CS Credit Suisse Group

By Douglas Belkin 

A move by the federal government to shut down a major accreditor of for-profit colleges has set off a mad scramble by the schools to find another group to vet their status as worthy of receiving federal student aid.

On Thursday, the government confirmed it is moving ahead with its plans to revoke the authority of the Accrediting Council for Independent Colleges and Schools, amid a crackdown on the for-profit education sector.

The group, known as ACICS, on Friday appealed to the Secretary of Education to reverse the decision "on the grounds that the findings and conclusions are arbitrary, capricious, an abuse of discretion (and) not in accordance with law."

But the chief executive of a rival accreditor on Friday said many of the schools under ACICS' umbrella aren't sticking around to find out how that appeal will end up: they are set to begin the accrediting process with his group next month. Michale S. McComis, executive director of the Accrediting Commission of Career Schools and Colleges, which accredits about 800 institutions with over 250,000 students across the country, said his organization has received numerous inquiries from schools formerly accredited by his competitor.

This new game of musical chairs in the accreditation world has the potential to affect hundreds of thousands of students attending about 240 schools. Those institutions depend upon the seal of approval from an accreditor to maintain access to the federal student loan program, which lends about $130 billion a year to the nation's college students.

If a school isn't accredited somewhere, students cannot borrow money from the federal government to pay their tuition.

Enrollment at the largest education chains has plummeted by more than half in the past five years, amid heightened scrutiny of the schools' recruiting practices and their failure to deliver on promised jobs for students. Most notable were the high-profile closings of Corinthian Colleges Inc. last summer and ITT Technical Institute earlier this month.

On Thursday, Emma Vadehra, chief of staff to Secretary of Education John B. King Jr., wrote in a letter that she agreed with the June recommendations of the advisory board that oversees accreditors. That report outlined significant problems. "ACICS track record does not inspire confidence that it can address all of the problems effectively," she wrote. "Many of the problems are serious and longstanding."

ACICS Interim President Roger Williams said the group is hopeful it will ultimately retain its status. "We are confident that if given the opportunity to do so, we will be able to demonstrate major reforms and ongoing progress towards compliance with the Department's recognition criteria," Mr. Williams, said.

Meanwhile, Mr. McComis's ACCSC accredits many vocational schools and would be the logical place for those formerly accredited by ACICS to turn, Trace Urdan, a research analyst with Credit Suisse said.

But that doesn't mean they will pass muster. Mr. Urdan said he thinks ACCSC will be very tough on the new schools because they have been tarnished by their association with ACICS. He predicts about half of the schools will shutter, in part because they won't be able to find a new accreditor.

"These schools are likely to be toxic now," said Mr. Urdan. "There is going to be an intensified scrutiny on all of them."

Write to Douglas Belkin at doug.belkin@wsj.com

(END) Dow Jones Newswires

September 23, 2016 20:00 ET (00:00 GMT)

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