June 24, 2016

For A Day, Broke Students Win


In a world of mass shootings, Brexit, and a looming dramatic presidential election, the deliberations of the U.S. Department of Education’s National Advisory Committee on Institutional Quality and Integrity (NACIQI), in a nondescript meeting room at the DoubleTree Crystal City in Arlington, VA,  would hardly seem to matter.

But, yesterday, it did matter. By the scheduled 8:30 am start time, the room was hot and packed, with seemingly more people, at least, than at any 2016 Jeb Bush event. At stake were billions of dollars that for-profit colleges want to keep getting, the integrity of federal aid programs, and the futures of countless Americans seeking to build better lives through higher education.

And at least for one day, after almost eleven grueling hours of debate, the underemployed, deep-in-debt former students who were deceived and abused by predatory for-profit colleges won a victory over the entitled, cynical operators of bad schools.

The issue on the table was whether NACIQI should recommend to the Department of Education that it continue to recognize as a college accrediting agency an organization called the Accrediting Council for Independent Colleges and Schools (ACICS). Such recognition is required in order for schools accredited by ACICS to continue receiving federal student grants and loans.

ACICS currently accredits 243 institutions exclusively or primarily, and most of those are for-profit colleges. $4.76 billion in taxpayer dollars went from the Department of Education to ACICS schools last year.

But ACICS has been the accreditor of some of the most notorious bad actors in the for-profit college sector, including Corinthian Colleges, ITT Tech, Kaplan, EDMC (the Art Institutes), Career Education Corporation (Sanford-Brown), Alta Colleges (Westwood), Globe, FastTrain, and Daymar. All these companies have been under investigation by law enforcement for deceptive practices. Some of those companies have, like Corinthian, shut down under the weight of abusive and reckless business practices. FastTrain’s CEO has been convicted of federal crimes and sentenced to eight years in prison. Others, like ITT, Kaplan, EDMC, and CEC, continue to receive billions in taxpayer dollars.

In advance of the NACIQI meeting, a number of advocates for students had sent reports or letters highlighting the dismal failures of ACICS to monitor college quality and abuses and calling on the Department to end its recognition of this body. Those opposing ACICS included thirteen state attorneys generalBen Miller of the Center for American Progress; nine veterans groups including Student Veterans of America and Vietnam Veterans of America; a coalition of 23 groups that advocate for students, consumers, and educators; and Senators including Dick Durbin and Elizabeth Warren, who two weeks ago issued a blistering report that criticized ACICS for its weak oversight of colleges, and also took the Education Department to task for its weak oversight of accreditors.

Finally, last week, the staff of the Education Department issued its report and recommendation that ACICS be terminated. A Department official told reporters that ACICS failures to police for-profit college abuses “were not just narrow misses, these were quite severe, quite egregious, irreparable.” He said that “some schools provide extremely poor outcomes for students or even commit fraud but nevertheless still maintain accreditation.”

NACIQI was the next stop in the process. The panel’s recommendation would be attached to the Department staff’s negative recommendation and then submitted to a designated senior official, in this case Secretary of Education John King’s chief of staff, Emma Vadehra.

The 18-member NACIQI panel includes six appointees of the Education Department, six appointees of congressional Democrats, and six appointees of congressional Republicans (with one of the GOP seats currently vacant).

The day seemed to begin badly for the Department of Education staff members who were urging termination, with GOP-appointed NACIQI panelists suggesting that ACICS was being made a scapegoat.

The Perry Mason leading this charge was GOP-appointed member Arthur Keiser. Keiser argued that the blame for the Corinthian debacle belonged to the Department of Education for limiting the troubled company’s access to taxpayer dollars, rather than ACICS for failing to detect abuses. He also asserted that it was inappropriate to infer that an ACICS-accredited school was a bad actor simply because it had paid cash to settle a law enforcement investigation. This was an interesting perspective, given that Keiser is the owner of a Florida-based chain of colleges that last year paid $335,000 cash to settle a law enforcement investigation, specifically fraud claims brought by a whistleblower and joined by the U.S. Justice Department.

Responding to an analogy about the accreditation system, Keiser seemed to open a window into his wealth, if not his oversight skills. “I had termites once,” he said, “in one of my houses.”

Keiser’s chain was for-profit, but he converted it to a non-profit in a troubling transaction that enriched him so much that it was the subject of a front-page New York Times story. Keiser is also the long-dominant figure in the for-profit colleges’ trade association, APSCU, which has harbored as members many of the same predatory schools that ACICS has accredited.

In light of that record, one had to wonder why the government had empowered Keiser to judge this issue in the first place.

Another of the GOP-appointed NACIQI members, Arthur J. Rothkopf, suggested that the Education staff report might have been dictated or ghost-written by Secretary King’s office. A third GOP appointee, Anne Neal, the long-time head of the Lynne Cheney-founded group the American Council of Trustees and Alumni, expressed concerned that ACICS wasn’t being given “a fair shake.”

