Feds yank ACICS’ recognition, add strict requirements on colleges it accredited

The U.S. Department of Education on Friday ended recognition of a troubled accreditor of for-profit colleges, the Accrediting Council for Independent Colleges and Schools, giving the institutions under its purview 18 months to find a new accrediting agency or risk losing access to federal funding. 

ACICS used to accredit more than 230 colleges — including now-shuttered for-profit giants, such as ITT Technical Institute and Corinthian Colleges. Today, the beleaguered accreditor only oversees about two dozen institutions. Collectively, they enroll about 3,800 students, according to the Education Department. 

Federal officials said they yanked the accreditor’s recognition because of continued noncompliance with the Education Department’s standards, such as having adequate resources and staff expertise. ACICS-accredited institutions will face increased department oversight as they seek new accreditors, including enrollment restrictions. 

“ACICS is known for accrediting some of the most infamous colleges, like Corinthian Colleges and ITT, that engaged in widespread wrongdoing,” James Kvaal, the Education Department’s top higher education official, said during a call with reporters Friday. “The cost of that wrongdoing to students and taxpayers is still being tallied.”

The sudden closures of those institutions left tens of thousands of students in the lurch and supercharged efforts to crack down on for-profit institutions. 

Just this week, the Education Department announced it is discharging nearly $4 billion worth of student loans from those who attended ITT from 2005 to its closure in 2016. Federal officials accused the closed institution of subjecting students to high interest rates and illegal debt collection practices. 

However, the Education Department’s decision Friday was based on ACICS’ yearslong “inability to come into compliance with the minimum standards expected of accreditation agencies,” Kvaal said — not its checkered history.

Kvaal said there are recent examples of the accreditor poorly monitoring institutions. 

ACICS accredited Reagan National University, in South Dakota, even though a 2020 USA Today investigation could not verify that the college had students, faculty or classrooms. It also oversaw Virginia International University, which state regulators in 2019 alleged had rampant plagiarism and poor online education. That college has since been renamed Fairfax University of America. 

“ACICS can no longer serve as a quality control gatekeeper for the federal student aid programs,” Kvaal said. 

These colleges risk losing access to federal financial aid if they aren’t accredited by a federally recognized agency. Although ACICS is no longer recognized, the Education Department will allow the institutions it oversees to continue participating in financial aid programs for 18 months. 

However, these institutions must adhere to strict requirements until they find new accreditors. Within 30 days, for instance, they must submit teach-out plans, which outline how students can complete their academic programs at other colleges in the event an institution closes. 

They also must disclose to students that they may lose access to federal student aid and limit enrollment of new students who wouldn’t be able to complete their programs before the 18-month period ends. 

And they will have to post letters of credit, a type of financial collateral to protect against taxpayer losses. The Education Department will base these amounts on how risky it deems each institution. 

The Education Department’s action comes after ACICS appealed an earlier decision from a senior official to terminate the accreditor’s recognition. Although Friday’s decision is final, ACICS could challenge it in federal district court, Kvaal said. A legal battle would not affect the 18-month timeline for ACICS-accredited colleges to find a new agency unless a judge rules otherwise, he added.

ACICS did not immediately respond to a request for comment. 

In a statement, Career Education Colleges and Universities, which represents for-profit institutions, said the Education Department’s decision to terminate ACICS’ recognition “comes as no surprise.”