Last month, the U.S. Department of Education announced that they would no longer allow one of the largest for-profit universities in the nation, ITT Tech, to enroll new students with federal loans and grants. This massive withdrawal of financial aid led to ITT Tech’s announcement that they have permanently closed all of their schools. While the school closures will present headaches and frustrations for students, there are federal protections in place to prevent much of the financial damage they may face. However, for roughly 8,000 employees whose jobs were immediately terminated, the consequences may be much more severe. Now, one former ITT staff member has filed a lawsuit demanding class status for all wrongfully terminated ITT tech employees.

The Education Department announced that ITT Tech would be banned from enrolling any new students with federal grants and loans on August 25, and this prompted the school to announce a full shut-down on September 6. According to a statement issued to ITT Tech students by U.S. Secretary of Education John B. King, Jr., “In recent years, ITT has increasingly been the subject of numerous state and federal investigations. In August, ITT’s accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS) determined that ITT ‘is not in compliance, and is unlikely to become in compliance with [ACICS] Accreditation Criteria.'”

Per the Huffington Post, ITT Tech had been receiving as much as $1.1 billion in taxpayer funds annually, but their “predatory and reckless practices” such as deceptive recruiting, unfair student loan practices, high tuition, poor education quality, and alleged investor fraud has shed scrutiny on the university for years. ITT Tech has already been investigated or sued by the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and the attorneys general of 13 states. Essentially, “ITT demonstrated until the end that it was primarily a call center, not a college.”

The withdrawal of funding from ITT Tech is part of a campaign by the Department of Education to end abuse and fraud by for-profit colleges in recent years. When the Department of Education chose to issue this ban on new enrollments for ITT Tech, they put into place oversight actions to protect the interests of thousands of ITT students at schools across the nation. As a result of these preventive actions, students will be forgiven all federal student loans for ITT Tech programs, and they will have the option of new loans to start their education over at an accredited school. If students do wish to continue their educations, they may be able to transfer their credits—but ITT Tech has already stated that many credits from their institutions are unlikely to be honored by other schools. Transfers may also affect their rights to have ITT Tech loans forgiven.

For the roughly 8,000 staff members from ITT Tech, the sudden school closures meant that they lost their jobs overnight. In advance of the terminations, the Wall Street Journal reports that some staff members received emails that they could take an extra day off for the Labor Day holiday weekend and would not be required to report to work on Tuesday. Then, on Tuesday morning, ITT Tech announced, “Effective today, the company has eliminated the positions of the overwhelming majority of our more than 8,000 employees.”

Two days after the mass-firing, former employee Christin M. Long filed a class action lawsuit against ITT Tech on behalf of all terminated employees. According to this lawsuit, the federal Worker Adjustment Retraining Notification (WARN) Act, companies are required to provide a 60-day notice when a large number of employees are terminated at the same time. Long also claims that the institution had known for months or even longer that schools may be closed and employees may be fired, yet they failed to take appropriate and legal action to warn employees. As a result of this violation, Long alleges that all terminated employees should be paid for the 60 days of employment they would have had if ITT Tech had adhered to the WARN Act. Other employees of ITT Tech have also filed similar lawsuits.

As roughly 40,000 former students at ITT Tech scramble to decide whether to start their educations over or attempt to transfer to new schools, it is likely that ITT Tech will face additional lawsuits in coming months. Though federal student loans for ITT Tech students will be forgiven, it is unclear whether private loans will be forgiven. This means that as a result of ITT Tech’s alleged consumer fraud, thousands of students may be burdened with substantial debt for educations that are worthless.

If you were a student or staff member of ITT Tech and would like to learn more about your potential right to compensation in a consumer fraud or wrongful termination lawsuit, please contact us for a free legal consultation.