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Commentary By Preston Cooper

Many Accreditors Have Conflicts Of Interest

Education Higher Ed

“People of the same trade rarely meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” So wrote Adam Smith in The Wealth of Nations in the same year the United States was founded. One would think the federal government would have taken Smith’s wisdom to heart by now.

Today, representatives of America’s colleges and universities frequently meet under the sanction of the government, and it is certainly not for merriment and diversion. To decide which colleges and universities are eligible to receive over a hundred billion dollars annually in taxpayer-funded student aid, the Department of Education leans on accreditation agencies. These “gatekeepers” are private organizations, but they serve a very public function—in deciding which institutions are eligible for federal funding, they shape the higher education marketplace in America.

In a recent report for Economics21 at the Manhattan Institute, I found that two-thirds of the commissioners who staff regional and national-level accreditation agencies are employed at colleges and universities which they oversee. In essence, the agencies the government charges with quality control at federally funded colleges are full of representatives of the colleges themselves.This framework has the makings of a cartel.

While accreditation agencies have policies to deal with such conflicts of interest, they generally do not go far enough. Asking a commissioner to leave the room only when his college’s accreditation status is being discussed still maintains the possibility of favor-trading with other commissioners, or designing accreditation standards to advantage incumbent colleges and hamstring the competition.

Earlier this year, the Department of Education revoked recognition of one accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS), for not sufficiently scrutinizing the institutions under its purview. These were mostly for-profit institutions, including now-defunct ones such as ITT Technical Institute.

It may be tempting to view the conflict of interest problem as one of shady for-profit schools conspiring to escape scrutiny. But the problem is less extensive at ACICS...

Read the entire piece here on Forbes

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Preston Cooper is a fellow at the Manhattan Institute's Economics21. Follow him on Twitter here.

This piece originally appeared in Forbes