Report: Accreditor Allowed $5.7B In Federal Funds To Go To Schools Under Investigation

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Less than a week after California’s Attorney General urged the Department of Education to revoke federal recognition of Accrediting Council for Independent Colleges and Schools (ACICS) following its continued approval of for-profit education chain Corinthian Colleges Inc. up until the day the now defunct schools closed their doors, a new report reveals ACICS’s “pattern” of providing approval to schools with bad track records, resulting in the funneling of more than $6 billion in federal funds to those schools. 

The Center for American Progress released a report [PDF] on Monday highlighting ACISC’s failure to take action by revoking accreditation to the schools even after federal regulators opened investigations into the schools’ practices and it became evident that students were unable to repay their debt obligations after enrollment.

In all, ACICS has accredited 725 institutions — including now defunct Corinthian Colleges and Fast Train schools — where more than 400,000 students have enrolled.

When compared to campuses receiving accreditation from the top five national companies, ACICS’s institutions have the worst graduation rates, the lowest rate of students repaying their student loans, and the second-worst student loan default rates.

According to the report, 21% of students attended an institution approved by ACICS had defaulted on their federal loans within three years of leaving school.

Among students who entered repayment, ACICS had nearly one-third more defaulters than fellow accreditor Middle States Commission on Higher Education—an agency that had 234,000 more borrowers.

CAP’s report found that over the past three years nearly 52% of federal financial aid dollars — about 5.7% billion — received by ACICS-approved schools have gone to institutions that have faced state or federal investigations.

To add insult to injury, the report found that ACICS also added many of these same questionable institutions to its annual “honor roll.”

From 2010 to 2015, ACICS named a campus or institution that faced a federal investigation to its honor roll 90 times.

In one specific case, ACICS continued to provide accreditation to FastTrain even after the Department of Education found the school engaged in a slew of fraudulent recruiting practices such as allegedly hiring strippers and attractive women to convince young men to enroll.

Additionally, last year a jury convicted the school’s former president of stealing more than $6.6 million in federal financial aid by enrolling ineligible students, fabricating high school diplomas, and making false statements to the U.S. Department of Education.

According to the Department of Education, these illegal practices began in 2009 and continued until the school closed in 2012. However, during this time, the company was approved by ACICS.

“In fact, not only did ACICS fail to raise any public alarm bells about FastTrain, it named the school an honor roll institution in 2011 for its ‘excellent understanding’ of the quality assurance process,” the report states.

CAP says in a statement that the results of the report show that ACICS’s policies, procedures, and student outcomes data paint a clear picture of a “deeply troubled agency.”

The report comes weeks before the Department of Education advisory board — known as the National Advisory Committee on Institutional Quality and Integrity — is set to meet and could terminate the recognition of ACICS.

“In total, these results strongly suggest that ACICS is incapable of acting as a sufficient assessor of college quality and that its repeated poor judgment leaves millions of students and billions of taxpayer dollars at risk,” CAP says in a statement. “As such, the report concludes, the Department of Education and its NACIQI advisory board should act in the best interest of students and taxpayers and terminate ACICS’ recognition.

For its part ACICS on Monday announced [PDF] it would take steps to improve its processes and restore “trust and confidence.”

For starters, ProPublica reports that the company will temporarily stop taking new applications from campuses, convene an ethics review panel, and provide more public disclosure and enforcement on probation standards.

“Every aspect of the agency must be re-evaluated, fortified and enhanced,” ACICS’ top executive Anthony Bieda said in a statement.

CAP’s report follows California Attorney General Kamala Harris sending a letter to the Department of Education urging it to revoke federal approval from ACICS.

With the letter, Harris expressed support for 13 other state Attorneys General who previously voiced their concerns over the renewal of ACICS as an accreditation agency.

Following the collapse of CCI last year, lawmakers opened an inquiry into how to improve the oversight of agencies that one might assume provide an indictor as to whether or not a particular school has met high standards for education and financial security. It’s unclear how that inquiry has progressed.

The committee’s inquiry came just weeks after the Consumer Financial Protection Bureau requested documents from ACICS related to its accreditation of for-profit colleges.

The Bureau’s request was part of its investigating into possible “unlawful acts and practices in connection with accrediting for-profit colleges,” according to Inside Higher Ed.