CFPB Can’t Investigate For-Profit School Accrediting Process, Says Federal Court Ruling
Posted By Eliana Osborn on May 5, 2016 at 2:18 pm
Accreditation is the process whereby a school proves value—that adequate learning takes place, finances are in order, and rules are followed. At least that’s the idea behind it. But as scrutiny of higher education has increased, accreditors who signed off on schools with questionable practices are themselves coming under fire.
Accreditors must be registered with the government but they are not government entities. For a school to qualify to receive financial aid dollars, whether from grants or loans, it must be accredited. With such staggering amounts of money involved, the lax oversight of accreditors is one clear area where many argue change needs to occur.
The Consumer Financial Protection Bureau (CFPB) is a government entity created to advocate for consumers, bringing to light shady practices and stopping them. In recent years, the CFPB has turned its attention to both financial aid and accreditation. They collect complaints and often lead the way forward on action; in 2015, they highlighted student loan repayment scams, and in 2016, the CFPB has worked to change loan communication standards.
Though, a recent court ruling has stopped the CFPB from moving forward to protect consumers from for-profit universities. According to a federal court, “the CFPB lacks authority to investigate the process for accrediting for-profit schools.”
The CFPB had tried to get information from the accrediting agency that allowed now defunct Corinthian Colleges to continue operating for so long. The agency, Accrediting Council for Independent Colleges and Schools, refused to hand over documents. ACICS not only the accreditor for Corinthian Colleges in the for-profit sector, but also for ITT Technical Institute, which is also under investigation.
ACICS and other accreditors say they are concerned about maintaining their integrity and independence; they see CFPB investigations as targeting those specifically involved in approving schools that have gone under. CFPB sees the situation differently; they say they are trying to uncover deceptive and misleading practices that cost consumers (and the federal government) millions of dollars.
Higher education officials have voiced concern that accreditors rarely sanction the schools they certify, serving simply as a rubber stamp without much bite. ACICS is making some changes in how they do business with for-profits, though for many it may be a small step a little too late. There are calls for ACICS to simply be removed from the approved list of accreditors, with dozens of states investigating the schools under their watch.
With this legal setback for the CFPB, the next step forward to reign in accreditors and for-profit schools is unclear. Congressional approval for changes to the Higher Education Act are hard to come by, and increasing oversight is not a popular move.