Less than two weeks after it was slammed with stiff new sanctions by the Department of Education, and just days before its fall semester was scheduled to start, giant for-profit college chain ITT Tech has closed its doors.

ITT announced the shutdown in a blistering statement, released early this morning, in which it called last month’s sanctions “unwarranted . . . inappropriate and unconstitutional.” The statement described “the damage done to our students and employees, as well as to our shareholders and the American taxpayers” as “irrevocable.”

The Department’s actions, however, reflected ITT’s ongoing corporate malfeasance. The chain is currently the subject of lawsuits and investigations by a long list of state and federal agencies, and it has been out of compliance with Department of Education oversight mandates for months.

And ITT Tech’s misbehavior was of particular concern to the Department because the company’s revenue came overwhelmingly from the American taxpayer. Since 2010, some $5 billion in federal money has flowed to ITT in the form of grants and loans, outlays for which the chain had steadfastly refused to be held accountable.

Last month’s sanctions were designed to rectify that. Limits were placed on ITT’s ability to divert revenue to its management and investors. Enrollment of new students using federal loans and grants was paused. And crucially, ITT’s letter of credit was hiked dramatically.

This last provision is worth explaining in more detail, because it clarifies both why ITT failed and what will happen next. When the Department requires that an educational institution post a letter of credit, that institution essentially places a specific amount of money in escrow, setting it aside so that it will be available to use to, for instance, compensate students if the company fails while their studies are ongoing. It’s an insurance policy, in essence, imposed to ensure that the taxpayer isn’t left holding the bag in the event that a college collapses.

If a company is healthy, a letter of credit will be a straightforward cost of doing business—either they’ll be able to cover it themselves, or someone will be happy to lend them cash to do so. If a company is already failing, securing a substantial letter of credit becomes more crucial (because the risk of inaction on the part of the Department is greater) but also more dangerous (because more robust oversight could expose and compound structural weaknesses).

In the past, the Department of Education has often delayed taking action against predatory and mismanaged for-profit colleges until they were in such dire straits that any attempt to impose even mild sanctions would lead to disaster. (Chris Hicks and I discussed this problem, and proposed ways of fixing it, in a report we released this summer.) Thus, when the Department announced in the summer of 2014 that it was placing a three-week delay on disbursements of federal financial aid to Corinthian Colleges, it sent that chain into a tailspin. Corinthian imploded in the months that followed, taking an additional $35 million in emergency taxpayer funding with it.

In some ways, the fall of ITT Tech seems to mirror that of Corinthian—after years of gentle treatment by the Department of Education, a crackdown was followed almost immediately by a collapse. In other ways, however, the Department’s actions in regard to ITT reflect lessons learned from Corinthian, suggesting that the ITT crackdown is less Corinthian II than a first step toward a new model of for-profit college oversight.

I’ll be discussing the similarities and differences between Corinthian and ITT, and what the Corinthian debacle tells us about how the Department should handle the ITT aftermath, in a later post.