August 9, 2021

Accreditor SACS Must Explain Its Tolerance of Abuses At Keiser Universities

Accreditor SACS Must Explain Its Tolerance of Abuses At Keiser Universities

In a separate post today, I discuss how the Department of Education is at a crossroads in its oversight of accrediting agencies, the private bodies that serve as reviewers of college quality and integrity and gatekeepers for eligibility for federal student grants and loans. Below, in response to a request for public comment related to the upcoming review of a group of accreditors, I urge the Department to take its oversight responsibilities seriously by looking closely at one accreditor’s failures to guard against blatant abuses at three non-profit schools that are run or dominated by a politically powerful for-profit college owner, Arthur Keiser.

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August 15, 2021

Secretary Miguel Cardona

Herman Bounds, Director, Accreditation Group

U.S. Department of Education

Dear Secretary Cardona and Mr. Bounds:

In response to the Department’s July 12, 2021, Federal Register notice entitled, “Accrediting Agencies Currently Undergoing Review for the Purposes of Recognition by the U.S. Secretary of Education,” I write regarding the Application for Renewal of Recognition to the Department of the Southern Association of Colleges and Schools, Commission on Colleges (“SACSCOC” or “SACS”). In particular I write regarding SACS’s handling of three schools it accredits: (1) Keiser University and (2) Everglades University, both operated by a non-profit called Everglades College Inc., and (3) St. Andrews University, which is a branch of non-profit Webber International University (“the three schools”).[1]

The publicly available evidence indicates that the Department should not approve the renewal of recognition of SACS until and unless the agency can satisfactorily address its repeated failures to comply with the Department’s Criteria for the Recognition of Accrediting Agencies in its oversight of the three schools.

SACS either knew or should have known about numerous failures of the three schools to meet SACS own accrediting standards, and in some cases to comply with federal and state law, and SACS should have taken action to address those failures. In failing to enforce its standards, and in other respects discussed below, SACS appears to have violated the Department’s criteria.

In considering SACS’s application for renewal of recognition, the Department should be asking SACS about efforts it has made, or has not made, to ensure that the three schools are appropriate for accreditation, whether those efforts led to any discipline of any or all of the three schools, and whether SACS is taking or plans to take further steps to address the schools’ behavior.

SACS, and the Department, have been on notice of issues involving the three schools in numerous ways for more than a decade, starting with the Senate HELP Committee investigation of the for-profit college industry that resulted in a comprehensive 2012 report; the Senate report concluded as to Keiser University: “Given the high cost of tuition at Keiser and that the majority of students leave the company’s schools with no degree or diploma, the company’s high rate of student loan default is particularly troubling. It is unclear whether taxpayers or students are obtaining value from their investments in the company. Moreover, Keiser’s decision to convert to non-profit status should be more closely scrutinized.”[2]

Since the Senate report, information indicating violation of SACS standards at the three schools has been presented in articles in the New York Times[3] and Miami Herald,[4] reports by the Century Foundation[5], a hearing earlier this year before the House Education and Labor Committee,[6] and other sources. Most recently U.S. Representative Kathy Manning (D-NC), wrote a letter to Secretary Cardona in June, copied to SACS, that stated in part: “In the last few years, St. Andrews’s nonprofit legacy has been threatened as for-profit college operator Arthur Keiser and his associates exert control over St. Andrews through what one expert characterized as a ‘hostile takeover.’”[7]

I have been raising concerns about the three schools for many years as well. I am appending to this letter two investigative articles I published in the past thirteen months, which contain detailed information based on extensive investigations I have conducted, including the review of numerous documents and interviews with more than 50 people associated with these institutions.[8] I hope you and your staffs will read both articles and follow the hyperlinks to extensive additional material. Rather than repeating in this letter all the information I have gathered, in this letter I indicate which portions of the articles I believe are most relevant to your consideration as to whether SACS is in compliance with the Department’s Criteria for the Recognition of Accrediting Agencies.

As Department staff have far more expertise than I do in interpreting the accreditation criteria, I hope you will look carefully at the evidence and consider the full range of Department criteria and SACS standards that might be implicated.

