Regulators Vote to Shut Down Nation’s Largest For-Profit Accrediting Agency

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The vote came after widespread criticism that the agency had provided inadequate oversight.

In a huge victory for opponents of for-profit schools, a federal panel voted Thursday to shut down the largest accrediting agency of private sector colleges and universities amid intense criticism in recent years for loose oversight of educational institutions.

The 10-3 decision, handed down Thursday by the National Advisory Committee on Institutional Quality and Integrity, effectively eliminates access to federal financial aid to hundreds of schools accredited by the Accrediting Council for Independent Colleges and Schools that enroll nearly 800,000 students.

ACICS officials blasted the decision.

"For better or worse we have become the subject of intense political and public scrutiny and we believe many of the public comments directed to ACICS are not well founded," said Anthony Bieda, executive in charge at ACICS during his testimony.

Steve Gunderson, president and CEO of Career Education Colleges and Universities, warned during testimony that the revocation of ACICS’ authority would amount to a collapse of post-secondary vocational training in the U.S.

In total, the Department of Education recognizes 37 accrediting agencies that act as gatekeepers to the federal student loan system. Those agencies review colleges based on a variety of issues, including academic quality, personnel, instructional resources and many others. Using that information, the agencies approve or deny schools access to federal financial aid benefits.

ACICS, which approves about 725 institutions and last year oversaw $3.3 billion in federal financial aid, has accredited schools including the now-shuttered Corinthian Colleges.

In fact, according to an analysis from the Center for American Progress, from 2010 to 2015, the ACICS in 90 instances approved and named schools to its honor roll around the same time they were under investigation. The companies that owned those schools, which took in more than $5.7 billion in federal funds over the past three years, represent 52 percent of all federal aid dollars received by ACICS-approved colleges during that period.

Last week the Department of Education issued a formal recommendation to eliminate ACICS altogether, outlining a 21-point list of outstanding issues that it charges the accreditor has yet to address.

The ruling is far from the final execution for the accrediting agency, which plans to appeal the decision, first to the secretary of education and then the federal courts.

Among other things, officials at the accrediting agency argued they have made a number of changes that speak to the agency’s commitment to fix past mistakes, including the creation of an ethics review board, assurances of greater accuracy regarding student achievement data and greater public disclosure.

In fact, on Wednesday, just a day before the federal accrediting agency handed down its death sentence, ACICS announced the formation of a “Special ‘Blue Ribbon’ Advisory Committee” that will conduct an in-depth examination of ACICS’ governance, standards, practices, operations, staffing, evaluator pool, support services and accreditation processes.

“ACICS is committed to enacting meaningful reforms that will demonstrate to our partners in federal and state government that we are turning over a new leaf,” Bieda said.

Those actions are too little, too late, many on the NACIQI panel underscored.

“I need to hear more than, ‘We’re creating a committee,’” said Simon Boehme, the student representative who graduated from Cornell University in 2014 and was appointed to the accrediting review board by the Education Department.

Revoking ACICS’ accrediting authority is just the latest event in a larger conversation on accreditation, for which there is broad agreement needs updating.

The Department of Education has called on accrediting agencies to beef up their review of colleges and universities, just as lawmakers have called on the department to step up its review of accreditors.

Undersecretary Ted Mitchell, the Education Department's point person for higher education, has said the department is hamstrung because it cannot strengthen the system without Congress updating the Higher Education Act, which lawmakers are working on but likely won't be able to pass until after the presidential election.

“The only way to ensure the system works – to truly give us assurance that institutions are serving students well – is to have an accreditation process that allows the flexibility for innovation and the rigor to hold institutions accountable,” Mitchell said during opening remarks Wednesday at the NACIQI panel. “And the only way to do that is to focus on outcomes.”

And that’s exactly what the Education Department has been trying to do around the edges.

In November, it announced plans to make public the standards that every accreditor uses when evaluating student outcomes and require accreditors to submit the letters they send colleges and universities when they're put on probation.

“When we see schools provide extremely poor outcomes for students – or even commit fraud – while maintaining accreditation, that is a black mark on the entire field,” Mitchell said. “The presence of poor players taints the reputation of all accreditors and raises questions about the value of accreditation as a whole – that should be as troubling to the accreditation community as it is to us.”

But critics argue that too often the administration’s focus on outcomes – both in the accreditation space and elsewhere in the higher education space – unfairly targets for-profit colleges and ignores similar intransigencies at other types of colleges and universities.

Case in point: A new report from Third Way, a nonpartisan policy think tank in Washington, D.C., shows that nearly half of students enrolled in four-year private, nonprofit colleges aren’t graduating. And many of those who do graduate aren’t earning sufficient incomes even years after completion and are unable to repay their loans.

To be sure, the NACIQI panelists, and even the representative from the Education Department, agreed that the steps ACICS outlined to fix its problems are good corrective actions. They also acknowledged that the accrediting agency has, to some extent, been held hostage by bad actors in the for-profit sector that wage legal battles against the accreditor every time it attempts to sanction them.

“I don’t want anyone to think that this is just an evil agency,” said Steve Porcelli, who presented the Education Department’s recommendation. “That’s not the case. It’s very complicated.”

But ultimately, the panelists decided, the totality and severity of past and ongoing issues outweighed the possibility of the accrediting agency re-establishing itself successfully.

As panelist Paul LeBlanc, the president of Southern New Hampshire University, asked: “Are we being asked to believe that the team that oversaw this systematic failure will be the team to turn it around?”

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