U.S. Department of Education Terminates Federal Recognition of ACICS, Enhances Federal Aid Program Participation Requirements for ACICS-accredited Colleges

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U.S. Department of Education Terminates Federal Recognition of ACICS, Enhances Federal Aid Program Participation Requirements for ACICS-accredited Colleges

August 19, 2022

EDITOR’S NOTE: An earlier version of this release noted enrollment of ACICS-accredited institutions was 3,800. That number has been updated to nearly 5,000 students.

Today, the U.S. Department of Education announced that colleges currently accredited by the Accrediting Council for Independent Colleges and Schools (ACICS) will now be required to fulfill additional operating conditions for continued participation in the federal student aid programs. This requirement follows U.S. Deputy Secretary of Education Cindy Marten's final decision to terminate federal recognition of ACICS.

Although ACICS is no longer a nationally recognized accrediting agency, the Department will provisionally certify ACICS-accredited institutions for continued participation in the federal student aid programs for up to 18 months from today, the date of the Deputy Secretary's final decision. This 18-month provisional certification period allows institutions time to seek accreditation from another nationally recognized accrediting agency.

During this period of provisional certification, the Department will require the ACICS-accredited institutions to comply with additional conditions that are designed to protect students and safeguard taxpayer dollars. These conditions include additional monitoring, transparency, oversight, and accountability measures. Only ACICS-accredited institutions that agree to these conditions may continue to offer federal student aid.

The Department's Federal Student Aid office will begin sending provisional program participation agreements (PPAs) to the affected institutions, which will have 10 calendar days to respond affirmatively to the new agreements to remain eligible to participate in federal student aid programs.

The additional PPA conditions establish strong protections for students and taxpayers, preventing ACICS-accredited institutions from establishing new programs or locations or enrolling new students who will be unable to complete the program by the end of the provisional period unless the institutions become accredited by a new nationally recognized agency.

Within 30 days, all ACICS-accredited institutions will be required to submit teach-out plans for helping students complete their academic programs elsewhere if necessary and submit information about recent and ongoing investigations to ensure the Department is aware of key risks in this new environment of reduced oversight. Other new requirements for ACICS-accredited institutions include:

  • Submitting teach-out plans to ensure a path to completion for students in the event of closure;
  • Providing enhanced disclosures to students regarding potential loss of federal student aid eligibility;
  • Limiting enrollment of new students who would be unable to complete their program of study before the 18-month provisional period ended;
  • Ceasing additions of new programs or locations that qualify for Federal student aid;
  • Submitting monthly student rosters and a record retention plan; and
  • Posting a letter of credit to protect against taxpayer losses associated with school closure.

ACICS no longer Recognized as Federal Aid "Gatekeeper"

In her decision letter, Deputy Secretary Marten wrote:

"Recognition by the Department must be reserved for agencies that adhere to high standards, just as accreditation by agencies must be reserved for institutions and programs that adhere to high standards. The regulations provide for conditional recognition for up to 12 months, the kind of latitude ACICS seeks on this matter, when an agency will remedy an instance of noncompliance in that time period. However, ACICS has already had multiple opportunities to achieve full compliance. ACICS was found noncompliant with 34 C.F.R. § 602.15(a)(2) as far back as 2016. Despite its professed improvements, the agency remained out of compliance in 2018, at which time it was given another opportunity to reach full compliance. Its continuing failure to reach full compliance with this criterion alone is a sufficient basis to terminate ACICS' recognition."

The Deputy Secretary's decision follows a several years-long process that began in 2016, with the Department's decision to cease recognizing ACICS. ACICS's appeal to have their recognition reinstated was denied by then Secretary of Education John B. King Jr. ACICS followed that decision with a lawsuit against the Department. After a federal judge required ED to consider new evidence, then Secretary of Education Betsy DeVos reinstated ACICS in 2018.

ACICS currently accredits 27 schools that enroll nearly 5,000 students. When the Department ceased recognition in 2016, ACICS accredited 237 schools that enrolled 361,000 students.

Last June, the Department's Senior Department Official (SDO) agreed with the recommendations of accreditation staff and NACIQI to withdraw recognition of ACICS. In its February 2021 final staff report, the Department's accreditation staff found that ACICS failed to comply with federal recognition criteria, including monitoring of compliance of institutions and inadequate administrative capability. ACICS appealed the SDO's decision, and the matter was referred to Deputy Secretary Marten.