When the Education staff members at first appeared defensive and struggled to quell these suggestions of conspiracy, the many for-profit college lobbyists in the room offered loud oohs and aahs of outrage. They also hissed when NACIQI’s student member, Simon Boehme, compared the now notorious ACICS-approved scam school Northwest Polytechnic University to Trump University.

Eventually, however, Herman Bounds, director of the Accreditation Group, silenced the lobbyists with a strong retort: We acted on the evidence, and there was tons of it.  The Department’s student aid program manager, Gail McLarnon, added, “To not terminate their agency would be to sanction egregious behavior.”

In the days and hours leading up the hearing, a desperate ACICS announced a series of reforms, a temporary halt to new accreditations, and a “Blue Ribbon” outside panel to oversee its changes. ACICS also told the panel yesterday that it had recently issued show cause orders to ITT Tech, Education Management Corporation, Delta Career Education Corporation, and Zenith, the non-profit that took over many of the former Corinthian-owned Everest College campuses.

Anthony Bieda, the new head of ACICS, barely attempted to appear contrite, but he kept stressing that his organization was ready to reform, and to right itself within a year. He offered that ACICS’s tolerance for college abuses “has gotten very, very low.” There were vague efforts by the ACICS delegation to throw Bieda’s predecessor, Albert Gray, under the bus. (After I broke the story in April that Gray was getting pushed out, Bieda sent me a kind note: “Thanks David. As always I appreciate your respectful objectivity. Please stay in touch!”)

But Bieda has been at ACICS for eight and a half years, as the agency built the record that has now been exposed as deplorable, and there appeared to be little reason to believe his team could or would promptly implement the kind of changes they were promising. It was, plainly, too little, too late.

Bieda had an ally in the room urging that the accreditor be spared: GOP former congressman Steve Gunderson, the head of APSCU, whose membership has included many of the worst ACICS-accredited schools. But Gunderson did not make much of a case. 

Gunderson, whose disastrous confrontational strategy has hastened the decline of his industry and his organization, has as his mantra the claim that efforts to hold bad for-profit colleges accountable are rooted in “ideological” opposition to his sector. It’s still not clear to me what ideology he has in mind, other than a common sense aversion to waste, fraud, and abuse with taxpayer dollars (many of his members of have been receiving around 90 percent of their revenue from the federal government) — an approach should be appealing to many, including conservatives. 

In the wake of the public meltdown of his industry, Gunderson last year offered a suggestion of reform, but a disturbing one. In admitting that his schools had enrolled too many students who were unlikely to succeed in their programs, Gunderson said, “We’re the first ones to say we should’ve been more careful. We were thinking with our hearts, not our heads…” Although I can tell you that there are kind-hearted sincere school operators who have admitted students because they wanted to give them a chance, most of these for-profit college owners have been thinking with their wallets. The risk of student failure did not fall on the school but on the taxpayers and, especially, the student. And many for-profit college programs are just not designed, are just not strong enough, to help many of the students whom these schools aggressively recruit.  Gunderson told the NACIQI panel that things had changed, “I see very few career schools, if any, that still have open enrollment.” But my sources in the for-profit college boiler rooms say that big companies, desperate to stay alive amid declining revenues, continue to recruit and enroll anyone with a pulse.

Gunderson also offered that some of the APSCU member schools (including, of course, Arthur Keiser’s) have converted to nonprofit status. He added, I guess intending to reassure, that “their academics haven’t changed one bit.”

In sharp contrast, advocates for students presented a strong case to the NACIQI panel. CAP’s Ben Miller delivered the findings of his blockbuster report on the failings of ACICS schools. He noted that when he attended the ACICS annual meeting last month, he hardly saw a new spirit; industry lawyers made a presentation about how to beat state attorney general investigations, telling school operators they could take advantage, for example, of the fact that state prosecutors often leave the office at 5 pm.

Tariq Habash of the Century Foundation presented the invaluable work that he and his colleague Robert Shireman did to unearth and analyze ACICS reports documenting their reviews of schools — just bare-bones checklists, with no narratives and no indication of real evaluations.

Sara Nolan Collins and Carrie Wofford of Veterans Education Success presented the cases of numerous vets abused by ACICS-approved schools like ITT Tech. Wofford argued that it was immoral that vets who pay for their G.I. Bill eligibility with their service often have it stolen by deceptive, low-quality schools. She brought to the session veteran Matthew Mitchell of Louisiana, a former recruiter for ITT who discussed predatory practices there. He also told of being a student who was deceived by ACICS-accredited, EDMC-owned Brown Mackie College regarding the accreditation of its nursing degree. Wofford also read a statement from a former ITT student and veteran, Howard Toller, who had to drive home to Raleigh, NC, when the NACIQI session on ACICS went well beyond its scheduled noon adjournment. Toller wrote that he received a totally subpar education at ITT, with teachers who didn’t know the material and couldn’t answer his questions. Later he learned, as many students do, that ITT credits would not transfer to a community college.

A number of other ITT Tech students, flown in by the industry, expressed satisfaction with the quality of their educations and their careers. I have no doubt that some students have benefitted from programs at ITT Tech and at other troubled schools. But the mountain of evidence of predatory and deceptive practices at ITT, and the many student complaints on file, tell the story of an institution that does more harm than good.

