FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 13 November 2015

Who Keeps Billions Of Taxpayer Dollars Flowing To For-Profit Colleges? These Guys

Special Report from ProPublica

-- this post authored by Annie Waldman

This a Special Report from ProPublica.

For-profit universities have had another rough year, with big players facing federal scrutiny for everything from predatory loans to outright fraud.

Now attention is turning to the schools' accreditors.

Accreditors are supposed to make sure that schools provide students with a quality education. They are not government agencies, but wield enormous power: Schools need accreditors' stamps of approval to maintain access to the government's annual $170 billion in federal student aid.

Losing accreditation would be fatal for most for-profit schools since they rely on federal aid for much of their income. But accreditors rarely crack down, even when students are struggling. One of the areas where students at for-profits face extra burden is debt: While only one-tenth of college students attend for-profit schools, they account for nearly half of all students' defaults.

What role are accreditors playing? Using recently released federal data, ProPublica analyzed how students are faring under the various accreditors that oversee many for-profit schools.

One accreditor stands out: The Accrediting Council for Independent Colleges and Schools, also known as ACICS. It oversees hundreds of mainly for-profit schools where students struggle at remarkably high rates.

Just 35 percent of students at a typical ACICS-accredited four-year college graduate, the lowest rate for any accreditor. Nationally, the graduation rate at four-year schools is around 59 percent. (Read our methodology for details on how we crunched the numbers for our analysis.)

Source: Department of Education Data; Note: We focused on the five largest national accreditation agencies and this chart only shows data for four-year programs. (See our methodology for more information.) Credit: Annie Waldman and Sisi Wei/ProPublica

Ben Miller, senior director for postsecondary education at the Center for American Progress, said:

"If you don't graduate anyone, you can't make claims that your program is any good."

Students at ACICS-accredited four-year schools also take on more debt than students at other schools with similar accreditors, typically about $26,000 in federal loans.

And then students struggle more to pay off the loans: At a typical ACICS-accredited school, about 60 percent of students were unable to repay even $1 of their loan principal within three years of graduation. That's 23 percentage points higher than the national average. (Miller also did a study this summer that found that more than one in five students at ACICS-accredited schools default on their loans.)

Anthony Bieda, vice president for external affairs at ACICS, told ProPublica that the organization does hold schools accountable. While ACICS does not track student debt load and loan repayment, it does look at other indicators, such as job placement figures and default rates.

Bieda also says there's a reason ACICS-accredited schools may look worse: they enroll poorer students. At a typical ACICS-accredited school, 75 percent of students receive federal grants designed for low-income families, a much higher proportion than similar accreditors.

He said:

"The primary predictor of whether or not a student will default on their student loan is their economic circumstances, not the quality of the institution that they enroll in."

Targeting poor students is exactly what regulators are concerned with. Take Corinthian Colleges, for example, which was the second-largest for-profit college chain in the country until it went bankrupt earlier this year. Before it closed down, the for-profit empire faced federal allegations of using deceptive advertising to lure poor students into predatory loans. Last week, a federal district court in Illinois found Corinthian liable for more than $530 million, the entire amount of the predatory loans.

Miller, who previously served as a senior policy advisor at the U.S. Department of Education, said that a student's socioeconomic background is not the only factor that determines whether loans are repaid.

He said:

"No one would pretend that there aren't demographic factors that influence results, but we can't pretend the schools don't have any effect too."

The Obama administration appears to agree. A few weeks ago, the Department of Education announced that it's about to launch a push for accrediting agencies to focus more closely on student outcomes.

Incoming Education Secretary John King, who will replace Arne Duncan at the end of the year, said in a press briefing on the changes that the focus in higher education needs to shift

"away from just enrollment towards completion, and particularly completion for the students who are most at risk."

The announcement comes in the wake of growing scrutiny of accreditation. A Wall Street Journal investigation earlier this year found the accreditors that focus primarily on nonprofit colleges also rarely hold schools accountable. And this past summer, Duncan called out accreditors for providing too little accountability, describing them as "the watchdogs that don't bark."

Sen. Elizabeth Warren, D-Mass., has repeatedly called for the Department of Education to get tougher on for-profit schools. She decried the current state of college accreditation.

Warren told ProPublica in an email:

"Accrediting agencies should not be allowed collect their fees, certify schools' eligibility for billions in federal dollars, and then walk away when those schools defraud their students or leave students with huge bills for useless degrees."

ACICS itself has faced increasing heat for accrediting campuses of Corinthian despite 20 state investigations into the for-profit college chain. In a hearing this summer, Warren slammed ACICS' president, Albert C. Gray.

She demanded:

"How many federal and state agencies need to file lawsuits against one of your colleges before your organization takes a second look at whether that school should be eligible for accreditation, and most importantly, federal money?"

Gray responded that the investigations were just allegations. Gray said:

"All of these investigations that you've mentioned are just that: investigations. Without outcomes from these investigations, we don't have any evidence to take any kind of action."

The Consumer Financial Protection Bureau has also recently launched an investigation into ACICS, demanding information on schools that the organization has accredited. It's not clear what the investigation is focused on.

A Department of Education committee is scheduled to review ACICS' accrediting status next year.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Comments on Feyerabend’s ‘Against Method’, Part II
Comments on Feyerabend’s ‘Against Method’, Part III
News Blog
Rail Week Ending 15 October 2016 Paints A Negative Economic View
What Is The New Normal For U.S. Growth?
Affordable Care Act And Its Effect On Part-Time Employment
The Speed Of Filling Jobs Is Declining
First Working Eggs Made From Stem Cells Points To Fertility Breakthrough
Infographic Of The Day: Mega Machines
Online Platforms Double Down On TV Programming
A History Of Mars Missions
How Tesla Out Innovates Traditional Carmakers
Schiaparelli's Descent To Mars In Real Time
September 2016 Existing Home Sales Still Not Excellent
September 2016 Leading Economic Index Improves Indicating Moderate Growth Ahead.
October 2016 Philly Fed Manufacturing Survey Declines But Remains In Expansion.
Investing Blog
Options Early Assignment - Should You Worry?
The 401k Plan Manager 17 October 2016
Opinion Blog
Prop. 51 Versus A State-Owned Bank: How California Can Save $10 Billion On A $9 Billion Loan
Obama's Middle East Policy Has Been A Complete Failure - Or Has It?
Precious Metals Blog
How Will The Election Outcome Impact Precious Metals?
Live Markets
21Oct2016 Pre-Market Commentary: Wall Street Pointing To A Lower Opening Despite So So Corporate Earnings, Markets May Recover Be Late Afternoon
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved