UPDATE: Oct. 27, 2020: The Higher Learning Commission will not face a year-long ban on accrediting new institutions, a top official at the U.S. Department of Education said in a letter to the accreditor this week. Department staff recommended the sanction against the accreditor for how it handled oversight of two Art Institutes that were transferring from a for-profit college operator to the nonprofit Dream Center a few years ago. 

The department's accreditation advisory group voted in July to reject the staff's recommended sanctions, though a senior department official would have the final say.

A department hearing in July (detailed in the story below) highlighted divisions within the department — as well as divergent interpretations of the accreditor's rules and federal law, and whether they were being faithfully applied by HLC, followed by the schools and deferred to by the department. 

In Tuesday's letter, that senior official, Deputy Education Secretary Mitchell Zais, said "there were shortcomings to go around," noting that while HLC's policies were unclear, the Dream Center could have asked for clarification before closing the deal. Zais also agreed with department staff who said the accreditor was out of step with federal regulations when it agreed to approve the change in ownership upon the Institutes agreeing to give up accreditation for a time. 

However, HLC will have to submit reports to the department following any meetings and hearings for the next 12 months during which action is taken on the schools it oversees. Those reports must include details on what HLC is doing to "mitigate the negative effects" of its decision to withdraw the Institutes' accreditation on former students, Zais wrote.

In an email to Education Dive Tuesday, an HLC spokesperson said the agency received the department's decision and that "we are considering our options at this time."

The U.S. Department of Education's accreditation advisory group voted Wednesday, July 29, to reject sanctions recommended by department staff for the Higher Learning Commission (HLC) that include a year-long ban on accrediting new schools. 

The National Advisory Committee on Institutional Quality and Integrity's (NACIQI) 9-2 vote, with one abstention, will go to a senior department official, Mitchell Zais, who will make the final determination.

The issue is contentious, highlighting divisions between political and career staff at the department and questions around its relationship with accreditors. "No one shines in our view," said committee member Paul LeBlanc before putting forward the vote. LeBlanc is also the president of Southern New Hampshire University. 

At issue is how HLC handled the accreditation of two Art Institutes that were transferred from Education Management Corp., a for-profit college operator, to the nonprofit Dream Center in late 2017 and early 2018.

Their accreditor, HLC, found during its review of the transaction that two of the schools hadn't met certain eligibility criteria. It signed off on the transaction, providing that the Dream Center would agree for the schools to be temporarily transferred to candidacy status, interrupting their eligibility for federal financial aid because the schools were still considered for-profits. 

But the Dream Center has been accused of falsely presenting the schools as accredited. Meanwhile, the department has argued that the schools weren't fully informed of the consequences of the status change and of the opportunity to appeal HLC's decision.

In a staff report earlier this month, the department alleged HLC didn't follow its own rules, or the department's, when informing the schools about the status change. The report called for banning HLC from accrediting new institutions for 12 months pending a compliance review.

HLC representatives, meanwhile, said the onus was on the Dream Center to understand HLC's policies. The commission argued that the college operator could have rejected its decision to move the institutions to candidacy status. The Dream Center could then have reapplied to HLC or sought other solutions for its financial issues — options that would have allowed it to stay accredited. Instead, Dream Center accepted the offer.

A report from the House's education committee released Tuesday calls out that exchange and notes that Dream Center executives showed unfamiliarity with some of the terms and concepts associated with accreditation. 

Limits of oversight

Those issues came to the fore in the course of several hours of presentations and questions during the NACIQI meeting Wednesday. During the discussion, HLC representatives answered committee members' questions about the procedural process used to move the two colleges to candidacy status.

Anthea Sweeney, HLC's vice president for legal and governmental affairs, said during the meeting that the process the commission used for the Dream Center meant the schools couldn't appeal the candidacy status. And HLC president Barbara Gellman-Danley called the Dream Center's assertion that it didn't know about the impact of the status change "disingenuous."

The House report, meanwhile, showed that a top Education Department political appointee was actively corresponding with Dream Center executives about the schools' accreditation status. The report, as well as an earlier review, found that Diane Auer Jones, the department's principal deputy under secretary, worked with the colleges to attempt to secure retroactive accreditation. But HLC declined, with the report noting that the retroactive accreditation was against its policies, and the department's.

"Throughout all of this, it is clear that there is only one action that HLC can take that will satisfy the department," said Julie Miceli, an outside counsel for HLC, referring to the request for retroactive accreditation. "HLC simply cannot honor its judgment as an independent accreditor if it takes this action at the insistence of the department."

Robert Shireman, senior fellow at The Century Foundation, echoed that concern during a short comment period for third-party participants, saying the department's approach "undermines" the accreditor's authority. Shireman was the department's deputy under secretary for a time during the Obama administration.

In a mild censure of all parties before the vote, LeBlanc said that while the HLC policies in question "were not as clear or logical as they should have been," the Dream Center also faulted. Its executives demonstrated shortcomings including "shoddy administrative practices" regarding its relationship with HLC and ignorance of basic accreditation practices.

The department, he continued, "did not acquit itself well in this matter either." It failed to raise issues with policies that it later flagged "only when HLC refused to violate its own policy" on retroactive accreditation, he said. 

'Not done yet'

NACIQI's decision comes on the tail of new regulations that strip historical geographic boundaries for regional accreditors. Robert King, assistant secretary at the department, noted that change during the deliberations when mentioning the potential year-long ban on HLC accrediting new schools. 

Already, two regional accreditors have said they will accredit outside their former bounds. And higher ed experts say that once-regional accreditors may start to compete to attract schools or build out specialty divisions. HLC could be sidelined from those options if Zais rejects the committee's decision.

Clare McCann, deputy director for federal higher education policy at New America and a former Obama administration official, told Education Dive she was surprised at the number of votes to reject the department's recommendation. McCann was one of several people to offer comment during the session.

It was "a bigger and louder rebuke of the department than I expected," she said, adding that she thought it was "fitting given how severe the department’s recommendation was relative to the action that was being investigated."

Another former Obama administration official agreed. 

Ben Miller, now the vice president for postsecondary education at the Center for American Progress, told Education Dive in an interview after the hearing that there are outstanding questions around the involvement of the department's political leadership. He also commented during the session.

The department has been sued for giving aid to schools that weren't accredited, including the two schools in question in this review. And the department’s critics have suggested it may be trying to shift blame to HLC.

But the committee's recommendation is just that, and Zais could decide not to take it. 

"This is not done yet," Miller said.