The bureau sent the council, which oversees controversial for-profit chains ITT Educational Services and Corinthian Colleges, an order to testify about its “policies, practices and procedures for accrediting certain for-profit colleges” in August. The order, known as a civil investigative demand, also asks for a list of colleges that the council accredits and the individuals who conduct the reviews.
After receiving the request, the council petitioned the bureau to either drop or modify the investigation, claiming that the Department of Education is its sole regulator. The bureau denied the request on the grounds that it’s not taking on the role of council regulator, just trying to determine whether anyone violated consumer protection laws.
Officials at the council, which accredits more than 900 colleges, did not respond to requests for comment.
Since the CFPB declined to comment on its investigation, it’s unclear whether the order is tied solely to the council or to a larger probe of another company. The CFPB is locked in ongoing litigation against Corinthian for allegedly steering students into predatory loans.
If the consumer watchdog is pursuing the council, it could deliver a devastating blow to an industry already under scrutiny for its lax oversight of for-profit colleges.
The stunning collapse of Corinthian, which ran the Everest, Heald College and WyoTech schools, exposed flaws in the accreditation system. The chain 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.
Taxpayers could now be forced to pick up the tab for billions of dollars in loans amassed by former Corinthian students. And some of the same signs that critics say should have alarmed accreditors to the poor quality of Corinthian schools are emerging elsewhere, according to a recent report from the left-leaning Center for American Progress.
Researchers found one in five borrowers at colleges accredited by the council 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. Other national accreditors, which are mostly responsible for for-profit schools, had similar outcomes, according to the 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.
There is consensus among policymakers that the college accreditation process is in need of reform. In their letter, Alexander and Kline said their committees intend to review the role of accreditors during the reauthorization of the Higher Education Act later this year.
“Any changes to the accreditation process must take place through the legislative process,” the chairman wrote to CFPB director Cordray. “Your efforts in this area are an inappropriate and disruptive intrusion into the work of Congress and our nation’s higher education system.”
At a recent hearing on accreditation, Sen. Patty Murray (D-Wash.), the ranking member on the Senate Education Committee, said she is “open to a conversation on refocusing accreditors’ role. But that should never come at the expense of forgoing the enforcement of important federal protections, like…ensuring a college is financially sound.”
Republican lawmakers have stood firmly behind the for-profit industry. They have sought to prevent the Obama administration from moving forward with new regulations limiting the amount of debt students can carry in career-training programs, a rule that largely impacts for-profit schools.
Although for-profit companies spread around their dollars, they primarily donate to GOP lawmakers. In fact, Kline is the largest recipient of industry contributions in the 2016 election cycle, with $68,700, according to the Center for Responsive Politics.
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