I am ready to discuss both of my articles with Department staff, to provide documentation to Department staff, and to encourage sources for the articles to speak with Department staff. Feel free to reach out to me at any time if you would like my assistance in evaluating this accreditor.

The two articles I append regarding Keiser-affiliated institutions are:

As you know, the Department staff’s evaluations of accreditors are reviewed twice a year by the National Advisory Committee on Institutional Quality and Integrity (NACIQI), an eighteen-member panel of outside experts that offers recommendations before the Department makes final decisions. I am mindful that, at the most recent NACIQI meeting, in July, the NACIQI chair cautioned his fellow members that asking the Department to judge an accreditor based on the actions of particular accredited institutions constitutes “picking on one school” and “getting into the weeds.”

That NACIQI chair is Arthur Keiser, the same Arthur Keiser whose schools are the subject of this letter. Keiser made that comment in the wake of a decision at the meeting by NACIQI members to reject the recommendation from the Department staff to renew the Accrediting Commission of Career Schools and Colleges (ACCSC) for a period of five years. The NACIQI members instead voted to renew ACCSC for just three years.[9] Among the concerns that NACIQI members raised at the meeting was the performance and integrity of some ACCSC schools. The ACCSC schools include Southeastern College, a for-profit college chain owned by Arthur and Belinda Keiser. Arthur Keiser, who is the chair of NACIQI, did not participate in the discussion of ACCSC.

Southern Association of Colleges and Schools, Commission on Colleges accredits many fine schools, public and private, large and small, and of course the Department should not evaluate it solely on the conduct of a handful of schools. But the Department should hold an accreditor accountable for institutions’ misconduct, abuse, and violations that occur on its watch.

The Department’s Criteria

 The Department’s Criteria for the Recognition of Accrediting Agencies include:

  • 34 CFR Sec. 602.19[10] (“Monitoring and reevaluation of accredited institutions and programs”) which provides, in relevant part, that an accrediting agency

“must demonstrate it has, and effectively applies, a set of monitoring and evaluation approaches that enables the agency to identify problems with an institution’s or program’s continued compliance with agency standards and that takes into account institutional or program strengths and stability” (emphasis added);

and

  • 34 CFR Sec. 602.20 (“Enforcement of Standards”), which provides, in relevant part,

“If the agency’s review of an institution or program under any standard indicates that the institution or program is not in compliance with that standard, the agency must . . . [i]mmediately initiate adverse action against the institution or program; or [r]equire the institution or program to take appropriate action to bring itself into compliance with the agency’s standards [within specified time periods].”

This Department criterion further provides:

“If the institution or program does not bring itself into compliance within the specified period, the agency must take immediate adverse action unless the agency, for good cause, extends the period for achieving compliance.”

  • 34 CFR Sec. 602.22 (“Substantive change”), which provides, in relevant part, that an agency must “maintain adequate substantive change policies that ensure that any substantive change to the educational mission, program, or programs of an institution … does not adversely affect the capacity of the institution to continue to meet the agency’s standards.” Under this criterion, accreditors must require schools to obtain their approval for such changes, which the regulation defines to include “[a]ny change in the legal status, form of control, or ownership of the institution.”

The substantive change criterion requires that the accreditor maintain “adequate” policies that “ensure” that substantive changes, including changes in legal status, control, or ownership, do not adversely affect an institution’s capacity to meet agency standards. As discussed below, including in my two articles, changes in the legal status, form of control, or ownership of the three schools has been associated with conflicts of interest and other misconduct, suggesting that SACS’s policies have not been adequate, and therefore that SACS has violated the substantive change criterion.

Further, 34 CFR Sec. 602.16 (“Accreditation and preaccreditation standards”) provides that an accrediting agency must demonstrate that its standards for accreditation “are sufficiently rigorous to ensure that the agency is a reliable authority regarding the quality of the education or training provided by the institutions or programs it accredits.” The available public evidence regarding the three schools, as described below, including in my articles, casts doubt on whether SACS’s standards are sufficiently rigorous and whether SACS is functioning as a reliable authority.

