What’s Ahead for Regulation of For-Profit Schools?

By aiwpadminJune 23, 2016

By John Egan. 

For-profit colleges may have one regulatory worry off their backs — at least for the time being.

A federal judge recently blocked the federal Consumer Financial Protection Bureau’s pursuit of an investigation into the accreditation process carried out by the Accrediting Council for Independent Colleges and Schools. The nonprofit is the largest accreditor of for-profit schools in the United States.

However, the council can’t rest easily just yet, as the bureau has indicated it will appeal the judge’s ruling, according to Law360.com. At the upcoming LeadsCon New York, a session titled “The Education Regulatory Landscape: Truth in Advertising, the Power of Your Brand and How to Control it Online” will delve into regulation of higher education by the Consumer Financial Protection Bureau, Federal Trade Commission, Federal Communications Commission, U.S. Department of Education and National Association of Attorneys General.

In April, U.S. District Judge Richard Leon ruled that the Consumer Financial Protection Bureau lacks the standing to probe the accrediting council. “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 wrote.

Anthony Bieda, head of the council, said he was pleased that Leon sided with his organization.

The council “is a federally recognized accreditor of higher education institutions. It does not provide loans or any other financial service to the institutions that it accredits, or to the students that they enroll,” Bieda said in a statement.

Since its role is “somewhat undefined,” the financial protection bureau “is casting a wide net,” expressing interest in an array of issues affecting colleges and universities, including financial services and marketing initiatives, according to a blog post from law firm Husch Blackwell.

While the Accrediting Council for Independent Colleges and Schools scored a victory in the form of Leon’s ruling, the financial protection bureau isn’t letting up the pressure on for-profit schools, and neither is one of its biggest champions.

In a recent report, U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, ripped into the accrediting council for its “appalling record of failure” in holding for-profit schools accountable for wrongdoing and called for the council to lose its accreditation power. Warren, who helped create the financial protection bureau, says the “failure” stretches beyond the council’s decision to keep accrediting campuses of the fraudulent Corinthian Colleges until the for-profit colleges ultimately collapsed.

The Accrediting Council for Independent Colleges and Schools and other accreditors have drawn scrutiny from Warren and other critics primarily because these groups are gatekeepers of billions of dollars in federal financial aid for students. In an email to The Washington Post, Bieda, the council’s executive director, said his organization would take several steps to beef up its oversight, such as conducting more on-site evaluations, removing board members who have conflicts of interest and bolstering enforcement. “We are confident that these measures will re-evaluate, fortify and enhance every aspect of [the council’s] accreditation process,” said Bieda, adding that the council “takes seriously all criticisms against our organization and we recognize the need for internal reform in order to better protect and serve students.” As the council carries out reforms, it has temporarily halted accepting applications for first-time accreditation.

“We look forward to working with policymakers, educators and other stakeholders to better protect and serve students, and ensure they receive a quality education that will lead to a better career path,” Bieda said in a recent news release.

Click here to register for LeadsCon New York 2016.

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