Thursday, January 20, 2011

ITT Profits, You Pay

The for-profit, Carmel-based ITT Educational Services continues to make big profits at the public's expense. Despite nearly a 10% drop in enrollment, the for-profit pretend college is still racking up big profits, but the joke is on you. Low-income, minority students and military veterans targeted for ITT's education scam, like other for-profit schools, are largely financed by federally-guaranteed student loans and carry the highest default rates in higher education. According to the federal Department of Education, only 31% of the students who take out federal student loans to attend ITT actually repay those loans. The IBJ and Bloomberg News combine to report on ITT's profiteering at your expense:

Shares of ITT Educational Services Inc. rose the most in a year Thursday after the for-profit educator reported a fourth-quarter profit that beat analysts’ estimates.

ITT shares jumped 8.5 percent to $68.10 at 11:15 a.m. and earlier reached $70, in the biggest intra-day gain since January 2010.

Early Thursday, the Carmel-based company said new-student enrollment fell for the second straight quarter, but it still turned a profit.

The company saw 9.4 percent fewer students sign up the three months ended Dec. 31 compared with the same period a year ago. In the third-quarter, ITT’s new-student enrollment fell 3.9 percent—the first decline the company had experienced since the recession began.

ITT’s profit for the quarter grew 4 percent to $97.5 million, compared with the fourth quarter a year earlier. Profit per share was $3.14, topping expectations of Wall Street analysts, which averaged $3.10 per share, according to a survey by Thomson Reuters.

Revenue for the quarter grew 9.5 percent to $410.1 million, also exceeding analysts’ estimates.

For all of 2010, ITT Educational grew profit by nearly 25 percent over the previous year to $374.2 million. Revenue surged 21 percent to nearly $1.6 billion.
The good news is that the Obama administration has decided to require for-profit schools to demonstrate that at least 45% of their students are paying down their student loans after four years in order to continue to receive student loan funding. Wow! That's a really tough threshold to meet, isn't it? According to news reports last year, a lot of these for-profit schools are actually going out and enrolling homeless people to obtain federal loan assistance simply to improve their bottom line. The homeless, of course, never attend any classes and default on the loans, which leaves taxpayers holding the bag. Considering the crushing federal debt that threatens our country's very existence, isn't it time to put these scam artists out of business? It is absolutely sickening to see how much executives at ITT, University of Phoenix and all of the other scam, for-profit colleges are making at the taxpayers' expense. ITT's CEO Kevin M. Modany earns annual compensation in excess of $7.5 million and last year received a $1.2 million bonus. Absolutely sickening. And then people wonder why our country is bankrupt and has an increasingly uneducated, unskilled workforce relative to the rest of the developed world.


Marissa said...

THANK YOU for realizing the disgusting truth about these schools.

Harrison College's Columbus location (a for-profit school) was recently mentioned in the Columbus newspaper as seeking assistance from Rep. Pence. They know that Congress is on to their game.

They're all the same when it comes down to it.

Would you hire someone who was sucked into one of these schools? Then how are they supposed to get jobs to pay back their loans?? Oh, they can get jobs - but they will not be the high paying jobs promised by the people who recruited them.

Check out these articles with even more information:

Gary R. Welsh said...

Harrison College's CFO pops up in various fundraising activities for Democrats here in Indianapolis. He has a sketchy history in the local business world.

Unknown said...

Also take a look at Ivy Tech. That entity spends money like it prints paper and hires half of the influencial legislators. What is the graduation/completion rate at Ivy Tech? They draw people and then they are gone.

Pete Boggs said...

Hire or higher, "education?"

Marv said...

I've always viewed the expansion of Ivy Tech during the last couple of Democratic administrations to "community college" status as nothing but a make work project for Democratic cronies, e.g. Pat Bauer.

Citizen Kane said...

Eliminate student loans and these for-profit schools would go away overnight and tuition would rapidly decline at "legitimate" schools. Of course, the other schools are running the same debt scam so that they can over-charge for many watered down degrees.

Do the Repubs have the desire to do so. No, of course not!

Valen said...

The broader for-profit education industry saw enrollment rise during the recession as unemployment rose and people sought new skills to improve their job prospects. But the industry has recently been hit by regulatory changes and criticism that the schools were leaving students saddled with huge college loans, often payday loans online applyings and slim job prospects.