Commerce, Justice, Science, and Related Agencies Appropriations Act, 2016

Floor Speech

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Mr. DURBIN. Mr. President, I have taken the floor many times to call to the attention of the Senate abuses by for-profit colleges, an industry that enrolls 10 percent of all college students, receives 20 percent of all Federal aid to education, and accounts for 40 percent of all student loan defaults. That is 10 percent of the students and 40 percent of the student loan defaults. I have spoken about specific companies involved in this industry--for-profit colleges and universities--including Corinthian, the University of Phoenix, DeVry, ITT Tech, Westwood, and Ashford. It is a long list. I have spoken about Congress's responsibility and the responsibility of the Department of Education to reform higher education laws and be aggressive in overseeing these companies. Fortunately, things are starting to change at the Department of Education.

Today, I wish to speak about the accreditors and one in particular-- the Accrediting Council for Independent Colleges and Schools, or ACICS.

Accreditors are, according to the Department of Education, responsible for ensuring that education provided by institutions meet acceptable levels of quality. In that role, they are, frankly, the gatekeepers of Federal dollars that flow to these colleges and universities. Without accreditation, the schools can't receive the money through the students for Pell grants and Federal loans. But, by law, the Department of Education decides which accrediting agencies are ``reliable authorities as to the quality of education or training provided by the institutions of higher education and the higher education programs they accredit.''

In order to be a gatekeeper of Federal educational student aid funds like loans and grants, these accrediting agencies must be approved by the Department of Education. The Department performs periodic reviews of federally recognized accrediting agencies to ensure that they are still ``reliable authorities.''

Here is where ACICS comes in. This outfit is currently undergoing one of those regular reviews by the Department and the Department's advisory board. It is a group called NACIQI, the National Advisory Committee on Institutional Quality and Integrity and they will hold a hearing on ACICS this Thursday. Last week, in the first part of this review process, the Department of Education staff made its initial recommendation to NACIQI to revoke the recognition of ACICS, an accrediting agency responsible for about 25 percent of all for-profit colleges and universities.

This is the right decision. I commend the Department. I hope that NACIQI and ultimately the Secretary of Education, Mr. King, will follow the recommendation.

Last week, I joined Senators Blumenthal, Murray, Brown, and Warren in writing to NACIQI to express support for their recommendation. For too long, this accrediting agency has acted as a rubberstamp for some of the worst for-profit colleges in America. Let's take one example to start with: Corinthian. Some will remember this company. It lied to the Federal Government and to the students who went to school there about its job placement rates. Listen to this. They used a scheme where they paid employers to hire recent graduates of Corinthian in temporary jobs so that Corinthian could report to the Federal Government that their graduates got employment. They were caught. The fraud was systemic at Corinthian and ultimately resulted in its bankruptcy. They were defrauding the government and, even worse, they were defrauding these students and their parents.

I wrote to the Department of Education asking them to look into these allegations of fraud about Corinthian in December of 2013. That same day I wrote to Dr. Albert Gray. He was the CEO of ACICS, which was the agency which accredited Corinthian. That was the agency that said to the Federal Government: This is a real college; you should let Federal funds flow to this college.

So I wrote to Dr. Gray and I said: What are you doing as an accrediting agency to hold Corinthian accountable and to ensure that they do not continue their fraudulent practices?

I received a response from Dr. Gray. His letter said the allegations were ``a source of great concern'' and that the council that he administered would review information submitted by Corinthian and ``make a determination of what actions to take regarding additional inquiries, compliance hearings or more serious sanctions.''

This so-called review of Corinthian by ACICS continued for more than a year, even as States like California, Massachusetts, and Wisconsin and Federal agencies such as the Consumer Financial Protection Bureau filed suit against Corinthian for their corrupt practices. Meanwhile, their accrediting agency was ``really looking into this''--really looking hard.

As the evidence of Corinthian's fraud and abuse mounted, ACICS--this accrediting agency--continued its wishy-washy ``monitoring'' that never led to anything. In fact, up until the date that Corinthian Colleges declared bankruptcy in May of 2015, they were still fully accredited by this ACICS accrediting agency. That is disgraceful.

But it wasn't disgraceful to ACICS. In response to an effort by Senator Chris Murphy of Connecticut in a 2015 Senate HELP Committee hearing to get Dr. Gray to admit that ACICS made a mistake by continuing to accredit Corinthian, Dr. Gray said:

I will be the first to admit that accreditors like any other organization make mistakes. Corinthian was not one of those mistakes.

Incredible--here is a group that has defrauded students, defrauded the Federal Government, is being sued by at least three States and other Federal agencies, had declared bankruptcy, and the accrediting agency was still standing firmly behind it. Is this an organization that we can truly trust as taxpayers to be a reliable authority as to the quality of education? This is the gatekeeper--this agency, this accrediting agency--the gatekeeper for millions and sometimes billions of dollars to flow out of the Treasury from taxpayers through students and their families to lots of CEOs at for-profit colleges that are doing quite well, thank you. History tells us we can't trust ACICS.

