Court Win For Students Over Predatory For-Profit Colleges

A district judge issued a ruling disempowering some of the nation's most exploitative colleges and trade schools.
02/21/2017 05:38 pm ET Updated Feb 24, 2017

This week, United States District Judge Reggie Walton denied a motion filed by the Accrediting Council for Independent Colleges and Schools (ACICS) for a preliminary injunction that would have blocked the U.S. Department of Education from proceeding with the de-recognition of the organization. ACICS needs department recognition in order for the colleges it accredits to be eligible for federal student grants and loans.

Judge Walton said in open court that ACICS had not demonstrated a substantial likelihood of prevailing on the merits of the case, particularly because then-Secretary of Education John King determined in December that ACICS was in substantial noncompliance with the rules governing accreditor performance.  Walton noted that King had the discretion to give ACICS more time to comply, but that King, “in his wisdom,” decided instead to terminate.

Walton also rejected ACICS’s argument that it would suffer irreparable harm if its motion was rejected, relying on the courtroom testimony of ACICS head Roger Williams, who indicated that the group’s demise was not imminent and that it had other sources of revenue besides from the schools receiving federal aid. Walton also noted that Williams’s testimony revealed that the organization has “substantial reserves” to tide it over while it pursues the lawsuit. Just how much cash ACICS had was unclear, because ACICS’s lawyer, Allyson Baker, demanded that such information be hidden from the public, leading Judge Walton to temporarily clear the courtroom of spectators, including lawyers from the offices of several state attorneys general who have been seeking to intervene in the case.

Finally, Judge Walton weighed the public interest factors involved and seemed to find that they favored the government. In particular, he noted testimony presented at the hearing by a Department official that taxpayers were on the hook to cover about $100 million in loans forgiven on the basis of “closed school discharges’ provided to former students of for-profit ITT Tech, an ACICS-accredited school, after that troubled institution collapsed last year under the weight of multiple law enforcement investigations for fraud.

In the hearing, Baker tried to press the department official, Ron Bennett, to admit that schools that lose their accreditor and can’t find another accreditor promptly, would commonly be required to post a burdensome letter of credit with the department.

Bennett replied, “The situation we’re talking about” ― meaning a failed accreditor ― “is not a common situation.”

Baker decided that she had no further questions of the witness.

There were rumblings before the hearing that the new Trump-Betsy Devos Department of Education might back down and somehow try to reverse Secretary King’s decision, as lobbyists for predatory for-profit colleges have been openly and aggressively urging.  It’s not at all clear how the department could simply dump King’s decision; from the regulations it appears that ACICS would have to start all over again and reapply. 

For today, at least, the Department of Justice, which represented the Secretary of Education in case, diligently and skillfully opposed ACICS’s motion.

In declining to recognize ACICS on December 16, King wrote that the accreditor had “exhibited a profound lack of compliance” with its responsibilities.

King’s action affirmed prior decisions by the department staff, by the department’s National Advisory Committee on Institutional Quality and Integrity (NACIQI), and finally by King’s own chief of staff, Emma Vadehra, from whose September decision ACICS had appealed.

The Department of Education has been engaged in outreach to students, colleges, and other accreditors to protect educational opportunities for students affected by King’s decision.

ACICS has been the accreditor for some 240 institutions exclusively or primarily, and most of those are for-profit colleges. $4.76 billion in taxpayer dollars went from the Department of Education to ACICS schools in 2015.

But ACICS has been the asleep-at-the-switch accreditor of some of the most notorious bad actors in the for-profit college sector, including Corinthian Colleges, ITT Tech, Kaplan, EDMC (the Art Institutes), Career Education Corporation (Sanford-Brown), Alta Colleges (Westwood), Globe, FastTrain, and Daymar. All these companies have been under investigation by law enforcement for deceptive practices. Some of those companies have, like Corinthian and ITT, shut down under the weight of abusive and reckless business practices. FastTrain’s CEO has been convicted of federal crimes and sentenced to eight years in prison. Others, like Kaplan, EDMC, and CEC, continue to receive billions in taxpayer dollars.

Last year, numerous advocates for students had sent reports or letters highlighting the dismal failures of ACICS to monitor college quality and abuses and calling on the Department to end its recognition of this body. Those opposing ACICS included thirteen state attorneys generalBen Miller of the Center for American Progress; nine veterans groups including Student Veterans of America and Vietnam Veterans of America; a coalition of 23 groups that advocate for students, consumers, and educators; and Senators, including Dick Durbin and Elizabeth Warren, who issued a blistering report that criticized ACICS for its weak oversight of colleges, and also took the Education Department to task for its weak oversight of accreditors.

This article also appears on Republic Report.

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