The Education Department recommended Wednesday that the largest national accreditation agency lose the power to act as the gatekeeper between colleges and billions of dollars in federal financial aid, a step that could signal the end of the Accrediting Council for Independent Colleges and Schools.
An independent advisory board will take the recommendation into consideration when it convenes next week to decide the council’s fate. Advocacy groups, lawmakers and state attorneys general are urging the board, the National Advisory Committee on Institutional Quality and Integrity, to deny the accrediting agency the recognition needed to operate. They say the agency has a track record of permitting schools being investigated for fraud or plagued by abysmal graduation rates to receive millions of dollars in federal loans and grants, and the lax oversight is putting students and taxpayers at risk.
Stripping the council of its power, though, would leave hundreds of schools scrambling to find a new accreditor to prevent students from losing federal financial aid, and it could burden an accreditation system that might not have the capacity to absorb all of those schools. It also could be the death knell for some for-profit schools enmeshed in legal and regulatory fights, if other accreditation agencies refuse to work with them.
Education Department officials say the council failed to meet 20 criteria used in making the recommendation, including an ability to monitor high-risk schools, ensure the accuracy of graduation rates and enforce actions against troubled schools. The department reviews federally recognized accreditation agencies every five years, evaluating their compliance with the law and effectiveness in ensuring the quality of the schools in their care. Staff members at the department conduct an analysis of each agency and can recommend full recognition for another five-year term, an extension for an agency to fix problems identified in the review, or termination.
The advisory board plans to weigh the department’s position and explore the council’s performance to develop its own recommendation, which is slated to be issued in 10 days, with a final decision coming within 90 days of the meeting. The council will have the right to appeal the decision to Education Secretary John B. King Jr.; if King upholds the decision to terminate the agency, schools accredited by the council will have 18 months to find a new agency to continue receiving federal financial aid.
“This is a very bold and dramatic step by the department,” said Terry W. Hartle, senior vice president of the American Council on Education. “The size of ACICS means the department is going way beyond anything they’ve done previously. This is not business as usual.”
The council, which accredits nearly 300 colleges that receive $4.8 billion in financial aid, gained notoriety for claiming that Corinthian Colleges, a for-profit chain that state and federal authorities said committed fraud, was in good enough standing to get billions of dollars in taxpayer funds. ACICS renewed two of the company’s campuses and authorized a new campus a few months before the Education Department forced Corinthian to close or sell its 120 locations.
Council officials have argued that they withdrew the accreditation of four Corinthian campuses that abruptly closed without providing refunds. Many of the former Corinthian schools under the agency’s auspices were sold to ECMC Group in a $24 million deal sanctioned by the Obama administration.
The accrediting agency is undergoing a series of reforms in the wake of the Corinthian debacle. The newly appointed executive director, Anthony S. Bieda, said last week that the council will increase the frequency of its on-site evaluations, remove board members with conflicts of interest and step up enforcement actions. The organization also is identifying other means to reassess its governance, standards, operations and accreditation processes.
On Wednesday, Bieda said in a statement: “The recommendation to deny recognition is disappointing, and must be addressed directly and decisively by the board and senior management of the agency. ACICS is prepared to make our case as effectively as possible to the National Advisory Committee on Institutional Quality next week.”
If the council is terminated, Hartle said the fallout would be far reaching. Other accreditation agencies might find it difficult to take on the hundreds of schools that would be left without an accreditor. Some might reject the schools accredited by the council, such as ITT Tech, Sanford Brown and the Art Institutes, to avoid association with struggling institutions. Much of the burden for dealing with ACICS schools probably would fall on the Accrediting Commission of Career Schools and Colleges, which was not immediately available for comment. Even if council schools are able to find an accreditor willing to work with them, getting approval could mean a long process that could jeopardize students access to federal loans and grants, he said.
“Becoming a member of an accrediting organization is not like becoming a member of the rotary,” Hartle said. “Schools seeking to align with a new accreditor must go through a complete new review. Under the best of circumstances a school is looking at something that takes 12 to 18 months, but if it’s not the best circumstances, it could take over two years.”
Department officials say they will work to help schools and the accrediting community in the event of the council’s demise.
In the wake of Corinthian, the department became increasingly critical of the accrediting process. There is no uniformity in the way accreditors decide who enters and exits federal student aid programs, which has led to a system that is at best subjective in how it assesses quality. Each accreditor sets its own standards, which are reviewed by the advisory board, but the department has no say in how the agencies do their jobs. Though schools need the blessing of a state agency and the department to gain access to federal funds, accreditors can sink their chances. Observers say accreditors give schools in trouble endless opportunities to fix their problems.
“I’m glad that the department is finally moving to end the recognition of ACICS, but it’s really sad that it took the loss of billions of dollars, the victimization of tens of thousands of students and the collapse or closure of multiple fully accredited fraud factories for it to act against such an obvious accreditation mill,” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities.
Some say the department is trying to deflect attention away from its own shortcomings in the Corinthian case. Problems at the California-based company came to light six years ago in a Government Accountability Office report that identified Corinthian as one of 15 for-profit colleges where recruiters encouraged students to commit fraud on financial aid applications. Evidence of malfeasance at the school continued to surface through litigation and state investigation.
Yet the department kept funneling $1.4 billion in federal financial aid to the company every year. It allowed tens of thousands of students to continue enrolling in criminal justice, health-care and business programs that frequently required them to take on five-figure debt.
It wasn’t until 2014 that the department decided to withhold federal funds from Corinthian, a move that crippled the company. Within a month’s time, Corinthian pleaded with the department for a lifeline to keep the doors open. The department gave the company $16 million in federal student-aid funds under the condition that it would sell or close its schools.
Despite the department’s role in Corinthian’s remaining open for so long, advocacy groups and lawmakers lay significant blame at the feet of the council and say the agency’s poor performance extends far beyond Corinthian. Just last week, Sen. Elizabeth Warren (D-Mass.) released a report documenting the long list of schools accredited by ACICS under investigation or being sued by state or federal authorities.
Take Westwood College, a for-profit chain owned by Alta Colleges, which in recent years has reached several multimillion-dollar settlements with state attorneys general for lying about its job placement rates and overall success of its programs. Despite this legal morass, the council lauded several Westwood campuses for excellence and did not withdraw the chain’s accreditation until it closed for good in March.
An analysis from the Center for American Progress shows a pattern of the council’s turning a blind eye to abusive practices at the schools in its care. Of the 17 schools accredited by the agency that have been investigated by state or federal authorities, 12 had campuses hailed by the council for excellence between 2010 and 2015. A jury convicted former FastTrain College president Alejandro Amor on charges of stealing more than $6.6 million in federal financial aid by enrolling ineligible students and fabricating high school diplomas as far back as 2009, yet the for-profit school still received ACICS “honor roll” recognition in 2011, the report said.
Researchers found that more than half of the $5.7 billion in federal student aid awarded to ACICS-approved schools in the past three years went to institutions facing a state or federal investigation. An earlier CAP report found that 1 in 5 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 is 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.
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