Despite Legal Setback, Accreditor Of Predatory For-Profit Colleges Remains Under Microscope

Consumer Financial Protection Bureau Director Richard Cordray listens while testifying on Capitol Hill in Washington, Tuesday, Jan. 31, 2012. CREDIT: SCOTT APPLEWHITE, AP
Consumer Financial Protection Bureau Director Richard Cordray listens while testifying on Capitol Hill in Washington, Tuesday, Jan. 31, 2012. CREDIT: SCOTT APPLEWHITE, AP

On Thursday, a federal judge ruled that the Consumer Financial Protection Bureau overstepped its authority when it investigated an accreditor for for-profit colleges and said the U.S. Department of Education was its only regulator, The Wall Street Journal reported.

That sounds grim for education advocates and activists who are worried that the accreditor, Accrediting Council for Independent Colleges and Schools (ACICS), will go on accrediting for-profit colleges that are being investigated for various unscrupulous practices, such as providing misleading information about job placement rates, manipulative recruitment schemes, and unfair lending practices. But ACICS may still be held accountable in other ways, Ben Miller, senior director for postsecondary education at the Center for American Progress told ThinkProgress.

“The CFPB’s lawsuit against ITT [Educational Services] and its questionable private loan practices is still ongoing and not affected by this. The same accreditor is still facing serious heat from states’ attorneys general and consumer groups over its repeated inability to exercise due diligence in reviewing colleges,” Miller said. “And it still has to face a Department of Education committee in June that will determine its fate. The CFPB lawsuit was likely the least important of all those actions. It’s like pulling one log out of a roaring fire — there’s still plenty of heat.”

A dozen state attorneys general, veterans groups, and students have called on the U.S. Department of Education to revoke the accreditor’s recognition this summer. That means the for-profit colleges it has accredited could lose federal student aid, and that aid makes up the majority of for-profit colleges’ funding.

ACICS has accredited over 900 institutions of higher education and is one of the largest national accreditors, according to Inside Higher Education. It accredited both Corinthian Colleges and ITT. The CFPB has investigated both of the for-profit college chains for unfair lending practices.

Last year, Corinthian Colleges was fined $30 million by the U.S. Department of Education for its false job placement claims as well as sued by California Attorney General Kamala D. Harris for securities fraud, false and predatory advertising and intentional misrepresentation to students in 2013. Corinthian Colleges shut down all of its remaining campuses last year.

ITT has been sued by the Securities and Exchange Commission for fraud and a former employee acting as a whistleblower also filed a lawsuit accusing the chain of manipulative recruitment practices. The whistleblower said recruiters were supposed to “’dig in’ to a student’s pain to pressure them to enroll” and lied about its credit transfer policy, to name a couple allegations.

Accreditors play a pretty big role in enabling some of the more predatory for-profit colleges, an investigation by ProPublica found last year. In its reporting on ACICS, ProPublica found that only 35 percent of students at a typical ACICS college complete their degrees compared to 59 percent for four-year schools across the country. In addition to not graduating, students at the schools ACICS accredited also have more trouble paying off debt. The percentage of students who couldn’t pay as much as $1 of their loan principal within three years of graduation was 23 percentage points higher than the national rate for your average four-year college student. There is also serious concern over how effective ACICS can be in overseeing for-profit colleges when executives of those colleges sit on its council.

Last year, when Massachusetts Sen. Elizabeth Warren (D) grilled Albert C. Gray, then-president of the ACICS on what she sees as ACICS’ role in perpetuating fraud, Gray responded, “All the investigations you’ve mentioned are just that. They’re investigations.” But now that the accreditor is under the microscope, it has decided to finally take those investigations seriously. On Friday, ACICS ordered ITT Technical Institutes to make a case for why it shouldn’t lose accreditation given the many lawsuits and investigations it’s contending with, Inside Higher Education reported. On Tuesday, amidst all of the scrutiny from government agencies and attorneys general, Gray resigned. He served as president and CEO for seven years.