Column: Finally, the feds move to fire an incompetent watchdog over for-profit colleges

Much of the world turns on paper credentials. But the fact that these often aren’t worth the paper they’re printed on has been spotlighted by the accreditation scandal in the for-profit college business. Scores of campuses have been given a seal of approval by accreditation agencies despite coming under state or federal investigation for fraud.

The federal government is preparing to bring down the hammer on one of these toothless watchdogs. Its target is the Accrediting Council for Independent Colleges and Schools, which is renowned for maintaining its accreditation of Corinthian Colleges right up to the day that chain of for-profit schools ceased operating in April 2015. Corinthian filed for bankruptcy days later. ACICS accredits some 900 campuses across the nation, giving those schools the formal imprimatur that allows them to collect an estimated $5 billion a year in federal financial aid on behalf of their students.

But its role may be ending. The Department of Education staff on Wednesday recommended the revocation of ACICS’s recognition as an accreditation body. That means that schools bearing its seal of approval will have to find a new accreditation body within 18 months or lose their right to collect federal financial aid payments.

The department’s recommendation isn’t the last word. The next step belongs to the National Advisory Committee on Institutional Quality and Integrity, which will meet next week. The decision ultimately will be rendered by Secretary of Education John King. But things look bad for ACICS; the department staff says it has fallen short on nearly two dozen issues or problems and doesn’t seem equipped to “remedy its compliance issues.”

ACICS has been pedaling furiously to stave off extinction. On June 6, it said it would suspend new accreditations until it can get its house in order. But the Education Department staff recommendation implies it’s moving too late.

The ACICS case underscores the drawbacks of governmental outsourcing of its regulatory authority to outside agencies, especially self-regulatory bodies. These bodies often are dependent for revenue on the very institutions they oversee, which tends to file down their sharp teeth when confronted with the need to bite down hard on a fee-paying target. The phenomenon typically leads to abuses going unaddressed, as happened with credit-rating agencies such as Standard & Poor’s, which has been accused of giving high ratings to deeply impaired mortgage securities in the run-up to the 2008 financial crisis.

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For consumers, accreditation seals of approval can look like reliable shortcuts to the checking that individuals should do for themselves. Students interested in Lincoln Technical Institute’s vocational programs, for instance, might be comforted by the word on its website that it’s accredited by ACICS, “one of the most respected, established national accreditors of academic institutions in the United States.” They would be hard-pressed to learn that Lincoln settled a lawsuit last year brought by the Massachusetts attorney general alleging it gave applicants for its criminal justice program bogus data about job placement by its graduates. The school settled for $850,000 without admitting the charges and forgave $165,000 in private student loans.

ACICS has become exhibit A for lax oversight. As documented earlier this year by ProPublica and the Chronicle of Higher Education, one reason may be that its board has been stocked by officials from some of the troubled institutions it has overseen, including Corinthian, Lincoln and ITT Technical Institute. The latter is under investigation by consumer protection officials in 19 states related to its statistics on job placement, graduation rates, and “many other aspects of our business,” according to its annual report.

The bigger issue may be that ACICS didn’t bother to keep its eye on the ball. At a hearing in July 2015, Sen. Elizabeth Warren (D-Mass.) hammered away at then-ACICS President Albert C. Gray over the council’s accreditation of Corinthian. Prior to the for-profit chain’s bankruptcy, she observed, Corinthian had come under investigation by 20 state attorneys general and the federal Consumer Financial Protection Bureau.

“So here’s my question,” she said. “How many federal and state agencies need to file lawsuits against one of your colleges before your organization takes a second look at whether that school should be eligible for accreditation and, most importantly, for federal money?”

Gray hemmed and hawed a bit, then replied, “I don’t think the number of agencies … is the issue that determines where they stand with us in terms of accreditation,” he said. “We have our own methods of investigating whether or not there’s compliance.”

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