As states have cracked down on licensing requirements, for-profit college and universities without federally recognized accreditation have concentrated in states where loopholes in regulations, weak laws or lax enforcement allow them to operate and even, in some cases, trumpet their status as “state licensed” in their quests to attract students online from all over the world.
Alabama officials were the latest to announce their intention to strengthen the state's licensing and review procedures last week, joining policymakers in their neighbor Mississippi, where the Legislature last year approved a bill granting district attorneys the right to take to court those Mississippi-based institutions offering degrees without approval by the state's Commission on College Accreditation. If Alabama and Mississippi, two of a handful of states that have served as havens for unaccredited entities, succeed in their quests to tighten the oversight of these institutions, there may soon be few friendly states left for them to call home.
“If you take a look at the basic situation across the country, if Mississippi and Alabama actually make progress, you’re down to a few states where these places can operate legally,” said Alan Contreras, administrator of the Oregon Student Assistance Commission’s Office of Degree Authorization and an observer of the national regulatory picture. “That doesn’t mean they won’t operate illegally,” he quickly added.
In Alabama, two agencies charged with approving institutions have announced a plan to seek legislation to consolidate a split regulatory structure, and to close a loophole that lets unapproved institutions operate with only a corporate license.
“What we have in Alabama is a unique, bifurcated system that is not found in any other state. In other words, the licensure law, the licensure act, the administration of it is housed in another agency, named the Alabama Department of Postsecondary Education,” said Elizabeth French, director of the office of institutional effectiveness and planning in the Alabama Commission on Higher Education.
“In 1979, there was a portion of our statute that was amended giving the Commission on Higher Education, which is a different agency, the responsibility for doing the programmatic review of all institutions coming into the state as foreign corporations. It did not give us the programmatic review of all institutions that were to be licensed, only those who were coming in whose headquarters were domiciled outside the state.” The two agencies typically work closely together through an articulation agreement, French said, but nothing legally binds the Postsecondary Department to accept the Commission's recommendation on licensure based on its review.
“It has become extremely complex, and we are not convinced that it is the most effective way of doing business anymore,” French said.
The Alabama Commission on Higher Education is now working with the Alabama Department of Postsecondary Education to craft legislation to consolidate the review and licensure processes within one agency. The entire process would preferably be housed under the commission’s authority, said Joan Davis, general counsel for the Department of Postsecondary Education.
Gregory Fitch, executive director of the Alabama Commission on Higher Education, said legislation meant to streamline and strengthen the process has been drafted, but the commission has not yet found a sponsor to introduce it during the upcoming legislative session, which begins in March.
Furthermore, Fitch said, even if both agencies collaborate to reject an institution's bid for licensure, an entity would only need to pay $1,500 to be licensed as a corporation in the state – and then, under current law, could proceed with granting degrees with Alabama's stamp. “If you were a student out there, looking for an opportunity or a special program or even a point of least resistance, you see something licensed by the state of Alabama, your first thought would be ‘good, this must be legitimate.’ But then all of the sudden, they’ve got your money and they disappear,” said Fitch, who hopes to work with other state agencies to develop legislation closing that loophole and requiring that all degree-granting entities be approved by an educational agency before being incorporated in the state.
Meanwhile, in Mississippi, the new legislation seems to be having an effect. Since the state gave authorities power to go after unaccredited institutions, seven of the 11 institutions on a list of those operating in Mississippi without state approval have said they have ceased operations in the state, said Juliette Wilson, special assistant attorney general with the Mississippi Office of the Attorney General. In December, the state sued the American University of Human Sciences , formerly known as the American University of Hawaii, which the state of Hawaii filed suit against in 2003, Wilson said. The institution eschews accreditation on its Web site , arguing that, "The American University of Human Sciences, as a global university does not require to be accredited."
Although Wilson said the institution has dissolved its operations in Mississippi, she plans to continue to move forward, after a 30-day procedural delay, because the operations were not dissolved until after the institution was served with a notification to cease operations in the state. Wilson expects to file suit against two other entities, which she declined to name, by the end of the month.
Meanwhile, the Mississippi Commission on College Accreditation has not yet made a determination after a November meeting  to hear an appeal by Madison University  regarding the commission’s decision to deny its request for provisional accreditation, said Annie Mitchell, spokeswoman for the Mississippi Institutions of Higher Learning. On its Web site, Madison describes itself as accredited by the World Association of Universities and Colleges, but notes that the "private accrediting body" is not recognized by the U.S. Education Department or any government agency.
“Historically, anytime states toughen legislation, there is fall-out in other states," said Larry Tremblay, acting deputy commissioner for academic and student affairs for the Board of Regents in Louisiana, another state that has strengthened its once-lax regulations. "Historically, questionable institutions seek greener pastures, and I will tell you that in the mid-80s, when California strengthened their law, we ended up with somewhere around 10 institutions with either California in their name or Pacific in their name or Western in their name.”
But this time around, more institutions may find themselves based on the Caribbean's lapping shores. Contreras said that only a few states – including Hawaii – might prove to be friendly ground for unaccredited, unapproved institutions if they find themselves pushed out of Mississippi and Alabama. Wyoming  and Idaho, two of the other traditional strongholds for these types of institutions, have both recently strengthened their regulations.
Contreras added that California, where the current regulatory structure will be shuttered July 1 after Gov. Arnold Schwarzenegger vetoed a bill to extend its life by a year, could prove to be a welcome home if nothing is initiated to replace the Private Postsecondary and Vocational Education program, which Schwarzenegger wrote upon vetoing the bill is plagued with “fundamental problems” that have been “studied extensively and well documented over the years.”
But Contreras cautioned that new regulations, by themselves, will do little to keep unaccredited institutions out. “Let’s assume that these are reasonably good statutes. I think the crucial issue is whether they are enforced. You can have a really good statute but if you don’t have any enforcement ability, it doesn’t do you any good. That has been the problem in California.”