Troubled predatory for-profit college ITT Tech said in a filing with the Securities and Exchange Commission last night that in order to raise enough money to cover a new letter of credit requirement imposed by the U.S. Department of Education, "the Company expects to implement certain modifications to its historical marketing and recruitment strategy." ITT added that the "specific details of the modifications are being finalized, and are expected to be reported by the Company in future filings with the U.S. Securities and Exchange Commission and other public disclosures as appropriate."
As documented in government investigations, government and private lawsuits, and media reports, ITT has for many years engaged in deceptive and coercive recruiting and marketing in order to maximize student enrollment and company revenue. It's not clear what modifications ITT intends to make that will provide the prompt increase in revenue it might need to provide a larger letter of credit.
Last month, the Department of Education directed ITT to raise its letter of credit from 10 percent of its annual federal revenue to 20 percent -- $123,646,182 -- after ITT's accreditor, ACICS, questioned the company's management and financial viability. (Subsequently, the Department staff and its advisory committee each recommended that ACICS, because of lax oversight of schools, no longer be a recognized accreditor.)
The Department requires letters of credit where it has concerns about a company's capacity to pay refunds and other debts. ITT's filing yesterday says the Department wrote to ITT on July 6 agreeing to allow ITT to increase its letter of credit on essentially an installment plan.
In recent months and years, ITT has been under investigation or has been sued by the SEC, the Consumer Financial Protection Bureau, and the attorneys general of New Mexico, Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania and Washington.
This article also appears on Republic Report.