Corinthian isn't the only embarrassment on the ACICS resume. According to the Center for American Progress, more than half of the $5.7 billion in Federal student aid awarded to ACICS-accredited schools in the past 3 years went to institutions facing State and Federal investigations or lawsuits. Twenty percent of the students at these for-profit schools accredited by this discredited agency defaulted on their Federal student loans. Does this sound like an organization that is a reliable authority when it comes to quality education schools provide?

In my home State of Illinois, Attorney General Lisa Madigan, who has been a real leader on this subject, settled a lawsuit last year against the notorious Westwood College. Westwood's practices were not all that different from Corinthian--lying to students about job prospects.

I remember meeting a young girl in Chicago. She had been smitten by all of these criminal investigation shows on television. So she signed up at Westwood, and she signed up to take courses in criminal justice. It took her 5 years to finish, to get her so-called degree from Westwood College in Chicago. Do you know what she found afterwards? Not a single law enforcement agency would even recognize her diploma. She spent 5 years and, even worse, she went deeply in debt--almost $90,000 in debt--for a worthless diploma from Westwood College. She moved back into her parents' home, living in the basement, and her dad came out of retirement to try to earn some money to help pay off the student loans at this worthless Westwood school.

Guess who accredited Westwood College. ACICS, the same agency. In fact, in the course of their investigation, the attorney general's office found that ACICS was not annually verifying even a sample of job placements reported by Westwood and other institutions they accredited.

There are so many other examples of negligence by this accrediting agency. That is why 13 State attorneys general, including Lisa Madigan of Illinois, have written to the Department of Education asking them to revoke ACICS' recognition.

Re Opposing the Application for Renewal of Recognition of the Accrediting Council for Independent Colleges and Schools (ACICS). Hon. John King, Department of Education, Washington, DC. Jennifer Hong, Executive Director/Designated Federal Official, National Advisory Committee on Institutional Quality and Integrity, U.S. Department of Education, Washington, DC.

Dear Secretary King and Ms. Hong: We write in response to the notice of intent to accept written comments on the application for renewal of accrediting agencies, specifically, the Accrediting Council for Independent Colleges and Schools (ACICS), as published in the Federal Register on March 18, 2016. We have carefully reviewed the Criteria for the Recognition of Accrediting Agencies, including Sec. Sec. 602.16(a)(1)(i), 602.19(a) & (b), and 602.20(a), that are of particular importance to our consumers. We believe that stronger oversight by accrediting agencies is necessary to protect vulnerable students from predatory schools, ensure accountability to taxpayers, and level the playing field for career schools that are delivering quality, affordable programs. Given ACICS' failure to ensure program quality at the institutions it accredits, we oppose renewal of recognition and urge the Department to revoke its status as a recognized accreditor.

Because the Department of Education does not directly assess the quality of institutions of higher education, students depend on accreditors to ensure that schools provide an education that fleets at least minimum standards of quality. Accreditors, more than any other party charged with .he supervision of higher education, are responsible for protecting students from profit-seeking institutions offering training of no educational value. Today, when millions of students are defaulting on the student loans they incurred to attend subpar for-profit schools, it is clear that certain accreditors are failing to do the job.

Even in the crowded field of accrediting failures, ACICS deserves special opprobrium. According to a recent analysis by ProPublica, only 35% of students enrolled at ACICS accredited schools graduate from their programs, ``the lowest rate for any accreditor.'' Of students who actually did graduate, more than one in five defaulted on their student loans within the first three years after graduation. A full 60% had not yet paid down a single dollar of the principal balance on their loans.

As consumer advocates in our respective states, our offices have investigated many ACICS accredited schools based on complaints from students, and found a fundamental lack of substantive oversight for student outcomes by the accreditor. Lapses that we have encountered include a failure to take action when improper job placement statistics are reported, inadequate job placement verification processes, and a lack of transparency and cooperation with investigations into student outcomes.

ACICS' most spectacular failure was its decision to extend accreditation to several dozen schools operated by Corinthian Colleges. Corinthian's practice of offering extremely expensive degrees of little value to low-income students has been the target of more than twenty state and federal law enforcement agencies. Yet ACICS continued to provide accreditation to Corinthian's schools until the day Corinthian declared bankruptcy. The U.S. taxpayer provided approximately $3.5 billion to Corinthian, made possible by ACICS's accreditation.