Non-enforcement of SACS Accrediting Standards

The Department’s requirement that accreditors, including SACS, monitor and enforce compliance with their own standards requires in turn a review of those standards. In the case of SACS, they are found online here: https://sacscoc.org/accrediting-standards/, with the most recent (2018) articulation of the standards here: https://sacscoc.org/app/uploads/2019/08/2018PrinciplesOfAcreditation.pdf

Those SACS standards include the following, and, under each standard I have cited, I reference the portions of my articles that I believe raise questions about whether SACS has complied with its own standards, and therefore with the Department’s criteria.

SACS Section 1:

 The institution operates with integrity in all matters.

See my two Republic Report articles in their entirety, describing a lack of integrity in matters including:

  1. the highly questionable 2011 transaction in which for-profit Keiser University was acquired by non-profit Everglades College, a deal providing Arthur Keiser with a stream of loan repayments based on a high valuation of Keiser University;
  2. the ongoing mixing of resources and personnel between the three schools and a for-profit institution owned by Arthur and Belinda Keiser, Southeastern College;
  3. the extensive business dealings between the non-profit Keiser schools and businesses owned by members of the non-profit board, including Arthur Keiser;
  4. the Internal Revenue Service review of Keiser University / Everglades College compliance with non-profit standards;
  5. Keiser University’s 2012 settlement of an investigation by the Florida attorney general under the state’s Deceptive and Unfair Trade Practices Act;
  6. Keiser University’s 2015 settlement with the U.S. Justice Department of False Claims Act charges that the school defrauded taxpayers in the receipt of Department of Education funds by paying recruiters sales commissions for enrolling students, which is barred by federal regulations;
  7. the pending lawsuit filed in 2020 by Evelyn Keiser, Arthur Keiser’s mother and school co-founder, against Arthur Keiser for fraud and theft over her entitlement to proceeds from companies related to the Keiser schools;
  8. possible misrepresentation by Keiser staff to a SACS visiting team regarding conditions at the Keiser University campus in Shanghai, China;
  9. deceptive and predatory recruiting practices at Keiser University, as alleged by current and former staff members;
  10. sexual misconduct by Keiser University campus leaders; and
  11. the covert effective takeover of St. Andrews University by Arthur Keiser and his associates, seemingly aimed, at least in part, at benefiting the Keisers’ Southeastern College.

SACS Section 4:

  1. The institution has a governing board of at least five members

that:

… (c) ensures that both the presiding officer of the board and a

majority of other voting members of the board are free of

any contractual, employment, personal, or familial financial

interest in the institution.

 See my Article 1, the introductory section and the sections entitled “Buying out a parent and becoming non-profit,” “Conflicts of interest at the non-profit,” “St. Andrews University,” and “A web of corporations and construction projects,” and the introductory section of Article 2, with respect to contractual, employment, personal, or familial financial interests of Arthur Belinda, and Robert Keiser, and of Greg Wallick, the chair of the board of Everglades College, the non-profit that operates both Keiser University and Everglades University.

(d) is not controlled by a minority of board members or by

organizations or institutions separate from it….

See my Article 2 in its entirety regarding St. Andrews University.

  1. The governing board…

     d. defines and addresses potential conflict of interest for its members. (Conflict of interest)…

 See the same sections of my article cited above under SACS section 4(1)(c).

     f. protects the institution from undue influence by external persons or bodies. (External influence)

 See my Article 2 in its entirety regarding St. Andrews University.

SACS Section 5:

  1. The institution employs and regularly evaluates administrative and academic officers with appropriate experience and qualifications to lead the institution. (Qualified administrative/academic officers)

See my Article 2, introductory section, noting the hiring in February 2021 of Arthur Keiser’s son Robert Keiser as executive vice chancellor in charge of Keiser University’s graduate school, after receiving his doctorate from Capella University in late 2020. Robert Keiser, who previously was executive director of the Keisers’ for-profit Southeastern College, may be an outstanding administrator and scholar, I don’t know. But hiring him to a top academic position just weeks after he earned his doctorate from Capella makes Keiser University look less like a legacy regionally-accredited large non-profit university with an independent governing board, and more like a family-owned business.

