SAN ANTONIO -- California revoked GI Bill approval for all 15 campuses of ITT Technical Institute on Thursday, a decision that will affect more than 1,300 California veterans and beneficiaries at the troubled for-profit school.
The California State Approving Agency for Veteran Education, which grants authority to state-based universities to enroll students in the GI Bill, said the move was to "protect the hard-earned GI Bill education benefits for California veterans," according to a statement.
The agency's decision to disapprove GI Bill usage at ITT was based on the company's failure to comply with federal and state regulations, the statement said.
The accrediting agency responsible for certifying ITT has doubts the school would come under legal compliance in the future, according to its corporate filings. The U.S. Department of Education required ITT to pay more than $250 million in assurances to offset losses in federal loans if the company went under, Stars and Stripes reported last week.
The Education Department also stripped federal student aid for all new students at ITT last week. In response, the company announced on its website this week that it would not accept new students.
"CalVet takes seriously our duty to ensure California Veterans receive the education and training they are paying for with their earned GI Bill benefits," said Keith Boylan, the Deputy Secretary of Veteran Services in California, adding his office is ready to assist student veterans with questions and concerns.
Veterans enrolled at ITT in California will not have tuition covered or receive a monthly housing allowance for classes starting after Sept. 1, according to a message posted to VA's GI Bill Facebook page on Friday.
States have the ultimate authority to approve which programs can receive federal government tuition from the Post-9/11 GI Bill, which is administered by the U.S. Department of Veterans Affairs.
Nearly 12,500 students are enrolled at ITT using the GI Bill, according to data from the national advocacy group Student Veterans of America. ITT is a vocational school with a combination of brick and mortar and online campuses with 43,000 students nationwide.
ITT spokeswoman Nicole Elam did not reply to calls or emails requesting comment.
A sudden university closure produces unique challenges for veterans. The GI Bill is not considered federal student aid, and students using the benefit cannot recoup benefits if their program folds, said James Schmeling, an official at SVA.
Proposed legislation, currently stalled in Congress, would allow veterans to recover some benefits used if a university goes under, said Ryan Gallucci, a legislation expert at Veterans of Foreign Wars.
Tighter regulations from the Education Department announcement sent ITT stock tumbling last week. By mid-afternoon Friday, shares in ITT Educational Service are down to 37 cents from a five-year high of $75.52 in 2012, according to the New York Stock Exchange.
ITT's dramatic spiral has some students on edge.
Chelsea Langston, an Army veteran who served in Iraq, is five classes short of completing her bachelor's degree in electrical engineering at ITT in Jacksonville, Fla. She is set to graduate in June 2017.
While VA and the Education Department have sent Langston email updates on ITT's situation, the school has been mostly silent, she said Friday. One email from the school sent to students Tuesday was short on details, which did not alleviate any concern, she said.
Langston said a local college and the University of Phoenix, another for-profit school, are unlikely to accept transfer credits from ITT, leaving her with few choices other than starting over and paying thousands in tuition out of pocket.
Another quarter at ITT starts Sept. 12, she said, but she's not sure whether it is worth attending if the school has a chance of going under.
"If they close their doors before I graduate, I'm screwed," Langston said. "I don't get those months back. So where am I going to go?"