Dive Brief:

• The whirlwind collapse of Dream Center Education Holdings (DCEH), a nonprofit that bought a set of more than 100 for-profit campuses totaling 50,000 students about two years ago, may have been mitigated by the U.S. Department of Education using back-door tactics, according to documents obtained by the House Education Committee and first reported by The New York Times.
• The Ed Department was made aware that DCEH was advertising two unaccredited campuses as accredited but “did not immediately require Dream Center to take corrective action," contends a July 16 letter to Education Secretary Betsy DeVos from a House committee. Instead, the letter alleges, the department told DCEH executives it would retroactively accredit the schools, thus protecting DCEH, and did not inform Congress.
• In a statement emailed to Education Dive, which mirrors comments it supplied to The Times, the Ed Department said DCEH "did not receive any unique benefits from policy decisions" it made and that the department was already working on a broader retroactive accreditation policy "long before Dream Center came into the picture."

Dive Insight:

The letter, written by Rep. Bobby Scott, D-Va., chair of the House Education Committee, argues that the Ed Department may not have "met its responsibility to protect student interests" during DCEH's drawn-out and confusing closure process.

In a letter replying to Scott on Monday, the Ed Department said it was already working to implement retroactive accreditation policies with another accreditor, the Commission on Collegiate Nursing Education.

A draft of the policy was put forward in April, three months before the department official who authored the draft, Diane Auer Jones, said she knew of the accreditation issue with Dream Center, according to responses provided to the House committee and reported by The Times. The accreditor posted a public notice of the issue in January. 

Other documents provided to the House and reported on by The Times suggest DCEH and the department were working together to coordinate retroactive accreditation. 

The department puts the onus on DCEH executives. "The fact that [they] characterized a policy decision on a pending appeal [for broader retroactive accreditation] was somehow about them is disingenuous but not surprising," a spokesperson said in a statement provided to Education Dive. "They were trying to make it appear they had control of the mess they had made."

The accreditation issue predates DCEH’s public downfall and focused on a group of students at Art Institute colleges it had acquired in the fall of 2017 as a package deal from Education Management Corp. The students alleged in a lawsuit last year that the institutions presented themselves as accredited when they were not.

Education Dive tracked DCEH’s mounting troubles, which culminated in February when the Ed Department pulled access to Title IV funding from its Argosy University over missing student loan disbursements. At the time, the cash-strapped DCEH was attempting to reorganize in receivership, a process that was proving to be troubled.

DCEH was the third for-profit college operator to close from late 2018 to early 2019. Observers allege school and department officials ignored warning signs that DCEH was struggling to run the campuses, and they’ve pointed out issues with financial disclosure mechanisms meant to indicate when a for-profit college was about to close. 

Earlier acknowledgment can help state and federal officials, along with accreditors, intervene and help the school implement teach-out and transfer agreements.

The spate of closures, which also included Education Corporation of America (ECA) and Vatterott Educational Centers, were swift. A day after its accreditation was suspended, ECA shut the doors at most of its campuses, leaving around 20,000 students without a clear path forward.