ITT Educational Services, Inc. (NYSE:ESI) shares were down 18.42% on Monday after the ED ruled that the company can no longer enroll students with federal aid.
ITT Educational Services, Inc. (NYSE:ESI) shares were down 18.42% on Monday to $0.442 then bounced 0.79% in after-hours trading. The company has a market cap of $4.12 million at 23.99 million shares outstanding. Share prices have been trading in a 52-week range of $0.42 to $4.10 so the stock is at the lower bound.
ITT Educational Services is a provider of post-secondary degree programs in the United States. It offers master, bachelor and associate degree programs to over 45,000 students, and short-term information technology and business learning solutions for career advancers and other professionals. The company has approximately 138 campus locations in over 40 states and offers online programs to students in all over 50 states.
ITT Educational Services designs its education programs, after consultation with employers and other constituents, to allow graduates prepare for careers in different fields involving their areas of study. Aside from that, provides career-oriented education programs under the ITT Technical Institute name and the Daniel Webster College.
According to the U.S. Department of Education, the company failed to address the department’s concerns from the previous week, leading them to impose a ruling that prevents ITT Educational Services from enrolling students with federal aid. This is part of the government’s increased oversight on the for-profit school industry.
Apart from that, the company is required to increase the amount of cash reserves it sends to the Department of Education, which will then slow the timeline in which ITT receives student aid from the government. As per the accreditor Accrediting Council for Independent Colleges and Schools, ITT isn’t in compliance and won’t likely be in compliance to the requirements.
The company is already under scrutiny for deceptive marketing amid allegations that federal loans and grants are its main source of revenue. This means that it will be cut off from federal funding until accreditors assess that it is able to properly maintain its finances.
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Posted by Sandy Fleetwood