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Postsecondary Institution Accreditation: The Tension Between Consumer Protection and Higher Education Innovation

October 28, 2018
Accreditation provides a vital role in allocating federal student aid to postsecondary institutions of higher education (IHEs). As gatekeepers of the Higher Education Act’s (HEA) Title IV funds, accrediting agencies are expected to be “reliable authorities on the quality of education being offered.”[1] For this reason, the United States Department of Education’s (ED) use of accreditation facilitates its decision-making on which IHEs receive funds. However, with more than $14 trillion in outstanding federal student loan debt, the accreditation process has come under scrutiny.[2]

Image: In addition to rising student loan debt, cumulative default rates have increased the longer the borrower maintains balances on their loan. Source: The Brookings Institution

Image: In addition to rising student loan debt, cumulative default rates have increased the longer the borrower maintains balances on their loan. Source: The Brookings Institution

This article will explore the accreditation process, obstacles, and potential policy solutions through the lens of recent newsworthy events: 1) the upcoming negotiated rulemaking sessions by ED for the deregulation of the accreditation system and 2) the shutdown of two accredited IHEs for fraudulent practices. Two themes emerge as obstacles to stakeholder consensus: the tension between institutional and pedagogical innovation and the protection of student loan borrowers and taxpayer funds from predatory institutions.[3]


II. The Accreditation Process and Limitations

ED’s budget proposal for the 2019 Fiscal Year included a request for $129.5 billion in new federal student aid. With 53 million recipients benefitting from loans and grants, understanding the accreditation process provides insight on the present discourse.


A. The Accreditation Evaluation Process

Generally, the accreditation evaluation process includes:

1. A self-study based on performance measures such as student achievement, curricula, faculty, admissions, and operations conducted by the IHE seeking accreditation;
2. A peer review of the self-study by a “volunteer team of institutional peers” combined with a site visit;
3. A final decision by accreditors after examining the peer review recommendations and the IHE’s self-study;
4. Authorization of IHEs to receive Title IV funds by ED;
5. Performance management of accredited IHEs and undergoing re-evaluation every 10 years.[4]


B. Shortcomings in the Accreditation Process

The United States Government Accountability Office (GAO) released a 2017 report indicating that there are “positive aspects of the accreditation system’s nongovernmental structure… [however] these features may limit the effectiveness of oversight of academic quality at schools”:[5]

• Peer reviewers may not be well-trained on evaluation best practices;
• Narrow interaction with students;
• Limited resources to manage IHE evaluations;
• Unfamiliarity with newer instructional models: distance learning programs, competency-based education; and
• Conflict of interests since membership fees are paid by IHEs to join accreditation associations.[6]


Furthermore, ED Office of Inspector General’s 2018 audit of the ED Office of Postsecondary Education found that this agency component rarely, if ever, interacts with accreditors once they are authorized by ED.


III. Recent Issues and Policy Recommendations


Image: Trends in online and distance learning models of instruction. Source: The Chronicle for Higher Education

Image: Trends in online and distance learning models of instruction. Source: The Chronicle for Higher Education


A. Negotiated Rulemaking to Foster Higher Education Innovation

In August 2018, ED announced a negotiated rulemaking agenda for FY19 that sought to reduce regulatory compliance standards. With the proposed changes, this would shift the accreditation emphasis towards educational quality and improvement rather than the extensive list of federally-mandated metrics.

A leading policy initiative promoting new models of instruction is the Educational Quality Through Innovative Partnerships Program (EQUIP). Supported by both the Obama and Trump administrations, EQUIP “provides a pathway to Title IV aid for students enrolled in programs not offered by approved IHEs,”[7] With the approval of accreditors, IHEs can partner with more unconventional and short-term programs that yields a significant increase in salaries for students in high-demand positions, such as coding boot camps.[8] EQUIP is also experimenting with results-based metrics such as licensing/certification passing rates and relevant industry employment rates. These indicators are intended to measure the efficacy of claims made by the program, i.e. whether the student gained new knowledge or skills as advertised by program.[9]

Another well-regarded solution is the elimination of the accreditors’ gatekeeper role in the process. The “decoupling” policy recommendation is a transparency-based system of quality assurance would be similar to the Securities Exchange Commission filings of publicly traded companies.[10] Instead of the accreditation evaluation process, IHEs would only need to file public disclosure of student success and audited financial statements. With the federal government focusing on those with substandard reports, the better performing IHEs are able to have more academic and operational control. As Diane Auer Jones, ED’s Delegated Under Secretary and Assistant Secretary for Postsecondary Education, states: “If we really want innovation to take place, we have to give accreditors a safe space to support that innovation.”[11]

Furthermore, as a result of deregulation, experts anticipate an increased industry-wide need to produce student-focused results that would lead to higher quality of instruction at competitive market rates.[12]


B. Taxpayer and Student Protection

The main concern with deregulating accreditation is the reduction of oversight to protect taxpayer funds and student educational investments.[13] At the time of their financial and institutional collapse, Corinthian Colleges and ITT Technical Institute maintained their accreditation from the now-deauthorized Accrediting Council for Independent Colleges and Schools.[14]

In 2012, the U.S. Senate Committee on Health, Education, Labor and Pensions released an investigative report showing accredited IHEs, mostly for-profit institutions (FPI), have engaged in fraudulent and predatory practices such as falsification of job placement rates, underqualified faculty, and nonexistent admissions standards. About three-quarters of all State Attorney Generals were investigating FPIs for claims of fraud, including the $7.3 billion lawsuit of former ITT Technical Institute students in the Indiana State Courts.[15]

