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ITT Today, Christian Colleges Tomorrow?

The Wall Street Journal reports that ITT Technical Institute, which has 130 campuses nationwide, ceased operations today [1]after the federal government cut off student loan aid. The feds lost confidence in the school’s ability to provide a quality education to its students. Excerpt:

Shutting off the spigot of federal student-aid dollars has devastated other schools. MedTech College, offering entry-level programs in medical assisting and nursing at a handful of locations, closed this summer after the government cut off student-aid funds, while the Marinello Schools of Beauty closed more than 50 campuses earlier this year once its flow of funds dried up.

ITT Tech, among the nation’s largest for-profit college chains by revenue, had been facing accusations from its accreditor of chronic financial mismanagement and questionable recruiting tactics. It is also under investigation by more than a dozen state and federal authorities, including the Massachusetts attorney general, the Consumer Financial Protection Bureau and the Securities and Exchange Commission.

Why does this matter to religious conservatives? Because it shows how access to federal student loan aid is the lifeblood of many colleges. ITT went down the drain because the federal government thought it was a lousy operation. In the future, the federal government may well cut off student loan aid to students attending Christian colleges that observe traditional teaching on sexuality, especially homosexuality — this, on the grounds that taxpayer dollars shouldn’t fund “bigotry.”

The reader who sent me the Journal piece adds:

I’m totally fine with the feds cutting off federal student aid to the school. From what I’ve heard, schools like this and many other for-profits are terrible. That said, I fear this is the trap many traditional institutions are going to fall into. If the fed doesn’t like the way you do things, goodbye privileges. Again, I don’t have a problem with the federal government acting this way—it’s a democratic republic and public morals change. Religions need to be independent of state funding. More importantly, pastors and parachurch organizations who enjoy non-profit status today need to remember, this could be them if they too become too reliant on federal aid.

I have a problem with the state doing this in our pluralistic nation, but too many liberals today are on a mission from a God in whom they do not believe to stamp out evil. If that means some poor Latino kid is not going to be able to borrow money from the government to go to a small Christian school, well, sucks to be that poor Latino kid, because every tree in the Republic must be cut down to get to the devil of anti-LGBT bigotry.

Point is, what happened to ITT today could easily happen to academically reputable Christian institutions tomorrow — and will. I think by now we all understand that the Law of Merited Impossibility is the best tool for interpreting what’s being said today, and what’s going to happen tomorrow.

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UPDATE: I don’t understand why some of you commenters think I’m defending ITT here. I’m not. I have not been following the stories of ITT’s travails, but if they are offering a terrible product, then the government is right to withhold federal student loans from them. It would be irresponsible not to. I only bring up the ITT example to show how critically important the federal student loan spigot is to the survival of many colleges and universities. This was why the recently defeated California bill to prevent state grants from going to “bigot” Christian schools that didn’t embrace LGBT progressivism was an existential threat to a number of religious colleges there. The point of this post is to highlight where progressives are going to attack orthodox Christian institutions next.

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69 Comments To "ITT Today, Christian Colleges Tomorrow?"

#1 Comment By JonF On September 7, 2016 @ 1:31 pm

JSmith– the ACA has very little to do with it. It reformed some of the more vicious practices of the student lending industry and instituted income-based repayment– but the fact is that these loans have been federally guaranteed for many, many years (since 1965)– that is what has given the Feds a stranglehold over educational funding. Well, that and the fact that even state-run colleges, which were originally chartered to provide a four-year degree to in-state students at merely nominal cost, have become unaffordable for all but the wealthy.

#2 Comment By JonF On September 7, 2016 @ 1:34 pm

How much would you give them? A young man of my acquaintance fell five stories to the sidewalk two years ago. He (barely, by a hair’s breadth) survived, went through multiple reconstructive surgeries and then lengthy rehab. The tab on Medicaid came to c. 950,000$. Yes, you read that right– and bear in mind that Medicaid cheaps out on most bills.
We are not going to hand over 950K to poor people to “spend as they see fit”.

#3 Comment By Chris Mallory On September 7, 2016 @ 2:28 pm

“For-profit schools are to education what pay-day lenders are to finance.”

You mean they provide a needed service to marginalized populations who are cut off from traditional institutions?

