The U.S. Department of Education wants ITT Technical Institutes to increase its letter of credit from 10 percent to 20 percent after the institution's accreditor questioned its integrity, according to a department letter sent Monday to the for-profit institution.
Last month, the troubled Accrediting Council for Independent Colleges and Schools scrutinized ITT Tech over allegations from state and federal agencies about the institution's administration, organization and financial viability. ACICS cited the department's decision to place ITT on heightened cash monitoring and lawsuits from the Consumer Financial Protection Bureau and Securities Exchange Commission to order the for-profit to prove why it shouldn't lose accreditation or be sanctioned.
Because of the increased risk of ACICS revoking accreditation, the Education Department determined the surety on file from ITT must increase from $79,707,879 to $123,646,182, according to the letter to ITT's chief executive officer, Kevin Modany. A letter of credit is collateral the government asks colleges to set aside when officials have concerns that an institution may be unable or unwilling to pay back money it owes to the government. The letter of credit would assure the government that if ITT Tech closes or terminates classes, funds will be available for refunds, teach-out facilities and institutional obligations to the department.