In response, the Center for American Progress (CAP) outlines two approaches in improving accreditation. First, the “Values-based Approach to Quality Assurance” where IHEs are evaluated by a non-accreditor third-party entity on a tiered rubric. This removes the conflict of interest and focuses on quality improvement by disregarding the current pass/fail system. With gradiation, high performing IHEs (Platinum level) would be rewarded with additional grant support and eligibility for its student to obtain unsubsidized federal student loans. As for the lower performing institutions (Bronze level), IHEs receive support to improve performance but are required to “buy bonds to support a percentage…. of their students’ federal direct loans.”[16]

Secondly, CAP expands upon improvement of performance metrics data:

• Standardization of the definition of “quality” and data collection practices;
• Clear performance expectations of IHEs; and
• The creation of a federal database that collects student data disaggregated by demographics to facilitate equity analyses.[17]

Recently, two organizations have instituted this approach of consistent in evaluation. The Council of Regional Accrediting Commissions, a group of seven accrediting agencies collaborated to review their institutions with low graduation rates. The National Advisory Committee on Institutional Quality and Integrity was provided by ED an accreditor dashboard to understand “the scope of the problem, benchmark agencies against each other, and know which schools are riskiest to students and taxpayers.”[18]


IV. Looking Forward – The Reauthorization of the Higher Education Act

Since HEA was signed into law by President Lyndon B. Johnson, the bill has been reauthorized every four to six years by Congress in order to adjust and make improvements to the language. The last two reauthorizations were enacted in 1998 and 2008. A decade overdue, both parties have put forward their own versions of the HEA. The Republican Party has put forward the Promoting Real Opportunity Success and Prosperity through Education Reform Act (PROSPER Act), which focuses on innovative forms of education, simplification of student aid, and decreased role of the federal government.[19] As for the Democratic Party, the newly-released Aim Higher Act emphasizes college accessibility and affordability, increased accountability of FPI, and protection of the Public Service Loan Forgiveness Program.[20]

With the PROSPER Act stalled in the Senate and the upcoming midterm election season, the likelihood of HEA Reauthorization within the upcoming fiscal year is highly unlikely. Already, the two parties’ version mirror this tension between innovation / deregulation vs. consumer / taxpayer protection. Although various interest groups have differing ideas on the improvement of accreditation, all agree that the policy and procedures should be reviewed and updated to withstand the changing fiscal obstacles and academic structure of higher education.[21]


Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  [1] “Database of Postsecondary Institutions and Programs,” Department of Education, accessed September 29, 2018. https://ope.ed.gov/dapip/#/home.

  [2]“Federal Student Aid Portfolio Summary,” Department of Education, accessed September 29, 2018. https://studentaid.ed.gov/sa/about/data-center/student/portfolio.
  [3]Andrew Kreighbaum. “Education Dept.’s Deregulation Push Gets Mixed Reviews,” Inside Higher Ed, accessed September 29, 2018. https://www.insidehighered.com/news/2018/07/31/online-providers-consumer-advocates-odds-over-education-department-regulatory.
  [4]“Higher Education: Expert Views of U.S. Accreditation,” United States Government Accountability Office, accessed September 29, 2018. https://www.gao.gov/assets/690/689171.pdf
  [7]Paul Leblanc, “Regulatory Experimentation, Accreditation, and Innovation: EQUIP as a Blueprint for the Future of Higher Education,” in Accreditation on the Edge: challenging quality assurance in higher education, ed. Susan Phillips (Baltimore, Maryland: Johns Hopkins University Press, 2018), 102-116.
  [10]Anne D. Neal and Armand Alacbay, “Fixing a Broken Accreditation System: How to Bring Quality Assurance into the Twenty-First Century,” in Accreditation on the Edge, 67-81.
  [11]Andrew Kreighbaum. “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, accessed August 1, 2018. https://www.insidehighered.com/news/2018/07/30/trump-administration-official-describes-plan-rethink-higher-education-through.
  [12]Neal, Accreditation on the Edge.

  [13]Barnak Nassirian and Thomas L. Harnisch, “Does Accreditation Protect Students Effectively?” in Accreditation on the Edge, 230-250.
  [16]David A. Bergeron, “Managing Risk to Students and Taxpayers in Federal Financial Aid,” in Accreditation on the Edge, 138-156.

  [17]Antoinette Flores, “How College Accreditors Miss the Mark on Student Outcomes,” Center for American Progress, accessed September 29, 2018. https://www.americanprogress.org/issues/education-postsecondary/reports/2018/04/25/449937/college-accreditors-miss-mark-student-outcomes/.
  [18]Michael Itzkowitz, Emily Bouck, and Clare McCann, “Armed with Better Data, Will Accreditors Finally Have to Act?,” New America, accessed September 29, 2018. https://www.newamerica.org/education-policy/edcentral/armed-with-data-will-accreditors-finally-have-to-act/.
  [19]“Fact Sheet on the PROSPER Act,” United States House of Representatives Committee on Education and Workforce, accessed September 29, 2018. https://edworkforce.house.gov/prosper/.
  [20]“Get to know the Aim Higher Act,” Democratic Caucus of the United States House of Representatives Committee on Education and Workforce, accessed September 29, 2018. http://democrats-edworkforce.house.gov/aim-higher.
  [21]Susan D. Phillips and Kevin Kinser, “Accreditation Introduction to a Contested Space,” in Accreditation on the Edge, 1-10.


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