Deputy Secretary Marten's decision is the Department's final action. ACICS is no longer a nationally recognized accrediting agency and can no longer serve as a "gatekeeper" of institutional eligibility for federal student aid programs.

Strengthening Accreditation of Colleges and Programs

As gatekeepers to $112 billion in annual federal student aid, nationally recognized accrediting agencies serve a vital role in ensuring quality for students and families and in protecting students and taxpayers. The Department oversees the accrediting agency recognition process, which determines whether agencies are reliable authorities on educational quality. Since February 2021, the Department has taken a series of steps to strengthen the accreditation process.

  • Releasing final analyses and recommendations for nationally recognized accrediting agencies under review. All nationally recognized accrediting agencies must successfully complete a review process every five years. In February 2021, the Department began releasing the final analyses and recommendations developed by agency staff to provide greater transparency and ensure confidence in the Department's review process.
  • Reinstating Accreditor Dashboards. In July 2021, the Department also reintroduced the Accreditor Dashboards and accompanying data files. The dashboards, first introduced in 2016, provide greater transparency to the public around student outcomes, equity, and value to aid NACIQI in identifying areas for discussion, challenges in accreditor oversight, and inform their recommendations on recognition.
  • Ensuring high standards in accreditor review process. In February 2022, the Department introduced a revised Accreditor Handbook to clarify expectations for agencies and ensure sufficient documentation in the public record for evaluating agencies for recognition, including on student achievement, actions taken against underperforming institutions or programs, and ensuring accreditors have adequate staff and resources to ensure quality, among other areas. The latest changes are intended to ensure accrediting agencies are holding institutions and programs to high standards.
  • Combating "Accreditor Shopping." In July 2022, the Department issued guidance to help inform institutions and accrediting agencies about their responsibilities related to seeking a different accreditor. The guidance aims to prevent "accreditation-shopping," the practice in which some institutions seek out specific accrediting agencies with less rigorous standards to sidestep accountability from an accrediting agency that investigates practices or takes corrective action against an institution. The Higher Education Act and Department regulations provide protections for students and taxpayers against this behavior.

Strengthening Institutional Accountability

In addition to strengthening the accreditation process, the Department has taken a series of steps to ensure that that all students have access to a valuable postsecondary education, and all institutions are held accountable for poor outcomes. Recently proposed regulations and executive actions that aim to strengthen institutional accountability include:

  • Fortifying borrower defense to repayment and prohibiting mandatory arbitration. Proposed regulations would create a fair path for borrowers to receive a discharge if their colleges lied to or took advantage of them. This includes allowing for group claims, eliminating overly strict limits on when borrowers can file a claim, expanding the type of misconduct that can lead to an approved claim to include aggressive and deceptive recruitment practices, and ensuring borrowers receive timely decisions about their claims. To curb predatory behavior by colleges, the Department proposes a strong process for recouping the costs of such discharges from the college, running for at least six years following the borrower's last date of attendance at the school. The Department also proposes ensuring that borrowers whose schools take advantage of them be allowed their day in court. The proposal would prohibit colleges from requiring borrowers to sign mandatory pre-dispute arbitration agreements or class-action waivers.
  • Holding institutions financially responsible. The Department has already demonstrated a commitment to increased accountability, including by requiring entities that operate private colleges, particularly those with potential risk factors, to sign the agreements between colleges and the Department and to assume joint responsibility for any liabilities. The change will further ensure colleges are held financially accountable for their conduct.
  • Increasing transparency in change-of-ownership transactions. The Department recently sought to clarify the requirements and processes institutions must follow for change-of-ownership transactions to expand protections for students and taxpayers. The proposed regulations would clarify the definition of a nonprofit institution to prevent improper financial benefits to a former owner or other affiliate of a college. Additionally, institutions undergoing a change in ownership may also be required to provide additional financial protection or to comply with additional conditions to protect against the risk of the transaction.
  • Closing the 90/10 Loophole. For-profit institutions have long been required by the Higher Education Act to obtain at least 10% of their revenue from sources other than federal student aid provided by the Department (e.g., Pell Grants and federal student loans). The American Rescue Plan Act requires that at least 10% of funds come from sources other than any federal education assistance—not just aid awarded by the Department. The proposed regulations would be a change from current practice, in which institutions can count federal student aid for veterans and service members to meet the 10 percent revenue test. These proposed regulations would codify this statutory change and ensure for-profit institutions do not aggressively target students who served our country.

The Department is currently drafting final regulations for these proposals in response to comments and feedback from the public.