#4 Comment By John Uebersax On September 7, 2016 @ 2:32 pm

1. The student loan program is an evil system used to put an entire generation in debt, forcing them to become sheepish wage-slave debtors completely dependent on an increasingly averse status quo.

2. College tuition has increased three times faster than the cost of living over recent decades. Student loans are the reason: tuition can be set to any amount as long as naive students borrow the money.

3. Overpriced Christian colleges in particular have a lot of explaining to do, because gouging students for $50,000/year or more is decidedly un-Christian.

4. College home-schooling is one answer: Great Books are free.

#5 Comment By Franklin Evans On September 7, 2016 @ 3:01 pm

I read the article Jake linked in his post, about St. Catherine College in KY. Just wanted to be clear on my intentions here.

Rod, using the ITT context to draw a dire warning about religious schools is a total failure of logic. It could become valid, but under current laws and regulations it is, bluntly, bogus.

ITT failed its compliance with apparently several federal regulations governing student aid. Aside: so did St. Catherine, though the facts of that case are less clear from the article. The only way to validate the connection is if Congress were to pass and the president to sign into law a statute that applies the same standards to the underlying belief system of a religious school.

Let us be clear on this: I would bet real money that should such a statute be passed, the ACLU would descend upon it like the proverbial ton of bricks as violation of both religion clauses of the First Amendment. Ahem. So says this not-a-lawyer reader of our Constitution.

Rod, this is a cognate of your Law of Merited Impossibility. No such statute exists, but we can be sure it will just in time for the federal government to oppress every religious institution in the nation… and really, my friend, don’t you think that’s just a wee bit hyperbolic? I do, and that’s how I’m reading you here.

#6 Comment By Stubbs On September 7, 2016 @ 3:53 pm

I know I’m late to the party, but I read this post and did a little math and realized this: when I matriculated at a state U in 1982, room,board, and tuition cost the equivalent of 6 months’ full time employment at minimum wage- about $3K. If orthodox colleges could offer education at the same price in today’s numbers- $7,500 per year- they would be the most sought-after schools around.

Also, I doubt that many of the 139 Catholic, 66 Baptist, or 17 Mormon members of congress will support denying federal funds to religious colleges.

#7 Comment By Dave On September 7, 2016 @ 3:58 pm

We should distinguish between two forms of federal student financial aid: grants and loans.

Losing access to federal grants is a real and long-term loss that can be ameliorated only by real financial sacrifices. E.g., churches in a denomination all agree to devote N more percentage points of their budgets to the denomination’s affiliated college(s).

Losing access to federal loans is a short-term cash-flow problem that mere financial engineering can prevent. Private students loans are still possible. If default risk is a problem, then the school should set up an income-based repayment scheme. (Maybe ITT will be back in a few years using such a scheme…)

A sufficiently progressive income-based repayment scheme would also ameliorate loss of federal grants. (Unless it falls prey to adverse selection. Maybe make it a mandatory replacement for traditional tuition and loans?)

#8 Comment By EngineerScotty On September 7, 2016 @ 5:00 pm

Even with the correction, this looks like “Dang, that cop just pulled over a speeder. I worry I might get pulled over too, for the Jesus fish on my bumper.”

#9 Comment By MichaelLF On September 7, 2016 @ 6:13 pm

Rod wrote, “NFR: Look, if you were a traditional, orthodox Christian, you would see that “protecting gay rights” is the excuse activists and their friends in law and politics are using to take more and more religious liberty rights away from believers.”

You’re misreading the situation. Gay rights isn’t an excuse; it isn’t a pretext or subterfuge. Liberals want to protect gay rights because they want to protect the health, safety, and equality of gays. End of story. This is not a foot in the door that allows activists to occupy and take over Christian schools. It just isn’t.

This kind of hysterical overreaction keeps backfiring on conservative Christians, making matters worse. Instead of digging in, look at the specifics more rationally. What concrete things can conservative Christian colleges do to improve the lot of gays on their campus while steadfastly maintaining clarity that homosexuality, divorce, and contraception are abominations? How can these colleges show mercy as well as justice?

#10 Comment By Sam M On September 7, 2016 @ 8:45 pm

Stubbs:

“Also, I doubt that many of the 139 Catholic, 66 Baptist, or 17 Mormon members of congress will support denying federal funds to religious colleges.”

