On Friday, Investors Place reported that ITT “stock fell into penny-stock territory after the Department of Education said it can no longer enroll students with federal loans.
On Thursday, the U.S. Department of Education announced its decision to prohibit ITT Educational Services from enrolling new students who use federal financial aid. Department officials announced the ban among a series of measures meant to increase financial oversight of the company.
The company has been the subject of state and federal investigations focusing on its recruiting and accounting practices.
ITT (NYSE:ESI) also is being ordered to pay the department $152 million within 30 days to cover liabilities in case it closes, and the company is barred from giving pay raises or bonuses to its executives.
Education Secretary John King claimed that it would be irresponsible to let new students enroll amid concerns about the company’s ability to operate.
The company enrolls 45,000 students in 38 states.
According to the Department, ITT over the years “has increasingly been the subject of state and federal investigations and this year it has twice been found out of compliance with its accreditor’s standards. Over time, ITT’s decisions have put its students and millions of dollars in taxpayer funded federal student aid at risk. In response, over the last couple of years, we at the Department of Education have increased our financial oversight over ITT and required the school to boost its cash reserves to cover potential damages to taxpayers and students.”