WASHINGTON (AP) — The Education Department withdrew recognition of the nation's largest accreditor of for-profit colleges on Thursday, a decision that could force schools to close and threaten financial aid to hundreds of thousands of students.
The Accrediting Council for Independent Colleges and Schools said it would appeal the decision to Education Secretary John B. King Jr. In a statement, ACICS Interim President Roger Williams said the council would "continue diligent efforts to renew and strengthen its policies and practices" to meet the department's criteria for accreditors.
The accrediting agency has been accused of lax oversight of its schools, which included those once owned by the now-defunct Corinthian Colleges Inc. and the recently shuttered ITT Technical Institute.
The department's decision was announced in a blog post on its website.
In a letter to the council released later Thursday, Emma Vadehra, King's chief of staff, said "ACICS' track record does not inspire confidence that it can address all of the problems effectively."
Vadehra said the department found fundamental problems with the council's work as an accreditor. Her decision followed staff and advisory panel recommendations to sever ties with the council.
If ACICS loses its appeal, hundreds of schools would be forced to find a new accreditor within 18 months or lose their ability to participate in federal financial aid programs, such as student loans and Pell Grants. About 600,000 students currently attend ACICS-accredited institutions, Williams said.
While the appeal is pending, ACICS retains its federal recognition and remains determined to fully execute its accreditation responsibilities in a professional manner, he said.
Thursday's decision was met with praise from Democratic lawmakers.
"Accreditors are supposed to be watchdogs, but this negligent agency rubber-stamped shady institutions like ITT and Corinthian for years, right up until the moment they collapsed," said Sen. Elizabeth Warren of Massachusetts.
But Steve Gunderson, president of Career Education Colleges and Universities, an industry lobbying group that represents for-profits, said the decision will have "horrible ramifications for hundreds of thousands of students, thousands of dedicated faculty and staff, and hundreds of communities and employers that rely on institutions accredited by ACICS."
Republican Rep. John Kline of Minnesota, chairman of the House Committee on Education and the Workforce, echoed those concerns. "Hundreds of colleges will be forced to scramble to find a new accreditor so students don't lose their aid and everything they've been working toward," said Kline.
Advocacy groups, lawmakers and others have long complained about the council. It has been accused of continuing to accredit schools under investigation for falsifying job placement rates and claims for federal aid, illegal recruiting practices and misleading marketing claims.
The council had allowed Corinthian Colleges, one of the largest chains of for-profit colleges, to continue to receive accreditation even while it was under investigation for fraud. Corinthian sold many of its campuses, closed others and filed for bankruptcy protection last year. Thousands of its former students are asking the Education Department to forgive their federal loans, in a taxpayer bailout that could top $3 billion.
And earlier this month, ITT Technical Institute announced it was shutting down all 130 of its U.S. campuses, leaving more than 35,000 students scrambling across more than 30 states. The chain was banned in late August from enrolling new students who used federal financial aid because Education Department officials said the company had become a risk to students and taxpayers.
Collin Binkley contributed to this report from Boston.