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Court Opens Door for For-Profit Accreditor’s Future

Court Opens Door for For-Profit Accreditor’s Future
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The Obama administration’s Education Department failed to consider key evidence when it reviewed and ultimately terminated its recognition of the Accrediting Council for Independent Colleges and Schools in 2016, a federal judge ruled late Friday.

The judge ordered the Education Department — now under very different leadership — to reconsider the accrediting agency’s case. The decision gives ACICS, which has fought vigorously to stay alive, an opening for a next act.

ACICS, a national accreditor that oversaw 245 institutions, many of them for-profits, and collectively received $4.76 billion in federal aid in 2015, was a highly visible casualty in the Obama administration’s multi-year crackdown on for-profit higher education. As the accreditor of several of the major for-profit college companies (Corinthian Colleges, ITT Technical Institute) that failed as a result of a combination of misbehavior, aggressive regulatory scrutiny, and enrollment freefalls, ACICS became synonymous with the sector’s woes, and in some ways was held responsible for them.

The federal panel that advises the education secretary on accreditation voted in June 2016 to terminate the agency’s federal authority to accredit institutions, despite vows from agency officials that it had turned over a new leaf and pleas for more time. In December 2016, as the Obama administration was preparing to leave office, then-Education Secretary John King accepted the panel’s recommendation and terminated the agency’s recognition, citing “pervasive compliance” problems.

ACICS appealed the department’s decision and challenged it in court, and the Trump administration backed its predecessor’s ruling in a May 2017 court filing.

But in his ruling Friday, Senior Judge Reggie B. Walton — while rejecting a majority of the agency’s claims — found enough flaws in the government’s review of the case to order a new hearing.

The crux of the 66-page ruling is that the Education Department violated the Administrative Procedures Act, the federal law that governs how agencies propose and establish regulations, in its handling of the ACICS review.

Specifically, Walton ruled that department officials failed to consider a supplement to the accrediting body’s response to a set of questions the department asked ACICS in March 2016, as well as information the agency gave the department about its placement verification and data integrity procedures.

By failing to consider those documents, the judge ruled, the department — acting “arbitrarily and capriciously” — fell short of its legal obligation to consider all relevant evidence in making such a decision.

“[T]he court concludes that the secretary violated the APA by failing to consider the Accrediting Council’s Part II submission and evidence of its placement verification and data integrity programs and procedures, and finds that the proper remedy for these violations is to remand this case to the Secretary for consideration of this evidence,” Walton wrote.

The judge declined to weigh in on the merits of ACICS’s case, so it is difficult to assess its chances of success in a new review.

Steve Gunderson, president and CEO of Career Education Colleges & Universities, which has been advocating for ACICS’s survival, said in a statement: “All we have ever asked for is due process and fairness. This ruling makes clear the process used in revoking ACICS recognition was not complete and fair. We now hope the current secretary will recognize the need to work with ACICS, the schools impacted by this ruling to find a path that keeps students in school and on their way to achieving career skills.”

Please follow me on Twitter @dougledIHE.



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