SACS Section 10:

  1. The institution publishes admissions policies consistent with its mission. Recruitment materials and presentations accurately represent the practices, policies, and accreditation status of the institution.

See my Article 1 section entitled “Employee grievances and aggressive recruiting.” In addition, as I alluded to in the introductory section of Article 2, I have additional information from current employees on this subject that I can provide to the Department.

The evidence indicates that the three schools have acted with impunity for years (St. Andrews only since Arthur Keiser obtained influence there), flouting a wide range of rules and standards that are supposed to govern them. The question the Department should be asking in this context is: Do SACS’s failures to prevent abuses at the three schools suggest that it is failing to perform the gatekeeping function for which it is responsible as an accrediting body that is delegated responsibility by the Department for ensuring quality and integrity in Title IV programs?

I also note that I and others have objected to the Department’s regular failure to make public in a timely manner information in its possession related to institutions and accreditors, including the information provided to members of NACIQI, which is information that by law must be provided to the public. More complete and timely release of such information would be of great value to advocates, researchers, students, and others, including with respect to public comments regarding Department decisions on accrediting bodies.[11] There may be more information in the possession of various Department offices that is relevant to the concerns I have raised, and I encourage you to look for it.

Thank you for taking the time to consider my comments and my offer to discuss these matters further and provide additional information. The two articles I have cited follow my signature.

Sincerely,

David Halperin

[1] H. Keith Wade, the President & CEO of Webber International University, serves on the SACS Executive Council and as the chair of the SACS Board of Trustees’ Florida Delegation.

[2] Senate Committee on Health Education Labor and Pensions, For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success, July 30, 2012, https://www.govinfo.gov/content/pkg/CPRT-112SPRT74931/pdf/CPRT-112SPRT74931.pdfhttps://www.help.senate.gov/imo/media/for_profit_report/PartII/Keiser.pdf

[3] Patricia Cohen, “Some Owners of Private Colleges Turn a Tidy Profit by Going Nonprofit,” New York Times, March 2, 2015, https://www.nytimes.com/2015/03/03/business/some-private-colleges-turn-a-tidy-profit-by-going-nonprofit.html

[4] Michael Vasquez, “Keiser: Not-for-profit but still lucrative,” Miami Herald, April 23, 2015, http://media.miamiherald.com/static/media/projects/2015/higher-ed-hustle/keiser.html

[5] Robert Shireman, “The Covert For-Profit,” The Century Foundation, September 22, 2015, https://tcf.org/content/report/covert-for-profit/

[6] House Committee on Education and Labor, For-Profit College Conversions: Examining Ways to Improve Accountability and Prevent Fraud, April 20, 2021, https://edlabor.house.gov/hearings/for-profit-college-conversions-examining-ways-to-improve-accountability-and-prevent-fraud

[7] https://www.republicreport.org/wp-content/uploads/2021/06/Rep.-Manning-ED-Letter-St.-Andrews.pdf

[8] I am a Washington, DC-based lawyer; with support from charitable foundations concerned with the quality and affordability of higher education, I spend part of my time advocating for students on accountability issues and writing investigative and opinion articles on these matters at RepublicReport.org.

[9] Alexis Gravely, “For-Profit Accreditor Scrapes by Advisory Committee,” Inside Higher Ed, July 28, 2021, https://www.insidehighered.com/news/2021/07/28/committee-recommends-three-year-renewal-profit-accreditor

[10] I note that the web address for the Department’s Criteria for the Recognition of Accrediting Agencies (http://www.ed.gov/​admins/​finaid/​accred/​index.html) that was provided in the Department’s July 12, 2021, Federal Register notice (https://www.federalregister.gov/documents/2021/07/12/2021-14741/accrediting-agencies-currently-undergoing-review-for-the-purposes-of-recognition-by-the-us-secretary), at least at this writing simply redirects to the homepage ed.gov.

[11] See David Halperin, “The Department of Education Is Still Concealing the Public’s Business,” Republic Report, July 16, 2021, https://www.republicreport.org/2021/the-department-of-education-is-still-concealing-the-publics-business/