But it turned out that Virginia College — and other for-profit schools — had a friend in high places.
Education Secretary Betsy DeVos has led a rescue squad for the nation’s for-profit colleges. Step by step, she has dismantled an Obama-era crackdown on the industry, and she plans to deliver a set of regulations next year that many expect to again boost the industry.
Critics say these schools, which enroll 2.3 million students and range from small trade schools to large multistate enterprises such as the University of Phoenix, prey on vulnerable students, leaving them with huge debts and questionable credentials. Defenders say they offer critical options, especially for students not in traditional four-year programs, and were unfairly singled out for scrutiny by the Obama administration.
“If it’s the right fit for the student, then it’s the right education,” DeVos said in a speech this summer.
DeVos’s systematic rollback of regulations on these schools reflects the broader Trump administration agenda. The administration has undone environmental rules meant to control carbon emissions and unraveled pieces of the Affordable Care Act. At rallies this fall, President Trump regularly bragged about regulatory retrenchment.
At the Education Department, DeVos has long believed the federal government should exercise as little control as possible over the nation’s schools, and she has spent a large chunk of her tenure undoing the work of her predecessors. She has revoked guidelines on affirmative action and transgender students, and is expected to cancel guidance regarding racial bias in school discipline.
Now, DeVos is poised to build a legacy of her own — creating new rules for schools and not just jettisoning regulations in place when she arrived. Her goal, aides say, is to encourage innovation by letting new players into the federal student loan program who are barred by today’s regulations, and eliminating or modifying requirements that no longer make sense.
That could benefit a fresh crop of for-profit programs such as computer coding boot camps and online courses in which students interact less with their teachers.
The question is whether her actions spur innovation and give students more choice or boost an industry with a track record of misleading and predatory practices.
DeVos’s aides said nonprofit schools wanting to offer innovative programs may benefit more from the new rules. The aides said much of their work is meant to remedy the bias against for-profit schools that they say prevailed during the Obama years.
“We believe that leveling the playing field is in the best interest of all students and is fair to all institutions,” said Diane Auer Jones, principal deputy undersecretary at the Education Department.
The collapse of two for-profit giants, Corinthian Colleges and ITT Technical Institute, spurred the Obama administration into aggressive action. Both schools were accused of widespread fraud and rock-bottom graduation rates but still received billions of dollars in federal student aid and were accredited until the day they closed.
The Education Department under Obama moved to cease recognition of their accreditor, the Accrediting Council for Independent Colleges and Schools, from the student loan program. Accreditors are little-known but powerful organizations whose seal of approval is required to secure federal student loans to attend these schools. In December 2016, nearly 300 schools accredited by the agency were told to find new approvers.
That included Virginia College and its 33 campuses, mainly in the Southeast.
So the college applied to the Accrediting Council for Continuing Education & Training, another accreditor of for-profit schools. The assessment by that accreditor was devastating. In a 59-page letter, the council detailed 232 “weaknesses” across Virginia College’s campuses and at its corporate office. It said after the school was given time to fix the problems, 80 percent of them remained.
Among the weaknesses: 31 of the 33 campuses failed to meet required metrics that address how many students graduate and how many get jobs.
“We wanted more of a track record,” said William Larkin, the accrediting council’s executive director.
That might have been the end of the line for Virginia College, almost all of whose students depend on federal loans to pay tuition.
But this week, DeVos reinstated the Accrediting Council for Independent Colleges and Schools — the agency the Obama administration removed. She said it was in compliance with 19 of 21 standards, and concluded it could fix the two problem areas within a year.
The decision came despite an Education Department staff report last spring that found the accreditor had failed to meet most federal standards when it submitted an application for reinstatement. A senior agency official said the report was a preliminary assessment bound to change as the process moved forward.
DeVos relied on a recommendation from Jones in making her decision. Critics say Jones is one of three senior Education Department officials who worked in the for-profit college industry before joining the Trump administration.
“It’s been very clear that DeVos is making decisions based on special interests that are not at all taking into consideration the best interests of students,” said Antoinette Flores, who studies the issue at the liberal think tank Center for American Progress.
A department spokeswoman said all three officials have a wide range of experience, adding that it is wrong to suggest they are predisposed in favor of for-profit schools.
The council, known by its acronym, ACICS, welcomed the announcement that its standing was being restored and said it had stiffened its oversight.
“In the past two years, ACICS has implemented significant reforms designed to address concerns, strengthen the accreditation process and, ultimately, enhance our ability to hold schools accountable for meaningful student outcomes,” said Michelle Edwards, president of ACICS.
Among the winners was Virginia College, which maintains its ACICS seal of approval even though it was rejected by the other accreditor. After seeing the rejection letter, though, ACICS put the college on probation.
Today, ACICS is the sole accreditor for about 50 institutions participating in the federal student loan program. Other schools have found different accreditors or, in many cases, closed, partly because demand has fallen with the improving economy.
Of these 50 schools, about a dozen, including Virginia College, were endangered by another Obama-era regulation aimed at poorly performing career training programs.
The “gainful employment” regulation, which took effect in 2015, detailed how colleges could be removed from the student loan program if students do not go on to earn enough money to pay back their loans.
In the first year this formula was applied, 18 of Virginia College’s programs failed the test, along with some 800 others nationally. About 98 percent of the programs that failed are offered by for-profit institutions, according to a Chronicle of Higher Education tally.
In August, DeVos proposed killing the gainful employment rule, saying she would replace it with more consumer information about programs.
That effort stalled, and as a result, the Obama regulation will stay on the books until at least 2020. But it is unclear whether DeVos will enforce it.
Steve Gunderson, president of the industry advocacy group Career Education Colleges and Universities, said he is encouraged by the direction DeVos is taking, saying the Obama administration had engaged in an “ideological, narrow attack on our sector.” But he said he is concerned some of the DeVos agenda has stalled.
“It’s not like it’s been Christmas for our sector,” he said.
In the meantime, Virginia College has begun to crumble.
The school counted about 20,000 students in recent years, mostly in allied health fields, but enrollment has fallen, said Steve McClearn, who serves as both chief marketing and chief academic officer. He blamed low unemployment, which encourages potential students to find jobs instead, and the accreditation controversy.
“When your accreditor loses its recognition, it makes it harder to enroll students,” he said.
In September, Virginia College’s parent company, Education Corporation of America, announced 16 of its campuses would close. In October, it filed court papers saying it was on the verge of insolvency, unable to pay debts. Virginia College’s troubles prompted its accreditor to demand that the school appear at a December meeting to defend itself.
The court papers blamed “numerous lawsuits” and threats from landlords seeking to evict the school’s programs.
McClearn said the company is hoping to keep the campuses open long enough to sell the business to someone who can keep it going.
“We think there’s a good business there,” he said. “We’re a good match with students and the communities overall. Let’s find a way to salvage that.”