Senate and House Education Chairs Demand that CFPB End "Unprecedented Overreach" into Accreditation Process

On October 23, 2015, Chairman of the Senate Health, Education, Labor and Pensions Committee Lamar Alexander (R-TN) and Chairman of the House Education and the Workforce Committee John Kline (R-MN) sent a letter to the Director of the Consumer Financial Protection Bureau (CFPB) Richard Condray, asking him to halt the CFPB's efforts to investigate the Accrediting Council for Independent Colleges and Schools (ACICS) and halt any other planned investigatory actions regarding accreditors. "This action is unprecedented overreach by the Consumer Financial Protection Bureau (CFPB) and raises serious concerns regarding jurisdiction given the CFPB's limited enforcement authority that does not in any way include the higher education accreditation process."

The Chairmen said:

"By undertaking this investigation, the CFPB is holding itself out as an expert in determining the quality of education or training programs at institutions of higher education. Congress clearly stipulated in the law this determination is not something the federal government can or should do. Not even the Department of Education is authorized by law to determine the quality of institutions of higher education."

In an article in Inside Higher Education of October 29, 2015, Director Richard Condray was reported to have responded to the criticism at an event hosted by Politico's "Morning Money" newsletter, by stating: "If an accrediting agency is facilitating for-profit colleges' misleading consumers, treating them unfairly and deceptively, then that's something that we should look at."

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Senators Ask Secretary of Education and Commissioner of IRS to Stop Conversions of For-Profit Institutions to Non-Profit Institutions

On October 22, 2015, Senators Tom Carper (D-DE), Sherrod Brown (D-OH), Richard Durbin (D- IL), Elizabeth Warren (D-MA), and Jack Reed (D-RI) sent a letter to Secretary of Education Arne Duncan and Internal Revenue Service Commissioner John Koskinen asking them to stop for-profit institutions from converting to non-profit institutions in order to evade federal taxes, gainful employment regulations, and the 90/10 rule. "These sham non-profits make a mockery of traditional non-profit governing and accountability structures with incestuous leadership arrangements, troubling debt structures, while making hefty profits for those in charge with questionable results for students.

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Obama Administration Puts Pressure on Accrediting Agencies

In response to the recognition by the Obama Administration that the accreditation process needs improvement, based on recommendations from the National Advisory Committee on Institutional Quality and Integrity (NACIQI) in 2012 and 2015 and from the December 14, 2014 Government Accountability Report (GAO-15-59) titled, "Education Should Strengthen Oversight of Schools and Accreditors," the Department of Education issued a press release announcing a number of executive actions that will be taken to improve the current accreditation system.

The executive actions include the following:

  • Publishing each accreditor's standards for evaluating student outcomes: ED is publishing a chart as of November 6, 2015, with each agency's stated Student Achievement Standards, including any specific thresholds.

  • Increasing transparency in the accreditation process and in institutional oversight: As of November 6, 2015, accreditors must submit decision letters to ED, which will be posted online, when institutions are placed on probation.

  • Creating a new, simpler accreditation homepage at: The Student Achievement Standards for each accreditor are found at this site.

  • Increasing coordination within the Department and among accreditors, other agencies, and states to improve oversight: Secretary Duncan is directing the Assistant Secretary for the Office of Postsecondary Education (OPE) and the Chief Operating Officer of FSA to report back within 75 days on strategies to improve coordination across accreditors, OPE, and FSA.

  • Publishing key student and institutional metrics for postsecondary institutions arranged by accreditors: Data drawn primarily from the College Scorecard will provide the performance of all colleges and universities in each accreditor's institutional portfolio.

  • Promoting greater attention to outcomes within current accreditor review processes: The Department will ensure that accrediting staff in OPE have access to critical outcomes data, state and federal litigation reports, and other information about each agency's schools prior to conducting their reviews. This information will help determine whether the accreditor has the appropriate processes in place with respect to institutional outcomes and whether they were followed effectively.

 Legislative reform proposals include the following:

  • Driving accountability through outcomes-drive and differentiated recognition: The Department will recommend to Congress that it repeal the statutory prohibition on its ability to set and enforce expectations regarding student achievement standards in accreditor recognition.

  • Requiring robust teach-out plans and reserve funds for high-risk institutions: The Department will recommend to Congress that it establish recognition standards that require accreditors to request more complete teach-out plans from high-risk institutions based on an expanded set of outcomes and other risk indicators.

  • Establishing a set of standardized, common definitions and data reporting: The Department will recommend that Congress require a single federal vocabulary for major actions and terms, including sanctions and key outcomes.

  • Increasing transparency on an expanded set of accreditation material and actions: The Department will recommend that Congress require all final accreditation documents relating to academic and institutional quality be made publicly available for each eligible institution participating under Title IV and published at a federally maintained website.

 In a memorandum to the Department staff, the Secretary requested that the staff provide further guidance and clarification to accreditors in understanding the flexibility they already have under current law to apply risk-based approaches to their oversight of institutions. A copy of the memorandum is found on the new accreditation homepage.

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Senate Permanent Subcommittee on Investigations is Reviewing the Role of Accreditors in Assessing Quality and Financial Health of Institutions

The Senate Permanent Subcommittee on Investigations is "reviewing the role that accreditors play in assessing the quality and financial health of post-secondary institutions and programs." The Subcommittee sent a letter to ACICS on November 3, 2015, seeking a wide range of documents going back 10 years. The Consumer Financial Protection Bureau (CFPB) recently requested records from ACICS as part of its investigation into possible "unlawful acts and practices in connection with accrediting for-profit colleges."

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