Accreditor of for-profit colleges loses appeal to stay alive

WASHINGTON -- Federal education officials are standing by their decision to cut ties with the nation's largest accreditor of for-profit colleges -- a ruling that will bar hundreds of schools from providing federal financial aid and likely will force some to close.

The Accrediting Council for Independent Colleges and Schools, which oversees more than 250 institutions nationwide with a combined enrollment of 600,000 students, had appealed an Education Department decision to strip it of credentialing authority in September.

In a statement, ACICS interim president Roger Williams said the organization would "seek immediate redress from the courts" to avoid losing recognition as an accreditor.

But should the decision stand, it will set off a scramble among ACICS accredited schools to find a new accreditor and force students to confront the possibility their school might close.

The schools are eligible to continue offering federal financial aid to students for as long as 18 months while they seek a new accreditor.

But within 30 days, the schools must provide the government with a "teach-out plan" to provide an orderly shutdown if necessary.

Schools that don't appear to be on track to meet the standards of another accreditor will face limits on their ability to enroll new students.

They also may be required to post a letter of credit to cover at least part of the government's potential losses on failed schools' loans.

The action to remove federal recognition of ACICS came after a lengthy review of its operation.

Both Education Department staff and a federal advisory panel overseeing educational accreditors recommended the action based on ACICS' alleged longstanding failure to handle its oversight duties competently.

Education Secretary John King Jr.'s rejection of ACICS' appeal was the last step.

Describing "a profound lack of compliance" with federal standards for accreditors, King dismissed ACICS' argument students would be hurt by removing its accreditor status.

"The interests of students are of foremost concern to me and this department, but students' interests are best served by proper application of the recognition criteria," King wrote.

For students at closed schools, the government would offer forgiveness of federally guaranteed student loan debt.

Among the government's concerns were the poor employment outcomes among students at the ACICS institutions and findings of falsified graduate employment rates.