Accreditation Actions Increased During Financial Downturn

The number of sanctions from national accrediting agencies increased by nearly 50 percent from 2008 to 2011, according to a new report from Moody’s Investors Service.

Nearly 80 colleges were subject to some negative accreditation action in 2011, the credit-rating agency found. Most colleges have been able to meet accreditors’ requirements after a warning or probation, the report concludes, and the increase in scrutiny is a result of pressure from the U.S. Congress and the Education Department to ensure both academic and financial viability in higher education.

“Not long ago, accreditation sanctions were rare. Now, in response to growing government criticism of poor disclosure about quality, pricing, and outcomes, as well as inefficient cost management, accreditors are taking more aggressive and quicker actions to bolster their role in demonstrating quality and performance standards in U.S. higher education,” the report says.

The main reasons for the actions are, not surprisingly, financial troubles for colleges struggling with endowment losses, cuts in state appropriations, and the growing institutional costs of student financial aid. But accreditors are also focusing more attention on outcomes, including assessing student learning and graduation rates, the report says.

In the short term, the increase in actions could mean trouble for colleges already on the brink of financial collapse—the reputational fallout from a negative accreditation action could scare students away from colleges that depend heavily on tuition, the report’s authors write.

In the long run, however, pressure from accreditors could force more colleges to put better financial controls in place, the report says. “Over time, this new pressure on colleges and universities to provide better outcomes data and more transparency related to cost management will likely lead to enhanced operating efficiencies and focus on market-oriented degrees.”

The report is available only to Moody’s subscribers.

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