Dive Brief:

• A recent U.S. Department of Education staff report takes aim at the Higher Learning Commission, alleging the regional accreditor didn't follow its own rules when notifying schools about their accreditation status during a change of ownership.
• The report focuses on two for-profit Art Institutes that were transferred in 2017 from one owner, Education Management Corp., to another, the nonprofit Dream Center. Students have also sued, saying the Dream Center presented the schools as accredited when they were not. 
• In its report, the department called for banning HLC from accrediting new institutions "until they have come into full compliance."

Dive Insight:

The report is part of the fallout from the Dream Center's failed attempt to run more than 100 for-profit college campuses. Students and others have alleged the Dream Center misrepresented four of its acquired campuses as accredited in 2018, two of which are at issue in the dispute with HLC.

The department has also been implicated in the situation. 

A July 2019 letter from Rep. Bobby Scott (D-Va.), chair of the House education committee, to Education Secretary Betsy DeVos stated that HLC "clearly and consistently indicated to Dream Center" that it must tell enrolled students about the change in accreditation status. The letter also stated department officials were aware of the accreditation claims and did not take immediate action. 

The letter, which was based on a review of documents obtained by the committee, alleges the department said it would work with the Dream Center to accredit the schools retroactively and did not inform Congress of the decision. The department later formally loosened its rules on retroactive approvals, and documents reviewed by The New York Times last summer suggest the department gave Dream Center and HLC advance notice of the forthcoming policy. 

The department also continued to fund the schools despite their loss of accreditation. The students who are suing, meanwhile, took issue with paying tuition to attend an institution that was not accredited.

The department, in its report, claims HLC didn't sufficiently notify the schools that they would have to give up their accreditation for a period during the transaction and that they could appeal the decision. It claims HLC used vague and inconsistent terminology in communication with the schools. 

In response to a draft of the analysis provided to it by the department, HLC contended that the school effectively consented to the accreditation loss by agreeing to the change of control candidacy status, according to the department's final report. HLC also published a notice on its website in early 2018 saying the two schools weren't accredited.

The department's accreditation oversight group, the National Advisory Committee on Institutional Quality and Integrity (NACIQI), will review the report during a meeting later this month. HLC was added as an agenda item in late June, without the opportunity for public comment.

The accreditor did not answer questions emailed by Education Dive on Monday, which included a request for a copy of its response to the department's draft analysis. The department did not respond to Education Dive's emailed questions by press time Monday.

But an HLC spokesperson told Education Dive in an email that the accreditor "welcomes the chance for an open dialogue with NACIQI to explain how HLC followed federal regulations and our own policies as we acted within the scope of our authority and with the best interest of Art Institute students in mind at all times."

A senior Ed Department official, Deputy Secretary of Education Mitchell Zais, will ultimately decide whether HLC was in compliance.

HLC says, according to the department's report, that the department overstepped its authority by questioning its accreditation decisions.

That may hold some merit. The department's role in approving an accreditor is to gauge whether it is a reliable authority, said Robert Shireman, a senior fellow at The Century Foundation who has criticized transactions through which for-profit colleges gain nonprofit status. 

The report "sure looks like inappropriate meddling … rather than an attempt to analyze broader questions about their ability to be a reliable accreditor," Shireman said. The department could look at HLC's decisions in other cases to determine whether there is a pattern of similar issues with regard to consistency when applying the accreditor's rules, he added.

Clare McCann, deputy director for federal higher education policy at New America, a left-leaning think tank, said the report "certainly feels like the department is trying to shoulder their responsibility for the Dream Center misrepresentations on HLC rather than on Dream Center, where they clearly belong."