A federal judge on April 21 struck a blow to the Consumer Financial Protection Bureau’s recent foray into college accreditation, ruling that the bureau lacks the authority to investigate how accreditors approve for-profit colleges. The judge’s decision can be found here.
U.S. District Judge Richard J. Leon dismissed the Bureau’s effort to force an embattled national accreditor, the Accrediting Council for Independent Colleges and Schools, to turn over information about how it decided to approve several controversial for-profit college chains. According to the CFPB’s filing, 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 had asked the court to force ACICS to answer its questions about how the accreditor green-lighted several Corinthian College campuses that operated under the Everest brand name, as well as FastTrain College, ITT Technical Institute and Westwood College.
“Although it is understandable that new agencies like the CFPB will struggle to establish the exact parameters of their authority, they must be especially prudent before choosing to plow headlong into fields not clearly ceded to them by Congress,” Leon said. “Thus, having concluded that the CFPB lacks authority to investigate the process for accrediting for-profit schools, I am compelled to deny its petition to enforce civil investigative demand.”
The case was being watched closely by accrediting organizations and others in higher education. A group of five accreditors and the Council for Higher Education Accreditation, which advocates for accreditation on behalf of colleges, filed a brief with the court claiming that the CFPB’s investigation threatened the integrity of the accreditation process. Accreditors were particularly concerned that the CFPB had sought from ACICS the names of individuals who were involved in reviewing and approving individual campuses, suggesting they would have some personal liability. Also, some in Congress have taken note. Sen. Lamar Alexander of Tennessee and Rep. John Kline of Minnesota sent a letter to CFPB Director Richard Cordray calling the bureau’s investigation of accreditors an “unprecedented over-reach” of its authority.
Cordray previously defended the bureau’s investigation involving college accreditation, saying, “If an accrediting agency is facilitating for-profit colleges’ misleading consumers, treating them unfairly and deceptively, then that’s something that we should look at.” A spokeswoman for the CFPB declined to comment on the ruling.