Dive Brief:

• The Wall Street Journal reports on a bankruptcy court's ruling to stop lawsuits against former for-profit giant ITT Technical Institute, which claim that the school's defrauding of thousands of students entitles injured parties to damages or fines.
• The Securities and Exchange Commission, the Consumer Financial Protection Bureau and the states of New Mexico and Massachusetts are among the litigants seeking damages from ITT, all of which say that predatory recruiting and retention practices displaced more than 40,000 students when it closed with minor notice last month. 
• The judge did not rule in favor of former ITT executives to protect them from lawsuits, but did say bankruptcy court was not the place for resolution. “If you want to punish and deter ITT, you ought to be bringing criminal actions,” Judge James Carr said, according to the WSJ. 

Dive Insight:

This could be a glimpse into the future for many college and universities, particularly those which are currently struggling with efforts to accredit schools and programs, failing metrics in state or federal postgraduate and student performance outcomes, and admission practices which may toe the line on illegal or broad interpretations of law. 

The federal government can, with one stroke of a pen from the Secretary of Education, determine a school or even a system to be out of compliance with federal guidance on performance and metrics of sustainability. This can be done without consideration for accreditation, and without input from schools. Leaders should watch these proceedings and the continuing fallout closely, to learn the trends of how quickly regulations can create irreversible damage for campuses and students, almost instantly.