Submitted by Paul Fain on December 13, 2016 - 3:00am
In an expected move, John King Jr., the U.S. secretary of education, on Monday made the Education Department's final decision to terminate its recognition of the Accrediting Council for Independent Colleges and Schools (ACICS). The council is a national accreditor that oversees 245 institutions, many of them for-profits, which enroll roughly 600,000 students and collectively received $4.76 billion in federal aid last year.
ACICS had accredited many Corinthian College locations as well as ITT Technical Institute. King, citing "pervasive compliance" problems, followed through on a federal panel's decision to nix the council for failing to protect students and taxpayers from fraudulent and underperforming colleges. The council had appealed that decision, which the department backed previously and confirmed with King's decision this week. In a written statement, ACICS said it would "immediately file litigation seeking injunctive and other relief through the courts."
The colleges accredited by the council have 18 months to find a new accreditor or risk losing access to federal aid. Many have been scrambling to be accredited by other agencies, particularly by the Accrediting Commission of Career Schools and Colleges.
In the meantime, the department on Monday said it was adding new conditions for ACICS-accredited colleges to remain aid eligible. Those measures include monitoring, transparency, oversight and accountability requirements. The department said the conditions "establish triggers tied directly to milestones in the accreditation process to ensure that institutions not on track to receive accreditation from a federally recognized accrediting agency within 18 months are subject to progressively stronger student and taxpayer protections."
Council-accredited colleges have 10 days to agree to the new conditions or they will no longer be able to receive federal aid. The colleges must submit teach-out plans as part of the department's terms.
The U.S. Chamber of Commerce filed an amicus brief in the D.C. Court of Appeals this week arguing that the Consumer Financial Protection Bureau doesn't have the authority to investigate college accreditors.
The CFPB is appealing a D.C. District Court decision that blocked its efforts to investigate the Accrediting Council for Independent Colleges and Schools and, specifically, how the agency approves for-profit colleges. Since that defeat, the Department of Education group that oversees accreditors recommended shutting down ACICS. But the CFPB in October filed an appeal arguing it had "ample authority" to oversee accreditors for violations of federal consumer protection laws.
The chamber argues in its brief that the accreditation process for for-profit colleges has "no connection to a transaction with a consumer for a consumer financial product or service, the bureau's contrary protestations notwithstanding."
The U.S. Department of Education said Tuesday it would block for-profit colleges Globe University and the Minnesota School of Business from receiving additional federal student aid.
As of Dec. 31, students will no longer be able to use funds from Pell Grants or federal direct loans at those institutions, which are jointly owned. The Federal Student Aid Enforcement Unit found that the programs committed fraud involving Title IV funds and misrepresented their criminal justice programs as well as the ability to transfer their credits to other colleges.
Globe enrolls about 1,000 students at 10 locations across the Midwest, and Minnesota School of Business enrolls about 700 students in Minnesota.
“Globe and MSB preyed upon potential public servants -- targeting those with a sincere desire to help their communities,” Under Secretary of Education Ted Mitchell said in a written statement. “These institutions misrepresented their programs, potentially misleading students, and abused taxpayer funds, and so violated federal law, which is why we removed them from the federal student aid program. This is a sober reminder that not all institutions deliver on their advertised promises.”
The department blocked access to Title IV aid for new students enrolling at ITT Technical Institutes in August -- a serious blow that was followed the next month by an announcement that the for-profit would close its doors at campuses across the country.
Submitted by Paul Fain on November 28, 2016 - 3:00am
Academic programs enrolling roughly 16 percent of the University of Phoenix's student population do not pass the federal government's new gainful employment rule, according to a financial filing from the Apollo Education Group, the university's owner. Those programs failed the regulation's two student debt-to-earnings standards. The department recently released its first round of draft data for affected programs, with a scheduled January release for the final data sets.
Apollo previously had said it was winding down academic programs that were likely to not pass the standards. Those programs now represent one-fifth of the university's degree-pursuing student enrollment.
Student loan servicer Xerox Education Services will pay $2.4 million in a settlement agreement over allegations it mishandled students borrowers' applications for income-based repayment plans, Massachusetts Attorney General Maura Healey announced Tuesday.
Xerox -- known as ACS Education Services when the state launched its investigation -- serviced both federally backed student loans under the FFEL program and private student loans. The attorney general's office alleged that the company charged excessive late fees, did not protect active-duty service members and made calls to borrowers multiple times a week.
"To address this student debt crisis, we need students to be on repayment plans that will help them succeed, not fall further into debt," Healey said.
But the company undermined students' ability to enroll in those repayment plans, the attorney general said.
A portion of the settlement money will go toward restitution of the Massachusetts borrowers unable to enroll in lower payment plans. The company will also create a "borrower advocacy group" to provide assistance to borrowers looking to enroll in the plans in the future. The group will also provide information on federal loan discharge applications to students with loans associated with shuttered for-profits like Corinthian Colleges and ITT Technical Institute.
Healey has been aggressive in pursuing both loan servicing companies and for-profit colleges for alleged misconduct. Earlier this summer, American Career Institute -- a for-profit college Healey sued in 2013 -- admitted to deceptive practices and violating state law. And Healey has pushed for clear federal standards for former students of institutions like Corinthian to seek cancellation of their student loan debt.
President-elect Donald Trump has agreed to pay $25 million to settle multiple suits that charge Trump University with swindling its students. New York's attorney general, Eric T. Schneiderman, sued Trump in 2013. The settlement also covers other suits against Trump over Trump University. Trump has to date denied wrongdoing, and accused Schneiderman of playing politics with the suit. Trump University was not a typical for-profit university, as it operated outside standard licensure and accreditation requirements and, as a result, its students did not use federal aid. In fact, Trump University was never a university, and changed its name to Trump Entrepreneur Initiative when New York State officials said it could not call itself a university.
Schneiderman issued this statement: "In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known at Trump University. Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes. Today's $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university. I am pleased that under the terms of this settlement, every victim will receive restitution and that Donald Trump will pay up to $1 million in penalties to the State of New York for violating state education laws. The victims of Trump University have waited years for today's result and I am pleased that their patience -- and persistence -- will be rewarded by this $25 million settlement."
President-elect Trump's transition press office did not respond immediately to a request for comment. However, Trump tweeted about the settlement on Saturday.
I settled the Trump University lawsuit for a small fraction of the potential award because as President I have to focus on our country.