Last week, ITT Technical Institute announced that it would close all of its colleges, affecting approximately 40,000 students and 8,000 employees. This closure was expected after the chain of for-profit colleges stopped enrolling new students in late August after the U.S. Department of Education cut off federal financial aid dollars for new students a few days earlier. This closure, which could cost taxpayers up to $400 million through forgiven loans, has generally been celebrated by those on the political left while conservatives and those in the for-profit sector are concerned that the federal government is trying to severely restrict the for-profit college industry.
Given that some of the concerns about ITT Tech were about poor student outcomes, I examined ITT Tech’s outcomes relative to other degree-granting for-profit colleges on three important metrics: median debt burdens of former students who took out loans, the percentage of students seven years after entering repayment, and median earnings of former students ten years after entering college.1 I restricted my analysis to the 415 degree-granting for-profit colleges that reported data on all three of the outcomes, combining branch campuses that reported the same outcomes as other colleges in the same system.2
Median debt
The median debt burden of all former ITT Tech borrowers was $12,473 (as indicated by the red line on the below chart), slightly above the median amount of $11,993. This suggests that among for-profit colleges granting associate and/or bachelor’s degrees, ITT Tech’s debt burden was fairly typical.
Loan repayment rates
Seven years after entering repayment, 58.2% of former ITT Tech students paid down at least $1 in principal on their federal student loans. This is slightly worse than the median rate of 61.3% across similar for-profit colleges.
Earnings
On this metric, ITT Tech looks pretty good relative to other for-profit colleges. ITT Tech students who received federal financial aid had median earnings of $38,400 ten years after college entry, well above the median of $29,200 and close to the 90th percentile among similar institutions. However, these data are based on students who entered college in the early 2000s, when ITT Tech looked much different than it did in recent years.
Based on financial outcomes, ITT Tech’s former students (at least those who enrolled at least several years ago) did as well or better than other for-profit colleges. This does lend some credence to defenders of ITT Tech who were concerned about the Department of Education targeting the institution. However, others have noted that ITT Tech’s closure may have been self-inflicted through an ill-advised private loan program that led to fraud charges. In any case, other for-profit college chains are likely to face additional scrutiny in the future—from politicians and accreditors alike.
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1 I did not examine graduation rates, as many for-profit colleges have very few students in the first-time, full-time cohort of students that are currently used to calculate graduation rates for the federal government.
2 ITT Tech had 143 branch campuses in the College Scorecard data, and 141 of them had the same reported outcomes. I analyzed those campuses as a single institution, dropping the two small campuses that had different reported outcomes.
Robert Kelchen 