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Dept. of Education restores recognition status of college accrediting organization

Following a remand from the D.C. federal district court, Department of Education (ED) Secretary Betsy DeVos has issued an order restoring the Accrediting Council for Independent Colleges and Schools’ (ACICS) status as a federally recognized accrediting agency.

ACICS accredits for-profit colleges, whose access to federal student loan funds is contingent on becoming, and remaining, accredited by a “nationally recognized accrediting agency,” as determined by ED. Although not the sole basis for his decision, Secretary DeVos’ predecessor, John B. King, had revoked ACICS’ recognition in 2016 after concluding, with reference to schools such as Corinthian and ITT Educational Services, that ACICS lacked sufficient mechanisms to monitor the results of state and federal agency enforcement actions brought against schools and to deny accreditation to those schools found to have been engaged in fraudulent conduct or to have otherwise violated applicable law.

Secretary DeVos’ recent order means that ACICS’ status as a federally recognized accrediting agency is restored effective December 12, 2016 (the date Secretary King terminated ACICS’ recognition) and that ED will conduct a further review of ACICS’ petition for recognition. ACICS-accredited institutions now may have to decide whether to wait for the outcome of ED’s review or continue pursuing their in-process applications with other accreditors.

The review of ACICS’s 2016 petition will include consideration of material that the D.C. federal district court concluded had been improperly omitted during the 2016 proceeding as well as additional, related material ACICS wishes to submit. According to U.S. District Judge Reggie B. Walton’s March 23 opinion, ED had violated the Administrative Procedure Act in 2016 by failing to consider during ACICS’ recognition proceeding: (1) supplemental information, submitted by ACICS at ED’s request, largely concerning ACICS’ standards for “problem schools,” and (2) evidence of ACICS’ placement verification and data integrity programs and procedures.

After ED had terminated ACICS’ recognition in 2016, it directed ACICS-accredited institutions to find a new accrediting agency by June 12, 2018. Under the terms of Provisional Program Participation Agreements they signed with ED, ACICS-accredited institutions were required to submit an application to a new accrediting agency by June 12, 2017 and host a site visit by the new agency by February 28, 2018. ED was authorized to: (1) terminate federal student aid funding for new students if an institution failed to meet either deadline and (2) require a letter of credit or other financial guarantee (equal to at least 10% of the institution’s Title IV volume from the prior completed award year) if an institution failed to meet the second deadline or obtain an extension.

Judge Walton’s March 23rd ruling is another significant win for ACICS, which one year ago convinced the D.C. Circuit to affirm the federal district court’s denial of the CFPB’s petition to enforce a Civil Investigative Demand (CID) issued to ACICS. In that opinion, the D.C. Circuit concluded the CID failed to adequately describe the nature of the unlawful conduct under investigation. It did not reach the broader question of whether the CFPB had jurisdiction to investigate the accreditation process based on the possible connection to ACICS-accredited schools’ lending practices.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VIII, Number 99
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About this Author

Heather Klein, Associate
Associate

Heather S. Klein advises institutions on federal and state consumer finance laws, including those governing fair lending, credit reporting, privacy, marketing, payments, debt collection, electronic contracting, military lending, mortgage lending, and unfair, deceptive, and abusive acts and practices. She is a member of the firm’s Fair Lending Task Force. 

Before joining Ballard Spahr, Heather was a Fellow with the Financial Frauds and Consumer Protection Division of the New York State Department of Financial Services. There, she worked on...

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