ITT Educational Services, Inc. has agreed to reimburse the state
of California $725,000 for Cal Grants mistakenly rewarded as a
result of the company misreporting student grades, ITT announced
Monday.
The mistakes were exposed by two former employees of ITT, which
operates technical colleges at over 75 locations across the United
States under the name ITT Tech, in a federal whistle-blower lawsuit
filed in 2002.
The suit claimed that the company was fraudulently obtaining
state funds via Cal Grants, scholarships given to students based on
their financial need and GPA. Students who do not meet a minimum
GPA are ineligible for the scholarship.
The attorney general’s office has been investigating the
company’s operations since 2002, and alleges that between
1996 and 2002, ITT miscalculated the grades of 93 students.
ITT admitted to misreporting the grades of some students, but
said that only 49 had received larger Cal Grants as a result,
according to an Oct. 18 article in the Chronicle of Higher
Education.
Though both parties have agreed to settle, a federal judge must
still approve of the settlement and dismiss the charges put forth
by the former employees “with prejudice,” meaning the
case cannot be retried, in order to end the action.
Nathan Barankin, a spokesman for the California attorney
general’s office, said the state could not comment other than
to say the agreement has yet to be finalized.
This is not the first dispute of this kind to be filed against
ITT.
The state of Indiana filed a suit against the company early last
year, alleging that it had falsified records in an effort to obtain
federal grants and financial-aid payments, according to a March 12,
2004, article in the Chronicle. Charges were dismissed.
In the current case, given the small number of students affected
by the mistake ““ only 1.3 percent of students over the
seven-year period ““ and the small size of the current
settlement, UCLA School of Law professor Mark Grady believes it
unlikely that ITT would have misreported the grades
intentionally.
“They probably do have an incentive, within limits, to
provide higher grades than lower grades,” he said, “but
1.3 percent is an awfully small number.”