Oh I’m sure you are right that the Catholic Nancy Pelosi would never touch student loans for Catholic colleges. As long as they agree to do a bunch of un-Catholic stuff.

#11 Comment By Siarlys Jenkins On September 7, 2016 @ 9:06 pm

Franklin and Scotty have hit the nail neatly on the head, in tandem.

Why was it ok for those who oppose gay marriage to work to get laws put on the ballots of many states to have gay marriage banned and even to push for a constitutional amendment to get gay marriage banned, but it’s not ok for those who support gay marriage to insist that bakers and florists who choose to be in the marketplace must serve gay clients for gay weddings.

Because the real issues of principle are not “pro-gay” or “anti-gay.” Those are merely the sordid personal interests of contending parties. Constitutional issues define the playing field, not the tilt that guarantees victory to one side or the other.

There is no particular reason that the state needs to take any interest whatsoever in what two men, or two women, are doing together. There is no particular reason that the state needs to take any interest in what a man and a woman are doing either. And there is no particular reason the state has to take an interest in all three just because it takes an interest in one, or two, of the above.

The right to privacy (which was the underpinning of Lawrence does not imply a right to approbation, approval, recognition. The movements to enshrine this in state constitutions was a defensive response to a moment of unclarity on the part of certain judicial panels.

Forcing florists and bakers and printers and wedding planners to actively participate in what is in fact an expressive message, when they find that message abhorrent, violates a fundamental bedrock of the First Amendment: government may not compel speech.

But if you want to go back to ranting about how come its OK to do anti-gay stuff but not OK to do pro-gay stuff, this is all about who can accumulate the most brownie points he who dies with the most toys wins… You can probably convince yourself.

#12 Comment By Siarlys Jenkins On September 7, 2016 @ 9:16 pm

The student loan program is an evil system used to put an entire generation in debt, forcing them to become sheepish wage-slave debtors completely dependent on an increasingly averse status quo.

For my father’s generation, the GI Bill was the difference between working at his father’s grocery store, like his older brothers, or earning a Ph.D in chemistry.

Somewhere along the way we lost our sense of proportion… if some is good, more is better. It is true, as many conservatives aver, that with a wide open spigot of loan money, institutions of higher education are free to splurge on all kinds of spending of dubious value, because students can afford the higher tuition, because it will be years later when the loan payments really catch up with them.

#13 Comment By Jake Lukas On September 7, 2016 @ 11:45 pm

Franklin Evans says:
ITT failed its compliance with apparently several federal regulations governing student aid. Aside: so did St. Catherine, though the facts of that case are less clear from the article.

If you search around and read a number of articles on the matter you find more details but no more real explanation. There may indeed have been some non-compliance, but the fact that SACS seems to have agreed with what they did regarding new majors lends a lot of weight to St. Catharine’s case. The most baffling thing about the case is the aggressive way in which the school was treated. The government sunk that college. One article–which I can’t find at the moment–said that the government was even willing to admit that St. Catharine was compliant with regard to its added majors, but this did not save the school. Having lost so many students and having been set back by the case, they sued to make up the difference. It was the loss of that case that really sunk them.

When folks read Rod’s posts like this and call him alarmist, I tend to be sympathetic to his reading. It should be no surprise then that when I first heard about St. Catharine’s (a school at which I was invited to speak) I suspected a modern Julian-style persecution was afoot. What facts I can discover, however, do not support such a reading. I must admit I am still at a loss to explain why the school was treated as it was, even though I don’t mark it down to some mistreatment on religious grounds.

That being said, I would still maintain that St. Catharine’s, ITT, and like cases do in fact lay the groundwork, institutionally and legally, to crush schools, even when they reorganize to ensure compliance. In the hands of an hostile state, complex and voluminous rules of financial can start to remind one of the line often attributed to Richlieu: “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”

#14 Comment By Mick Lee On September 8, 2016 @ 6:56 am

I am not sure I understand the federal government’s case against ITT; but, for my son, taking several courses at ITT lead to a major college accepting him as a student.

My son’s deep depression lead to him dropping out of high school. (The high school was only too happy to be rid of him. But that’s another complicated story.)

