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- A USA Today investigation last year found an educational agency accredited a school that appeared to be fake.
- The agency – the Accrediting Council for Independent Colleges & Schools – lost its recognition on Wednesday.
- It had also accredited now defunct for-profit schools that were accused of defrauding students.
- See more stories on Insider's business page.
The Education Department on Wednesday cancelled its recognition of the Accrediting Council for Independent Colleges & Schools (ACICS) for approving a school that reportedly has no faculty or students, but received federal funds anyway.
USA Today conducted an investigation last year that found that although approved by ACICS, Reagan National University in South Dakota did not house any faculty, students, or staff. And while the agency said that Reagan had met its standards during the accreditation process, it declined to say specifically how it verified the college had students and faculty.
This caused the Education Department on Wednesday to remove ACICS's recognition, given its inability to deliver sufficient evidence as to why they accredited Reagan in the first place.
"ACICS's significant and systemic noncompliance with multiple regulatory recognition criteria leaves me no reasonable option but to terminate its recognition, effective immediately," Jordan Matsudaira, deputy undersecretary for education, wrote in a notice posted to the department's website.
Schools that are approved by accreditors are given access to federal grants and student loans, so even though Reagan appeared to be non-functioning, it still could access federal funds.
Reagan ended up being stripped of its recognition, but Education Secretary Betsy DeVos stood by ACICS and affirmed that the agency had followed proper procedure when choosing to accredit the school.
But Reagan was not the first questionable school to fall under ACICS's jurisdiction. The agency has accredited more than 60 for-profit schools, and a number of those schools - including Corinthian Colleges and ITT Technical Institutes - have shut down in the past decade amid allegations of fraudulent behavior, including engaging in misleading marketing practices and persuading students to take out loans they would never be able to pay back.
Specifically, in 2014, the Consumer Financial Protection Bureau accused Corinthian of illegally collecting high-interest private loans that it marketed to students. And in 2015, the Securities and Exchange Commission had taken ITT Tech to court for deceiving investors about high rates of late payment and defaults on student loans.
The Education Department's decision to remove ACICS's recognition follows a series of actions already taken to reverse Trump-era rules. For example, last week, the department announced plans to start tackling flaws in the student loan system, including reforming DeVos' method to forgive student debt for borrowers defrauded by for-profit schools.
President Barack Obama established the borrower defense to repayment to forgive student debt for eligible defrauded borrowers, and under him, the program had a 99.2% approval rate, but when DeVos took over, 99.4% of eligible borrowers were denied from the program. President Joe Biden's Education Secretary, Miguel Cardona, cancelled $1 billion in student debt for defrauded borrowers in March, and DeVos will soon testify over why so few eligible defrauded borrowers never received relief.