RSSThe Consumer Financial Protection Bureau has issued a civil investigative demand to a national accreditor of for-profit colleges. The Accrediting Council for Independent Colleges and Schools (ACICS) received the demand in connection with a handful of for-profit colleges that have already drawn the attention of the CFPB. The purpose of the investigation is to “determine whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges,” the CFPB said. If the investigation is aimed at ACICS itself, it would be an unprecedented expansion of the bureau’s jurisdiction.
ACICS accredits more than 900 colleges and universities, making it the largest national accreditor of institutions that grant degrees and career-related certification. It is therefore the gatekeeper for federal financial aid at those colleges, since federal funds cannot go toward unaccredited institutions. Of particular interest to the CFPB, ACICS has been a primary accreditor for two for-profit chains, Corinthian Colleges and ITT Educational Services, which the CFPB has sued over allegations of illegal lending practices. Those lawsuits are ongoing. Corinthian collapsed last year amid a flurry of federal and state investigations, many of them revolving around allegations that the school made fraudulent claims about the employment rates of its graduates.
ACICS has faced criticism for its relationship with Corinthian. Sen. Elizabeth Warren (D-Mass.) blasted ACICS prior to the CFPB lawsuits for continuing to accredit Corinthian despite federal investigations. Also, the Center for American Progress drew attention to the fact that students who attended institutions accredited by ACICS had generally higher levels of borrowing, debt and default, as well as lower graduation rates, than their peers who attended colleges with different accreditors. However, such criticism seems a far cry from the mission of the CFPB.
ACICS argued as much, filing a motion to alter or set aside the investigative demand. ACICS claims in a letter that the bureau has over-extended its authority by targeting accreditors. “The review of accreditation actions by the government is specifically vested in the Department of Education and the courts, which recognize a wide level of discretion by accrediting bodies,” ACICS wrote. “CFPB’s unprecedented effort to intrude into the accreditation process threatens to upend the process laid out and followed by the Congress and the Department of Education since the 1950s.” The CFPB rejected ACICS’s request to drop the investigation and to meet more informally.
