DeVos Sued by Virginia College Students Over Reckless Reinstatement of Shady For-Profit College Accreditor

See the Washington Post story HERE; reaction from Allied Progress director Derek Martin: 

“Only a billionaire activist like Betsy DeVos would think it’s a good idea to put a lobbyist in charge of regulating an industry they previously worked for. DeVos’ has already gone to bat for loan servicers, is it any surprise she’d do the accreditors’ bidding as well? Student Borrowers need a Secretary of Education that actually wants to solve the student debt crisis; Betsy DeVos needs to enroll in Revolving Door 101.”

ADDITIONAL BACKGROUND: 

For-Profit College Lobbyist Diane Auer Jones Led The Charge To Reinstate Controversial For-Profit College Accreditor ACICS

Two Former Students Have Sued The Department Of Education And Betsy DeVos Over Her Controversial Decision To Reinstate For-Profit College Accreditor ACICS

On June 3, 2019, Two Former Students Of For-Profit Virginia College Sued Betsy Devos Over The Reinstatement Of Controversial Accrediting Agency ACICS In April 2018. “The case, filed Monday in the U.S. District Court for the District of Columbia, explores the consequences of the secretary’s decision in April 2018 to grant the council, known by its acronym, ACICS, temporary recognition to act as a gatekeeper for billions of dollars in federal financial aid.” [Danielle Douglas-Gabriel, “Virginia College students sue DeVos for reinstating controversial for-profit college accreditor,” The Washington Post, 06/03/19]

Previously, A Federal Judge Had Ordered DeVos To Review A Petition From ACICS For Re-Instatement, But The Choice To Re-Instate Was Made By Her Department. A federal judge had ordered DeVos to review a 2016 petition by the council for reinstatement but did not explicitly say the department had to reinstate the accreditor. The Obama administration declared the accrediting body beyond redemption after identifying oversight failures. DeVos restored its status as a federally recognized agency pending her final decision.” [Danielle Douglas-Gabriel, “Virginia College students sue DeVos for reinstating controversial for-profit college accreditor,” The Washington Post, 06/03/19]

The Students’ Lawsuit Asks the Court To Throw Out DeVos’ Interim Recognition of ACICS And Cancel Federal Student Loans Issued To Pay Tuition At Virginia College. “[The students’ attorney] is asking the court to throw out DeVos’s interim recognition of the accreditor and cancel any federal loans issued to pay tuition at Virginia College between June 12 and Nov. 21, 2018. ‘These students took out thousands of dollars in student loans on the promise that they would be able to continue and complete their studies at Virginia College,’ Lewis said. ‘That didn’t happen when the school closed, so those students are entitled to redress.’”

Senators Previously Warned Betsy DeVos That Diane Auer Jones Might Reinstate For-Profit College Accreditor ACICS After She Started At The Department Of Education … Jones Went Ahead And Did Just That.

U.S. Senators Argued That Diane Auer Jones “Has A History Of Participating In The Revolving Door,” And Demanded To Know If She’s In A Position At ED To Give Favors To Her Industry Cohorts, Particularly Accrediting Firm ACICS

In April 2018, Ten Senators Called For Answers About Diane Auer Jones’ Conflicts Of Interest. “Ten Senate Democrats are questioning the role and potential conflict of interest of a recently hired official at the U.S. Department of Education who has ties to the for-profit college industry.[…] Senate Democrats say those relationships [with for-profit industry] color Jones’s objectivity in advising on policy and regulatory matters that affect her former employers and the for-profit industry.” [Danielle Douglas-Gabriel, “Senate Democrats question the role of a former for-profit college lobbyist at the Education Department,” The Washington Post, 04/28/18]

The Senators Said “Ms. Jones Has A History Of Participating In The Revolving Door.” In an April 26, 2018 letter to Betsy DeVos, ten U.S. Senators wrote, “Ms. Jones has a history of participating in the revolving door of government and lobbying, including a position as the chief lobbyist for a for-profit education company operating colleges accredited by ACICS.” [Letter from Richard Blumenthal et. al to Betsy DeVos, 04/26/18]

The Senators Were Specifically Concerned About Jones’ Authority To Reinstate An Accreditor That “Rubber-Stamped” For-Profit Schools And “Oversaw The Biggest Collapse of For-Profit Colleges In The History Of Federal Student Aid.” “Among the concerns raised in the eight-page letter: Lawmakers say they are suspicious of Jones having the power to recommend whether the Accrediting Council for Independent Colleges and Schools should be fully reinstated. The Obama administration stripped the organization of its power in December 2016, after deciding it was incapable of rectifying years of lax oversight. The organization accredited some of the biggest names in the for-profit college industry, including several once owned by Career Education, where Jones worked from 2010 to 2015.” [Danielle Douglas-Gabriel, “Senate Democrats question the role of a former for-profit college lobbyist at the Education Department,” The Washington Post, 04/28/18]

