surety could only cover $90 million. ITT Tech's collapse was part of a broader crash of the for-profit college industry after it had ballooned to a $35 billion scam-ridden enterprise. The industry had spent over $40 million lobbying Congress to maintain the flow of federal funds, with leaked documents showing House GOP leaders "directed" the lobbying strategy. The Biden administration would later cancel $3.9 billion in loans for ITT Tech students, but the DeVos Education Department had blocked relief for years despite career staff recommending full debt cancellation.