They were not asked to put up collateral because their education is worthless and students won't be able to repay. They were asked to put up collateral because the Department of Education didn't believe they would survive the multiple fraud investigations (securities as well as consumer fraud). I think that risk was reasonably high, so the collateral doesn't seem punitive.

> They were asked to put up collateral because the Department of Education didn't believe they would survive the multiple fraud investigations (securities as well as consumer fraud).

That's not entirely true. They were asked to put up collateral and then banned from accepting new federal-aid-dependent students because the DOE received word from ITT's accreditor that ITT's accreditation was at risk due to, among other issues, ITT's financial status.

Now, among the sources of the problems for ITT's financial status were the SEC and CFPB fraud lawsuits themselves, and, IIRC, changes in ITT business practices that were taken in response to those lawsuits. But the primary direct trigger for the DOE actions wasn't DOE's evaluation of ITT's financial status, but the risk that ITT's would lose its accreditation, which would make it ineligible to enroll any students accepting federal student aid (not just new students, but continuing students as well.)

In a nation of laws, the government should not take punative action until after allegations of fraud are settled in court.

Sometimes, to prevent further damage, a court may decide to freeze assets or prevent a certain activity while the case is worked out. But that's the job of a court, not an agency like the DOE.

I don't have a good answer for you, because what you said sounds rational, but their tactics were slimy and their immediate shuttering signals, in my opinion, that they had no legitimate shot without a seat in the government trough.

They've had plenty of time to fix their problems. They have to have known about the issues for some time now, so them not having a bunch of extra time given to them is nothing to be sad about.