By Joshua Benton
American colleges and universities have to negotiate a complex network of approvals and accreditations to be successful.
The most important come from state officials, who typically grant colleges the right to operate and grant degrees. Without state approval, colleges generally can’t open their doors.
But the most prestigious stamp of quality a college can get is regional accreditation. Six regional bodies exist to evaluate colleges and their academic programs, leadership and financial stability.
Nearly every prominent university in the country is regionally accredited, from the Ivy League to the University of Texas. There are forms of national accreditation that are considered less prestigious, used most often by trade schools and career colleges.
But many employers, licensing agencies and graduate schools won’t accept degrees or transfer credits from colleges that aren’t regionally accredited. For instance, Texas regulators generally won’t let an out-of-state college open a branch campus in Texas unless it is regionally accredited.
“That’s viewed as the gold standard,” said Sean Gallagher, a senior analyst at Eduventures, a company that tracks the for-profit education market. “Colleges work very hard to get it.”
Or, increasingly, they buy it.
It has become more and more common for for-profit companies to purchase struggling not-for-profit colleges, particularly small schools in the Midwest. And they are often motivated, at least in part, by a desire to ease access to accreditation or other permits.
But in most cases, the colleges were either trade schools or maintained a significant portion of their past identity after the sale – keeping the name or campus, maintaining academic staff, or continuing to enroll the same students.
Perhaps the closest analog to the Barat sale was the financial collapse of Jordan College, a small chain of not-for-profit colleges in Michigan. It offered primarily career training to a population of poor and nontraditional students, some of them on welfare.
Jordan ran into financial difficulties in the early 1990s, including a federal inquiry into misspending grant money. It shut down in 1995.
For-profit colleges must meet relatively tough requirements before they can open in Michigan. But the University of Phoenix wanted an entry to the state’s market. So it bought Jordan’s paper remains, including its state authorizations, and used them to open Phoenix campuses.
When a for-profit buys a college, accreditors generally still require the purchaser to meet a number of standards, on things like academic offerings and financial stability.
For instance, North Central has required the American College of Education to answer a number of questions about its library facilities and other matters. But buying an existing college still gives a start-up a big jump in accreditation.
Contrast ACE’s story with another recent start-up, Ave Maria College. The conservative Catholic college is the brainchild of Tom Monaghan, the founder of Domino’s Pizza, and opened its doors in Ypsilanti, Mich., in 1998.
Michigan is in North Central’s jurisdiction, so Ave Maria applied for accreditation with the agency in 2002. As a start-up college, it had to go through the standard process: an application, a site visit, a promotion to “candidate” status, and eventually accreditation. Four years later, it still hasn’t reached that final stage.
Ron Muller, the college’s former president, acknowledged that Ave Maria searched for a dying college it might be able to buy out. That would have sped up Michigan’s difficult state approval process. But it had no luck.
“In Michigan, there was no kind of wobbly institution that we could make a deal with, but we did look,” he said.
Under Michigan’s rules, Ave Maria couldn’t even call itself a college legally in its early days. It went by the name Ave Maria Institute instead.
“There’s a certain element of trust in enrolling in an institution, and it’s a handicap” not being fully accredited, Dr. Muller said. It may have pushed some students away, he said, and limited students’ access to federal financial aid.
(As it turns out, Ave Maria will never reach full accreditation with North Central. The college’s leaders have decided to move the campus to a new site in Florida, which falls outside North Central’s jurisdiction.)
Dr. Muller said he was surprised North Central would allow Barat’s accreditation to transfer to ACE. “The accrediting people want to assure good student outcomes and make sure real learning is going on,” he said. “How can you demonstrate that before you open your doors?”
North Central has a reputation among some as being friendly to for-profit and other nontraditional forms of higher education. For example, it was North Central that accredited the for-profit University of Phoenix in 1978. The founders had moved their operation from California to Arizona two years earlier because California’s regional accreditor had considered the school a diploma mill.
But several education observers said that other accreditors have become more like North Central in recent years, approving for-profit and nontraditional institutions regularly.
“It’s very troubling, because if North Central has done it, others will do it, too,” said James Perley, a retired college dean and chairman of the American Association of University Professors’ accreditation committee. “North Central stands out as the star among the group.”
Steven Crow, executive director of North Central’s Higher Learning Commission, defended his organization’s standards.
“We know their ultimate goal is to make some money, but you can make money and still do a good piece of work,” he said of ACE. “We were told the intent of ACE was to actually breathe life into those programs that were the largest at Barat.”
He said North Central would ensure that ACE’s promises are actually being met.