Accreditation agencies have been the gatekeepers standing between colleges and millions of dollars in federal financial aid for more than half a century. But that role is in question after the stunning collapse of Corinthian Colleges.

The network of for-profit schools retained its accreditation even as the Obama administration cut off its access to federal student loans and grants for falsifying job placement and graduation rates. Corinthian faced government lawsuits and investigations for years that accused it of lying to students and committing fraud, but none swayed its accreditors.

Now taxpayers could be forced to pick up the tab for billions of dollars in loans amassed by former Corinthian students. And to make matters worse, some of the same warning signs that critics say should have alarmed accreditors to the poor quality of Corinthian schools are emerging at other colleges.

A study by left-leaning Center for American Progress found one in five borrowers at colleges accredited by the same agency overseeing Corinthian — the Accrediting Council for Independent Colleges and Schools— defaulted on a student loan within three years of entering repayment. That is 50 percent higher than the national average, and especially troubling because students at those schools borrow heavily to pay for college, according to the study.


And the problems don’t end there. Other national accreditors, which are mostly responsible for for-profit schools, had similar outcomes.

At colleges approved by the five national agencies, about 20 percent of students who started repaying their loans in 2011 defaulted by the end of 2013. That compares with 12 percent at schools under the country’s seven regional accreditors, which oversee the vast network of public and nonprofit private colleges, according to the report.

“These schools are struggling with student-loan debt, and the accreditors don’t appear to be doing enough to tackle that problem,” said Ben Miller, senior director for post-secondary education at CAP and the author of the study.

All of the national accreditors declined to comment on the study.

Accreditors are supposed to conduct in-depth investigations of colleges’ facilities, retention rates and teaching quality to make sure taxpayer money is going to quality colleges. But they are falling short, according to the CAP study.

The findings are emblematic of larger problems in college accreditation. There is no uniformity in the way accreditors decide who enters and exits federal student aid programs. And that has led to a system that is at best subjective in the way it assesses quality.

“Accrediting agencies should not be allowed to certify schools’ eligibility for billions in federal dollars, and then walk away when those schools defraud their students or leave students with huge bills for useless degrees,” said Sen. Elizabeth Warren (D-Mass.).

As student debt approaches $1.3 trillion dollars, whether borrowers can repay their loans has become a critical national issue. Students at for-profit colleges represent only about 11 percent of the total higher-education population but 44 percent of all federal student loan defaults, according to the Education Department.

“All of us need to be more tightly focused on student outcomes,” Undersecretary of Education Ted Mitchell said in an interview. “The fact that Corinthian was accredited until the day they shut their door is a very clear indication that there is work that needs to be done here.”

Stewards of financial aid

Since the early 1950s, the government has depended on private-sector accreditors to be the stewards of federal financial aid, the lifeblood of colleges and universities. Each accreditor sets its own standards, which are reviewed by an advisory board at the Education Department for access to financial aid funds, yet the department has no say in how the agencies do their job.

Although schools need the blessing of a state agency and the Education Department to gain access to federal funds, accreditors can sink their chances. Because the stakes are so high, critics say accreditors give schools in trouble endless opportunities to fix their problems. And, critics say, because the schools they rate fund the agencies through fees, there is a conflict of interest.

“Too often accreditation agencies see their job as trying to work with someone to improve, and they just keep giving them more chances,” said Miller, from CAP. “They almost never say ‘Enough is enough.’ ”

Andrew Kelly at conservative think tank the American Enterprise Institute said accreditors focus too much on whether schools look and act like traditional colleges. And “that stuff is not nearly as important as whether students are learning, able to get jobs and pay back their loans,” he said.

Seventeen of the nationally accredited colleges identified in the study — all small technical, trade or career schools — had default rates higher than 30 percent.

Of the 138 students at Coast Career Institute in Los Angeles who began repaying their loans in 2011, 56 percent were in default by 2013, according to the most recent data from the Education Department. Officials at the institute did not immediately respond to requests for comment.

Coast Career Institute is one of several schools accredited by the Accrediting Commission of Career Schools and Colleges with many struggling borrowers. About 19 percent of borrowers at the schools the agency oversees were past due on their student loans, according to the study.

The commission was about to renew the accreditation for Everest Institute, a school run by Corinthian, before the Education Department stepped in to prevent the college from receiving any federal money. Officials at that organization declined to comment for this story.

Done in by Corinthian

It is not the only accreditor that claimed the Corinthian schools were in good standing. The Accrediting Council for Independent Colleges and Schools renewed two of the company’s campuses and authorized a new campus a few months before the department forced Corinthian to close or sell its 120 locations.

Even after Corinthian filed bankruptcy, the council’s executive director, Albert Gray, continued to defend his agency’s actions, insisting that it found no evidence the college lied to its students or committed fraud. His defiance did not go over well on Capitol Hill.

In an exchange that has been viewed nearly 300,000 times on Facebook, Warren confronted Gray at a hearing in June, rattling off a list of federal and state authorities investigating Corinthian as his agency continue to give its approval.

“You were aware of these investigations and lawsuits had been filed? You were tracking it, and yet you continued to accredit?” Warren asked Gray.

He replied, “We have our own methods of investigation . . . All of these investigations that you mentioned are just that, investigations.”

In an e-mail, Gray said his agency withdrew the accreditation of four Corinthian campuses that abruptly closed in April without providing refunds, which the council requires. Gray, who declined to comment on the CAP study, said his agency is considering filing sanctions against Corinthian leadership for the closing.

As he did during the Senate hearing, Gray pointed out that many of the former Corinthian schools under his care were sold to ECMC Group in a $24 million deal blessed by Education. Gray said the vast majority of students enrolled at Everest have been able to continue their education, and the council is visiting all of the schools to make sure they live up to its standards.

Shortly after the Senate hearing, industry groups admitted that there are problems that need to be addressed.

“We in accreditation need to do more to protect students,” said Judith Eaton, president of the Council for Higher Education Accreditation, at the trade group’s meeting in June. “The job of protecting students may serve as the foundation of a discussion of the future role of accreditation, including its gatekeeping function.”

Accreditation could take center stage in the reauthorization of the Higher Education Act of 1965, which Congress is expected to take up before the end of this year.

“We need a base line standard for what’s acceptable to stay in the federal student aid program,” Miller said. “There needs to be greater consequences for inaction.”