After a few year of therapy, my son’s depression lifted. He got his high school equivalency diploma but that hardly meant much to any college or university he applied to. He needed to demonstrate he could do college work and his studies at ITT proved he could do so. The same colleges and university which had rejected him before changed their tune and actively sought to recruit him. Now my son is in his last year of college and he already has been accepted into law school.

My wife and I are grateful for ITT for what it did for our son. Maybe ITT deserved to be closed down; but I couldn’t let it pass that it didn’t do any good for any of its students.

#15 Comment By Franklin Evans On September 8, 2016 @ 10:08 am

Jake, I’m grateful that you shared your first-hand knowledge of the St. Catherine situation. From my direct, professional experience with regulations — ERISA, and the myriad complexities surrounding pension plans — there are several factors in play which are easily applied with Occam’s Razor.

Regulations at every level are at their heart political. Many regulations (I would say most) are for good and serious reasons, and are effective for their intentions. Many are part of a balance, where an entity (corporate or private) is awarded benefits in exchange for giving up something deemed harmful (a loaded term, but I must let it stand). All regulations fall under two general categories: you may limit up to a certain point (restrictive); you must give or permit from a certain point, and may be more generous voluntarily (permissive).

ERISA is a major section in the Internal Revenue Code, so grains of salt and beware of false analogies, but there is a common factor in all the sections of federal regulation, and that’s the qualifying attribute.

In taxation, it’s a scale measuring the source and amount of profit. By that I mean that an INC is not a LLC is not a partnership is not a wholly-owned subsidiary. It should surprise no one that the CPAs get the big bucks in such situations. But that’s just part of it, with mutual corporations (not for profit), non-profits and charities rounding out the general categories.

The key to our tangent is that being a religious organization — or social, or generic charitable — is the qualifying attribute. It governs which sub-section and clauses of a section constitute the compliance burden. Education is at the same level as taxation in this regard. You can have a “straight” religious entity (the Big Churches), a religious institution (the various schools, social services, etc.), or be affiliated with a religious organization (the Christian Science Monitor, Nationalities Services Center (Friends), etc.).

Too long don’t want to read: if you think life is complicated, take a vacation from it in the Great Swamp of Regulations, and you’ll come out relieved that you have so little with which to deal. I would happily refrain from second-guessing St. Catherine’s administration, but would be cautious about their claims concerning practical compliance. Agencies are not authorized to have faith in such activities. They have documentation and timeline requirements, and will judge compliance on that basis only.

#16 Comment By JonF On September 8, 2016 @ 1:18 pm

Re: My wife and I are grateful for ITT for what it did for our son.

I knew a young man (a friend’s nephew in a mostly rural area) who went to ITT and ended up with a very good job. But: that was in the 90s when good jobs, for the skilled at least, were falling out of the trees and (at a good guess) ITT’s tuition was at more affordable levels. Since then desperation in the labor market has sent many a young man and woman to seek degrees and certification they ought not need at all in a saner world– and allowed the proliferation of diploma mills serving no purpose but to enrich the owners. We are talking taxpayer funds here and we do need serious oversight to make sure they are well-spent.

#17 Comment By Jake Lukas On September 9, 2016 @ 4:33 pm

@Franklin Evans,

Thank you for that. I’m going to have to start looking more deeply into this, as an organization which I help to run will soon be making a move toward non-profit status.

#18 Comment By Craig On September 9, 2016 @ 6:53 pm

You make a fair point. If an educational institution depends on access to federal student loans to stay in business, the government can then exert a lot of control by threatening to take that access away.

Didn’t the removal of it’s federal tax exempt status force Bob Jones University to abandon practices that were judged to be racially discriminatory? That seems like a similar precedent.

#19 Comment By Franklin Evans On September 10, 2016 @ 2:43 pm

Jake, when we (Pagans) first began the process of forming our non-profit, one of us was a fully-trained and bar-admitted lawyer, who either knew herself or could rely on professional sources for what we had to be concerned and cautious. I urge you to either find one such to join you, or set up a dedicated funding effort to pay for one.

When I was a pension administrator, it always took three of us to be confident that our mutual client was well-advised and protected from unwitting violation of regs: myself (covered by a $1 million liability bond), a CPA, and a tax lawyer.