ACICS has failed repeatedly to take action in response to public enforcement actions by state and federal law enforcement. In the Illinois Attorney General's investigation and subsequent litigation with Westwood College, the office found that ACICS was not annually verifying even a sample of job placements reported by the institutions it accredits. When asked by the attorney general's office, ACICS would not commit to formally outline their verification process in an affidavit. This type of obfuscation hinders regulatory cooperation between the ``triad'' that oversees higher education in the United States, the federal government, the states, and accreditors.

There are other examples of ACICS' failure to identify compliance problems and enforce its accreditation standards. In 2015, Education Management Company (EDMC), with campuses accredited by ACICS including The Art Institute and Brown Mackie College, settled with thirty-nine State Attorneys General and agreed to forgive $102.8 million in outstanding loan debt. ITT Tech has been sued by the Consumer Financial Protection Bureau, and Attorneys General of Massachusetts and New Mexico and is under investigation by 19 other states. Daymar College employed dozens of unqualified faculty as determined by the Kentucky Council on Postsecondary Education and the Kentucky Attorney General, yet ACICS took no action to rebuke the school or require remedies for students. Daymar subsequently settled with the Attorney General and agreed to provide $11 million in debt relief and pay $1.2 million in student redress. National College of Kentucky, Inc. was fined $147,000 by a Kentucky Court for failing to fully respond to a subpoena from the Kentucky Attorney General. National College of Kentucky later admitted in litigation with the Kentucky Attorney General that it advertised false job placement rates yet ACICS has taken no action against the school.

Career Education Corporation, whose Sanford Brown schools are ACICS-accredited, settled with the New York Attorney General's Office in 2013 for $10.25 million based on findings that CEC fabricated job placement rates. ACICS failed to identify the placement rate inaccuracies and, when CEC's misconduct came to light, failed to terminate or suspend accreditation to any Sanford Brown Schools. In fact, ACICS did not even request that CEC recalculate inaccurate placement rates for several of the affected cohorts.

It should be noted that ACICS has representatives of these problem schools on its board and committees, raising serious questions about potential conflicts of interests and therefore ACICS's ability to impartially evaluate those and other schools. For example, ITT, Corinthian Colleges, and National College all had representatives on the ACICS Board of Directors/Commissioners during the pendency of these enforcement actions or the events leading thereto.

ACICS's accreditation failures are both systemic and extreme. Its decisions to accredit low-quality for-profit schools have ruined the lives of hundreds of thousands of vulnerable students whom it was charged to protect. It has enabled a great fraud upon our students and taxpayers. ACICS has proven that it is not willing or capable of playing the essential gate-keeping role required of accreditors. It accordingly should no longer be allowed to do so.

The state attorneys general appreciate this opportunity to comment and we urge the Department to exercise its appropriate discretion in refusing to renew recognition. Sincerely, Maura Healey, Massachusetts Attorney General; Brian E. Frosh, Maryland Attorney General; Thomas J. Miller, Attorney General of Iowa; Lisa Madigan, Illinois Attorney General; Andy Beshear, Kentucky Attorney General; Karl A. Racine, District of Columbia Attorney General; Janet Mills, Maine Attorney General; Stephen H. Levins, Executive Director, Hawaii Office of Consumer Protection; Lori Swanson, Minnesota Attorney General; Ellen F. Rosenblum, Oregon Attorney General; Eric T. Schneiderman, New York Attorney General; Hector Balderas, New Mexico Attorney General; Bob Ferguson, Washington Attorney General.

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Mr. DURBIN. Mr. President, ACICS has shown time and again that it is not a reliable authority when it comes to the quality of an education. It is not a responsible steward of taxpayers' dollars.

Follow the money in this case. Think of schools like Corinthian that took billions of dollars out of the Federal Treasury through loans that are assigned to students and paid into Corinthian so they can maintain their operations and pay handsome salaries to their CEO. Now they go bankrupt, and at that point the students of Corinthian have a choice. They can keep their worthless semester hours from Corinthian and keep their debt or they can walk away from both. Well, many of them choose to walk away. When they walk away, they have wasted years of their lives, but even more important, taxpayers have just taken a beating.

These are corrupt capitalist ventures that rely, for 85 to 95 percent of their revenue, directly on the Federal Government. These are not free market entities. These are not private corporations. It is crony capitalism at its worst.

So, today, I want to commend the Department of Education for making its recommendations to NACIQI to withdraw ACICS' federal approval. I hope this is the beginning of the end for this awful organization that has been complicit in defrauding students and the fleecing of taxpayers by major for-profit education companies for way too long.

I encourage the Department to continue to remain steadfast in its current position and to ensure that the students and institutions that ACICS currently accredits are well informed that this process is under way.

Finally, I will say that ridding our higher education system of ACICS is a good first step, but more needs to be done to reform it. In the coming weeks, I will be introducing an accreditation reform bill with several of my colleagues, and I hope this issue will be front and center during the Senate's consideration of a Higher Education Act reauthorization in the next Congress.

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