Federal Watchdog Can’t Investigate For-Profit Accreditation, Judge Rules

A federal judge has ruled that the Consumer Financial Protection Bureau doesn’t have the legal authority to investigate the accreditation of for-profit colleges. In a ruling dated Thursday, Judge Richard J. Leon of the U.S. District Court in Washington, D.C., denied the federal agency’s request to enforce a civil investigative demand on the Accrediting Council for Independent Colleges and Schools.

“Although it is understandable that new agencies like the CFPB will struggle to establish the exact parameters of their authority, they must be especially prudent before choosing to plow headlong into fields not clearly ceded to them by Congress,” the judge wrote. He concluded that “the CFPB lacks authority to investigate the process for accrediting for-profit schools.”

The bureau issued the civil investigative demand last year. In response, Republican lawmakers said it had committed “an unprecedented overreach.”

The accrediting council’s Board of Directors removed its president recently, not long after 13 state attorneys general called for its federal recognition to be revoked. On Wednesday, ITT Educational Services Inc. disclosed that the accreditor had sent it a letter demanding that the company show why its accreditation should not be revoked.