* Move to affect thousands of students
* NYSE suspends trading in ITT shares
(Adds NYSE statement, background)
By Arunima Banerjee
Sept 6 ITT Educational Services Inc said
it would shut its flagship ITT Technical Institutes, following a
U.S. Department of Education order, affecting thousands of
students and employees.
ITT's move is the latest blow to the over $20 billion U.S.
for-profit education industry, which has come under fire from
the government in the past couple of years for its poor track
record in helping students find employment.
Shutting the institutes will affect more than 8,000
employees and hundreds of thousands of students and alumni, ITT
said on Tuesday.
The New York Stock Exchange said it would immediately
suspend trading in ITT's shares and delist the company. (bit.ly/2cxGirp)
The stock last traded at 38.4 cents in premarket trading
before being halted.
"We reached this decision only after having exhausted the
exploration of alternatives, including transfer of the schools
to a non-profit or public institution," ITT said.
In August, the U.S. Department of Education banned the
company from enrolling students who get federal aid.
Such students accounted for more than two-thirds of ITT's
revenue in 2015. The company had 40,000 students at its ITT
Technical Institute and Daniel Webster College locations as of
U.S. for-profit education providers have struggled to
attract students since a 2010 government crackdown revealed high
student debt loads, low graduation rates and poor employability
In April last year, Corinthian Colleges Inc
abruptly closed 28 schools, leaving 16,000 students without
classes amid federal and state investigations. (reut.rs/2c4n37c)
The company, which filed for bankruptcy the following month,
was being investigated for allegations of misleading students
and investors about its finances and job placement rates.
U.S. for-profit college operator Education Management Corp
also said in November that it would to pay a record
$95.5 million to resolve charges that it used high-pressure
sales tactics to mislead students.
Carmel, Indiana-based ITT has been subject to government
scrutiny for allegations of fraud and deceptive marketing
ITT's accrediting agency said in April that ITT Technical
Institutes - which provide career-oriented education programs -
had not demonstrated compliance with certain accreditation
(Reporting by Arunima Banerjee and Subrat Patnaik in Bengaluru;
Editing by Kirti Pandey)