Call to Shut Down a Controversial Accreditor Could Shake For-Profit Higher Ed

For more than a year, criticism of the Accrediting Council for Independent Colleges and Schools has been growing over the poor student outcomes at its member colleges and allegations of misconduct against some of those institutions.

Greg Kahn for The Chronicle

In a report on Wednesday, Education Department analysts recommended stripping the Accrediting Council for Independent Colleges and Schools of its federal recognition. The accreditor’s executive in charge, Anthony S. Bieda, called the recommendation disappointing and said it "must be addressed directly and decisively" by the organization’s board and senior leaders.

Now the U.S. Department of Education has recommended that the accrediting agency lose its authority as a gatekeeper of federal financial aid.

In a 29-page report released on Wednesday, department analysts laid out 21 areas where they say the accreditor, known as Acics, has failed to follow federal rules. In a call with reporters, department officials said the accreditor’s shortcomings were "extensive and pervasive."

In a written statement, the accreditor’s executive in charge, Anthony S. Bieda, said the "recommendation to deny recognition is disappointing and must be addressed directly and decisively by the board and senior management of the agency."

Judith S. Eaton, president of the Council for Higher Education Accreditation, said the department’s recommendation fits in with the Obama administration’s new focus on the role of accreditation in improving student outcomes and institutional accountability, and sends a clear message to all accreditors that consumer protection is now a primary job of their agencies.

The process to remove an accreditor’s authority is lengthy, and could take nearly two years to complete even if there are no delays or legal challenges. But if the department’s recommendation regarding Acics is carried out, nearly 250 institutions, mostly for-profit, that together represent about 900 campuses will have to find a new accrediting agency if they want to continue to be eligible for federal student aid, such as Pell Grants and federally backed student loans.

"The department is going way beyond anything it’s ever done before," said Terry W. Hartle, a senior vice president at the American Council on Education.

A withdrawal of Acics’ authority would not be entirely without precedent — a few other accreditors have lost their federal recognition. But the result in this case could be far-reaching, affecting some 800,000 students whose student aid could be cut off if their college could not find a new accreditor.

In addition, some other accreditors could be swamped with applications from the institutions now accredited by Acics. And in that process, it’s likely that many of the now-accredited colleges would be rejected by other accreditors, said Trace Urdan, a financial analyst of for-profit colleges with Credit Suisse.

"I think it’s going to be huge," said Mr. Urdan. "Hundreds of schools will be shuttered through this process," he said, and much of that shaking out will happen long before the department’s decision is final. "The market will react much faster" than the bureaucratic process, he said.

Mounting Pressure

The department’s call to remove the council’s recognition is anything but a surprise. The accreditor has been under intense scrutiny for failing to take any action against campuses of the now-bankrupt Corinthian Colleges that it accredited before that company’s collapse.

In an exchange during a U.S. Senate hearing last summer that gained widespread attention online, Sen. Elizabeth A. Warren, Democrat of Massachusetts, grilled the council’s president at the time, Albert C. Gray, about why his organization had maintained Corinthian’s accreditation even as the company was under investigation by the federal government and several state attorneys general.

"How many federal and state agencies need to file lawsuits against one of your colleges" before the accreditor takes action? Ms. Warren asked. "The accrediting agency continued to look the other way," she said, "and now students and taxpayers are stuck with the bill."

Since then, several news reports have questioned the council’s effectiveness. A report from the Center on American Progress concluded that the council was "incapable" of assessing the quality of a college, and Senator Warren has issued her own report slamming the accreditor for "cranking open the spigot to allow taxpayer funds to flow to some of the sleaziest actors in higher education."

This recent deluge of criticism will be in the air next week, when the department’s recommendation is considered by the National Advisory Committee on Institutional Quality and Integrity — an 18-member panel that advises the education secretary on accreditation matters.

The advisory committee will consider the department’s report and then make its own recommendation to a "senior department official," usually the assistant secretary for postsecondary education, who will have 90 days to make a final decision. After that, the colleges accredited by the council would have 18 months to find a new accreditor.

While the advisory committee is meant to be independent of the department, it relies heavily on the department’s staff reports and expertise for its decisions.

In addition, dozens of commenters have written letters to the advisory panel urging it to recommend withdrawing the accreditor’s recognition. They include 13 state attorneys general and a group of students who are seeking dismissal of the debt they incurred at Corinthian Colleges or its affiliates.

In recent weeks, the accrediting council has made several policy changes meant to respond to the criticism and hold its institutions more accountable.

Those actions have done little, if anything, to sway critics. Ben Miller, a higher-education expert who wrote the report for the Center for American Progress, said the Education Department’s recommendation to deny recognition was "a monumental step to protect students and taxpayers."

The council’s "abuse of the public trust for years could not — and must not — go unpunished," Mr. Miller said in a written statement.

Even if the advisory committee agrees with the department’s recommendation, the council could continue to exist for many months, and possibly years.

After the department makes its final decision, the accreditor could appeal the decision, and the education secretary has no deadline for deciding the appeal.

Another possibility is that the accreditor would sue the government, alleging that the department violated its own processes for denying the accreditor’s recognition.

But even if there is little immediate change in the council’s status, the department’s decision would have deep reverberations across higher education.

Mr. Urdan and Jeffrey Lee, another researcher for Credit Suisse, wrote in a brief analysis on Wednesday that a decision to deny recognition would make it harder for the council's members to find a new accreditor. "We believe that the chilling effect of the Acics closure means that other agencies will have very high standards for admission that hundreds of schools will have trouble meeting."

In addition, Mr. Urdan and Mr. Lee wrote, students at colleges now accredited by the council might flee those institutions, fearing the loss of federal student aid.

Mr. Hartle agreed that there would be broad consequences for other accreditors. "Consumer protection has been moved to the top of the list of things accreditors must focus on, whether they want to do this or not," he said.

In the past, consumer protection has primarily been the responsibility of state governments, Mr. Hartle said.

"The world has changed," he said, "and the damage that unscrupulous schools can do to students has been made all too clear."

Eric Kelderman writes about money and accountability in higher education, including such areas as state policy, accreditation, and legal affairs. You can find him on Twitter @etkeld, or email him at eric.kelderman@chronicle.com.