In economic policy, the Federal Reserve has as its mandate controlling inflation and unemployment. Inflation is exogenously measurable, but unemployment isn't. Rather than have the Fed measure unemployment, a seperate government agency, the Burea of Labor Statistics, does. Hence: the Fed doesn't measure what it manages.

Forbidding ITT from pursuing collections, leaving that to an industry which has experience with loans (banks), and instead, leaving it to modify what it can control -- the control, the recruitment of students and instruction standards -- might result in a successful incentives alignment.

You'd have to police and very heavily penalise any kickbacks or covert communications between ITT and lenders.