Why ITT Tech's closing hits veterans hardest
By JAMES BRIGGS | The Indianapolis Star | Published: September 6, 2016
EDITOR'S NOTE: Since this written, ITT Tech announced that it was shutting down all its campuses.
INDIANAPOLIS (Tribune News Service) — Matthew Pecoraro doesn't know how ITT Technical Institute got his phone number. But he was glad to take the call.
Pecoraro had left the U.S. Marine Corps in 2007 and had military education benefits to use. He was looking for his next step in civilian life when an ITT recruiter reached out to him.
"They contacted me and said, 'Hey, want to schedule an appointment?'" Pecoraro recalled. "I said, 'I'll come in and talk to you.'"
Almost before he knew it, Pecoraro enrolled in ITT's network systems administration program.
"Immediately, once you get into the office, it's paperwork, paperwork, paperwork, and you sign all this stuff," he said. "It felt more like buying a car than going to a school."
ITT aggressively recruited veterans such as Pecoraro, in part to stay compliant with a rule that requires at least 10 percent of a for-profit college's tuition money to come from sources other than federal loans. Now, as ITT is collapsing under the weight of federal sanctions, thousands of veterans fear that their hard-earned education benefits will have been wasted.
Pecoraro, 32, of Round Rock, Texas, is relatively lucky. He graduated in 2014, two years before the Obama administration dropped the hammer on ITT. Veterans who are still enrolled in classes have the most to lose if Carmel-based ITT Educational Services Inc. goes out of business in the coming weeks or months, as virtually all analysts predict.
The U.S. Department of Education has said students who attend ITT on federal aid can get their loans discharged if ITT closes. Even past students, who have graduated or dropped out, can file claims to get their federal loans forgiven. But veterans have no recourse.
The Post-9/11 GI Bill gives veterans 36 months of college tuition, plus expenses, to attend the school of their choice. It makes no accommodation for students who are enrolled in a school that closes. Should ITT shutter its campuses, the veterans who were attending classes there face several bad options.
"You could literally be four credits shy (of graduation), the school closes, and no one will accept your credits because no one wants ITT credits," said Derek Fronabarger, the director of policy for Washington, D.C.-based Student Veterans of America. "There's not a school for you to go to and no way for you to recoup your benefits. Those are the people that will be affected the most."
Student Veterans of America is lobbying for legislation to change that. So far, though, there has been little effort to help veterans who attend failed schools because there's almost no precedent for it. When Corinthian Colleges closed last year, the for-profit chain stranded about 450 veterans who had yet to complete their programs, Fronabarger said.
The impact would be significantly greater at ITT. About 12,500 veterans attended ITT in 2015, according to Student Veterans of America. There are 6,842 GI Bill recipients slated to attend classes at ITT during the school's next academic term, which begins Sept. 12, according to the U.S. Department of Veterans Affairs.
"I would say something of this scale is unprecedented," Fronabarger said. "The only thing we have to compare it to in the modern day would be Corinthian Colleges. This is definitely a much larger case."
Fronabarger expects to hear countless heartbreaking stories if ITT ceases to exist.
"When you look at what some people have sacrificed to go to school and now ultimately end up with a degree that's worthless, no degree or no degree and no GI benefits, it's a bad situation," he said.
It's a situation that Alec Moeller, of Waukesha, Wis., faces — and has tried to warn his friends about.
Moeller, 28, graduated from ITT in June 2015. Although he has an associate degree, Moeller said he hasn't found that employers respect his degree.
Even though Moeller used his military benefits, he said he still came out of ITT with $8,500 in student loans.
"They said I got charged more because the degree changed while I was overseas," he said. "The title of the degree changed and the number of the credits. I was like, 'What?' That doesn't make any sense."
Moeller has spent the past year discouraging other veterans from using their benefits at ITT.
"All the veterans I know, I tell them don't go to that school," he said. "You don't want to risk it."
It's unclear whether ITT will even begin its next academic term as scheduled. ITT has stopped enrolling new students in the wake of devastating government restrictions handed down Aug. 25, including a ban on signing up new students who rely on federal aid and a requirement for greater financial reserves.
Staff members and students have largely been left in the dark as ITT determines its next steps.
ITT spokeswoman Nicole Elam said the company is "committed to keeping students informed as we evaluate the U.S. Department of Education’s additional sanctions and requirements, as well as all options available to us." Elam referred veterans to the Department of Veterans Affairs, which has posted information regarding ITT to its website. Elam said ITT "will have additional information in the next several days."
The Department of Veterans Affairs in a statement said there's little it can do for veterans who have chosen to use their GI Bill benefits at ITT.
"It is important to note that unlike a situation in which a school has been found to have used deceptive or misleading enrollment practices, VA is not legally authorized to prevent GI Bill beneficiaries from using their benefits, or enrolling in an accredited institution, based solely on its financial condition," the statement said.
The agency added it is "communicating with GI Bill beneficiaries about the significant risks of continuing to use their benefits at certain educational institutions."
Education Secretary John B. King Jr. has acknowledged that ITT's failure would be a setback for students but said the government's actions against ITT are "necessary to protect the interest of taxpayers." The college chain, which had 137 campuses across 39 states at the end of June, has faced fraud charges from the SEC. ITT also is being investigated by about 20 state attorneys general.
But Alexander Paris, an analyst for Barrington Research Associates Inc. who follows ITT, said the Obama administration's relentless crackdown on for-profit colleges is to blame if students are left hung out to dry by ITT.
"It's quite unfortunate to do it in the name of the students and taxpayers when those are the exact parties that are going to be harmed by this action," Paris said.
Pecoraro said he has seen signs that ITT was in trouble but didn't entirely believe them. Like Moeller, Pecoraro racked up loans at ITT in addition to using his military benefits — to the tune of $10,000. Pecoraro said he has found little value in his ITT degree and he is concerned it could be worth even less if ITT closes.
"I think I've been passed up because of it," Pecoraro said. "When (employers) ask for your degree, like what have you completed, I think people pass it up. They see it and it's like, 'Oh, great,' it's one mark against you."
Having blown through his GI Bill benefits, Pecoraro said he doesn't plan to pursue another college program. He has a job related to IT and wants to make the best of it.
"I'm hoping based off of work ethic and really good references that I can make something happen in the future," he said.
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