RNN) - ITT Educational Services Inc., a for-profit educational company, will end operations at all ITT Technical Institutes, it announced Tuesday, blaming the federal government sanctions for the closures.
"The actions of and sanctions from the U.S. Department of Education have forced us to cease operations of the ITT Technical Institutes, and we will not be offering our September quarter," the company said. "We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution."
A majority of the 8,000 ITT Tech employees will lose their jobs, the company said. ITT Tech served more than 130 communities and more than 40,000 students as of June 30 at its campuses in 39 states and online.
ITT stopped enrolling students last week, CNN reported, after the U.S. Department of Education barred students who use financial aid from enrolling.
The Department of Education said in its blog that ITT Educational Services has been the subject of state and federal investigation for not being in compliance with accreditation standards.
"Over time, ITT’s decisions have put its students and millions of dollars in taxpayer funded federal student aid at risk. In response, over the last couple of years, we at the Department of Education have increased our financial oversight over ITT and required the school to boost its cash reserves to cover potential damages to taxpayers and students," the Department of Education's blog post stated.
ITT characterized the closure as a response to "unwarranted actions."
"This action of our federal regulator to increase our surety requirement to 40 percent of our Title IV federal funding and place our schools under 'Heightened Cash Monitoring Level 2,' forced us to conclude that we can no longer continue to operate our ITT Tech campuses and provide our students with the quality education they expect and deserve," the company stated.
The U.S. Department of Education places institutions on a Heightened Cash Monitoring payment method to provide additional oversight of cash management as a result of compliance issues. Level 2, the most stringent level of cash monitoring, was levied Aug. 25.
ITT was cited by the U.S. Department of Education in 2014 for late audits and was placed under a Provisional Program Participation Agreement for three years, the U.S. Department of Education said in a letter to ITT.
More than 500 schools nationwide are under some level of heightened cash monitoring as of June 1.
The U.S. Department of Education has advice for those ITT students who are affected by the ITT closures. Students with loans may be able to discharge the loans. The department said to monitor news through the Federal Student Aid's announcement page.