Meanwhile, from a distant office, Trace Urdan, a long-time for-profit college market analyst now at Credit Suisse, was playing embittered wise man via Twitter.  He asked whether many of the people attending the meeting were there “to gloat.” But there was nothing to gloat about. The advocates for students in the room have all met numerous people, like Matthew Mitchell, who were lied to and had their finances ruined by for-profit schools — single mothers and veterans and immigrants who owe tens of thousands, sometimes more than $140,000 in debt, whose degrees did nothing for their careers and earnings, who are depressed and ashamed. This is a mess. No one is happy about any aspect of it.

Urdan also insisted that no one had ever demonstrated that for-profit schools offered poor-quality instruction. “Classroom instruction never credibly impugned,” he tweeted, “only sneered at by those that never saw a campus.” But many advocates, journalists, and government investigators have been to campuses, and many of us have spoken with countless students and instructors who have testified to low-quality programs and to instructional budgets cut as classrooms were literally converted into additional call-center space for relentless recruiters seeking to sign up new students.

Urdan even tweeted that he was “sure” that one NACIQI member’s comments about Northwest Polytechnic were “thanks” to me.  But Urdan, whose intel has not always panned out, was wrong on this one, too. (I’ve never communicated with any of the NACIQI members.)

At last, as the clock moved past 7 pm and the crowd had thinned substantially, NACIQI was ready to vote on a motion to end recognition of ACICS. Before the vote, Arthur Keiser, the school owner, warned that terminating ACICS would create “havoc” in high education, causing schools to close. In other words, that ACICS was too big to fail.

Keiser lost. The motion passed by a vote of 10-3. GOP appointees Keiser, Anne Neil, and Hank Brown (a former U.S. Senator from Colorado and a lawyer whose firm, Brownstein Hyatt, lobbies for the biggest for-profit college, the University of Phoenix), voted to protect ACICS. A fourth GOP appointee, Rothkopf, apparently had gone home. The fifth, Rick O’Donnell, a long-time education executive from Colorado, voted against ACICS.

Even if Ms. Vadehra of the Education Department, who must act within 90 days, accepts the NACIQI and Education staff recommendations and decides to drop ACICS, the accreditor can appeal to Secretary King and then to the federal courts. This battle could take years, and it does nothing to make whole the many students already abused by predatory colleges while ACICS turned a blind eye. If ACICS loses its recognition, there will be a hard road ahead to transfer to better programs for students at ACICS-approved schools that cannot find a new accreditor within 18 months and thus would lose access to student aid dollars. And there are many other fronts in the battle to reform the career college sector so that taxpayer money and student time goes only to those honest, skilled operators who are truly training students for careers.

But this was a step, spurred especially by the inspiring efforts of students to stand up for themselves, to push the Department of Education to act, at last, as if their paramount obligation is to students, not college operators. In this random hotel conference room across the river from the Lincoln Memorial and Dr. King’s statue, the moral arc of the universe just bent slightly toward justice.

UPDATE 06/24/16 6:30 pm:


 Senators call on the Department of Education to ensure that students and institutions are aware of ACICS’s pending loss of recognition

[WASHINGTON, DC] – U.S. Senators Richard Blumenthal (D-CT), Patty Murray (D-WA), Dick Durbin (D-IL), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) welcomed news that the National Advisory Committee on Institutional Quality and Integrity (NACIQI) voted overwhelmingly to recommend withdrawing federal recognition of the Accrediting Council for Independent Colleges and Schools (ACICS), one of the country’s largest accreditors of for-profit colleges. The Senators called on NACIQI to take this action in a letter last week.

“For years, ACICS has been a negligent watchdog, giving its stamp of approval to colleges and universities that have engaged in widespread fraud and abuse of students and taxpayers. Its failure to detect or even investigate this fraud and abuse when it came to light makes ACICS unfit to be a gatekeeper of taxpayer funds as a federally recognized accreditor.  Its inadequate attempts at reform were too little, too late and were to be carried out by the same individuals who oversaw its previous failures–giving us no confidence that such reforms would be adequately implemented,” the Members said.

 “NACIQI, after hearing 10 hours of testimony, made the right call to recommend that the Department revoke ACICS’s federal recognition. We call on the Department to heed this recommendation to help restore the integrity of accreditation and ask it to ensure that students and institutions are well-informed that this process is underway.‎”

Last week, following a U.S. Department of Education staff recommendation to terminate the federal recognition of ACICS, the Senators wrote to NACIQI:“there is overwhelming evidence that ACICS represents a threat to the integrity of accreditation and higher education in America and that its inadequate review process has put students at risk.”

The Center for American Progress found that one in five students at ACICS-accredited schools default on their loans, and more than half of the $5.7 billion in federal student aid awarded to ACICS-approved schools in the past three years went to institutions facing some sort of state or federal investigation, including the former Corinthian Colleges.

Text of the lawmakers’ letter is available here.

This article also appears on Huffington Post.