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SEC Charges ITT Educational Services With Fraud
mpicpp writes with news that ITT Educational Services, the company that operates for-profit college ITT Tech, has been charged with fraud over its student loan programs. The U.S. Securities and Exchange Commission accuses the company of concealing poor financial performance from its investors.
ITT formed both of these student loan programs, known as the "PEAKS" and "CUSO" programs, to provide off-balance sheet loans for ITT’s students following the collapse of the private student loan market. To induce others to finance these risky loans, ITT provided a guarantee that limited any risk of loss from the student loan pools.
According to the SEC’s complaint filed in the U.S. District Court for the Southern District of Indiana, the underlying loan pools had performed so abysmally by 2012 that ITT’s guarantee obligations were triggered and began to balloon. Rather than disclosing to its investors that it projected paying hundreds of millions of dollars on its guarantees, ITT and its management took a variety of actions to create the appearance that ITT’s exposure to these programs was much more limited.
According to the SEC’s complaint filed in the U.S. District Court for the Southern District of Indiana, the underlying loan pools had performed so abysmally by 2012 that ITT’s guarantee obligations were triggered and began to balloon. Rather than disclosing to its investors that it projected paying hundreds of millions of dollars on its guarantees, ITT and its management took a variety of actions to create the appearance that ITT’s exposure to these programs was much more limited.
I think the idea isn't that the SEC specifically should address this issue, but rather, that it's a shame that we turned a blind eye to a fraudulent diploma mill until it started hurting someone who mattered to those at the top.
This is my signature. There are many like it, but this one is mine.
ITT and Phoenix are products of the federal loan industry. College was affordable before federal loans. The administrators scream and wail about losing state funding and blame tuition rises on that, but look at the fucking temples to education that are being built. How does a lazy river contribute to education? Climbing walls are nice, but why am I subsidizing federal loans for students to have a better climbing wall than education. I'm not quite at the "pole barn is optimal" level, but half of the staff and the space they occupy here is absolutely useless, and many of them actively, deliberately interfere with education. We could cut the cost of college education in half and get a better product. Don't believe me? Look at or College of the Ozarks. Both are private colleges that don't charge tuition or room and board. Most universities, the one I teach at included, are scams designed to extract the most money possible from the "students" or "customers" as we've been told to call the millennials. Even major pedagogical decisions, like switching from quarters to semesters, are driven by the same thought ...you get more money out of a student who drops out after a semester than a quarter.