ITT has more than 40,000 students who remain eligible for federal aid. Should ITT close, the Education Department has suggested it will forgive the federal loans of existing students.
ITT has been ordered to pay $152 million to the federal department within 30 days to cover student refunds and other liabilities in case the company closes. The chain, based in Indiana, is still paying another $44 million demanded by the department in June for the same reason.
The education department also has prohibited ITT from awarding its executives any pay raises or bonuses, and it must develop “teach-out” plans that would help current students finish their programs at other colleges if the chain shuts down.
Under the new measures, current students can continue receiving federal grants and loans.
Education Secretary John King said the government is taking action to protect students and taxpayers following “troubling” findings about the company. This month, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.
“It simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal financial aid,” King said during a telephone conference with reporters.
The Associated Press contributed to this story.