ESINQ ITT Educational Services Inc (CE)

ITT Technical Institute will cease all of its academic operations, eliminating most of its 8,000 employees effective today, after the government last month banned the for-profit college chain from enrolling new students who receive federal aid.

"The actions of and sanctions from the U.S. Department of Education have forced us to cease operations," ITT's parent company, ITT Educational Services Inc., said. "We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a nonprofit or public institution."

ITT Technical Institute is facing accusations from its accreditor of chronic mismanagement of its finances and using questionable recruiting tactics. The parent company is also under investigation by state and federal authorities. ITT, which as of this spring was the fifth-largest for-profit college chain by revenue, says it runs more than 130 campuses in 38 states. It recently had about 43,000 students nationwide.

The Education Department said in late August it had lost faith that ITT would survive the scrutiny and banned its schools from accepting new students that receive federal loans and grants to pay for the school's tuition. Such aid provided 68% of the company's $850 million in revenue last year. Analysts said at the time the Education Department's move would almost surely force the company to close many if not all of its campuses.

The Obama administration has pursued a broad crackdown on the for-profit college industry, which officials have accused of using deceptive marketing to enroll vulnerable students who go thousands of dollars into debt for low-quality educations.

ITT has blasted the government's actions, saying Tuesday it wasn't given the "opportunity to pursue our right to due process."

"The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable," the company said. A representative from the Education Department couldn't immediately be reached for comment.

Shares were halted premarket and have fallen 83% in the past month.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

September 06, 2016 09:15 ET (13:15 GMT)

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