  • Senator Richard Blumenthal Told The Washington Post He Had “Significant” Concern That Jones Might Favor An Accreditor That “Rubber-Stamped” Fraudulent And Abusive Schools. “‘I have significant, specific concerns regarding Ms. Jones’ ability to oversee a derelict accreditor that has rubber-stamped the flow of federal dollars to colleges and universities that engaged in widespread fraud and abuse — the very same colleges and universities she has worked for most of her career,’ Sen. Richard Blumenthal (D-Conn.), one of the 10 lawmakers who signed the letter, said in an email to The Washington Post.”  [Danielle Douglas-Gabriel, “Senate Democrats question the role of a former for-profit college lobbyist at the Education Department,” The Washington Post, 04/28/18]
  • The senators’ letter asserted that ACICS was “an accrediting agency that oversaw the biggest collapses of for-profit colleges in the history of federal student aid.” [Letter from Richard Blumenthal et. al to Betsy DeVos, 04/26/18]

The Senators Argued That Jones Was A Lobbyist For A Company That Operated Nine Schools Which Were Punished For “Misrepresenting Job Placement Rates.” “In federal disclosure forms, Jones was listed as a lobbyist for Career Education at a time when the company was subject to investigations, lawsuits, enforcement actions and settlements. In 2012, nine of the company’s schools were sanctioned by one accrediting agencies [sic] for misrepresenting job placement rates, but the schools’ other accreditor — the Accrediting Council — choose not to take action. Senate Democrats questioned whether Jones pressured the council to go easy on her employer.” [Danielle Douglas-Gabriel, “Senate Democrats question the role of a former for-profit college lobbyist at the Education Department,” The Washington Post, 04/28/18]

The Senators Argued That Jones Served As An Expert Witness For A Chain Of For-Profit Schools That Tried To Gain Nonprofit Status But Was Rejected By ED. “The lawmakers said they also are wary of the senior policy adviser’s ties to the Center for Excellence in Higher Education, a Utah-based chain of career colleges that are seeking to convert from for-profit status to nonprofit for federal financial aid purposes. The Education Department in 2016 rejected the company’s bid to convert to nonprofit status. Jones served as an expert witness when the company sued the Education Department over its decision.” [Danielle Douglas-Gabriel, “Senate Democrats question the role of a former for-profit college lobbyist at the Education Department,” The Washington Post, 04/28/18]

Diane Auer Jones Went On To Confirm The Senators’ Fears When She “Effectively Reversed” ED’s Prior Decision To Strip ACICS’ Accreditor Status, Arguing That It Was A Victim Of “Government Strong-Arming” Although ED Has Found That ACICS Had Flouted “Nearly 60 Federal Regulations”

Diane Auer Jones “Effectively Reversed” An Obama-Era Decision To End ED’s Recognition Of ACICS’ Accreditor Status. “Nearly two years ago, the U.S. Education Department finalized a decision to strip a controversial accrediting agency of its federal recognition, ending its ability to serve as a gatekeeper for federal student aid. However, following a court decision and review of more than 30,000 pages of documents, a senior official at the department has now effectively reversed that decision. A letter to the Accrediting Council for Independent Colleges and Schools, dated September 28, concluded that the council was now in compliance with all but two of the necessary standards for recognition.” [Eric Kelderman, “Education Department Moves to Give Controversial Accreditor of For-Profits Another ChanceThe Chronicle of Higher Education, 09/29/18]

Jones Blamed ED Staff And Argued That ACICS Was Likely In Compliance” With ED Accreditation Standards. “In making her decision, Auer Jones largely faulted the department’s staff, its political appointees, and the federal panel that advises the secretary on accreditation decisions for not considering additional evidence and measures the accreditor had taken to meet the standards before the 2016 decision. ‘Acics was likely in compliance with many of these criteria in 2016 at the time of the secretary’s decision,’ Auer Jones wrote in her 77-page decision, which was completed without input from the staff in the department’s accreditation division.” [Eric Kelderman, “Education Department Moves to Give Controversial Accreditor of For-Profits Another ChanceThe Chronicle of Higher Education, 09/29/18]

Jones Argued That ACICS Was A Victim Of “Government Strong-Arming” And That ED Staff “Predetermined” Its Decision Before Evaluating All The Available Material. “Not reviewing the additional documents ‘is an example of government strong-arming that is simply unacceptable and, in my opinion, is a strong sign that the department had predetermined’ the accreditor’s ‘destiny, whether or not the evidence provided did or did not justify the determination,’ Auer Jones wrote.” [Eric Kelderman, “Education Department Moves to Give Controversial Accreditor of For-Profits Another ChanceThe Chronicle of Higher Education, 09/29/18]

ED Issued A More Recent Analysis Finding That ACICS Was “Out Of Compliance With Nearly 60 Federal Regulations. “The latest decision conflicts with a separate staff analysis, completed earlier this year, that found the accreditor out of compliance with nearly 60 federal regulations. Auer Jones dismissed that report, however, saying that it could not be considered because it was done for a different process, as the accreditor sought to reapply for recognition.” [Eric Kelderman, “Education Department Moves to Give Controversial Accreditor of For-Profits Another Chance,The Chronicle of Higher Education, 09/29/18]

Earlier in Her Career, Diane Auer Jones Spent Five Years Lobbying For A For-Profit College Corporation That Drew The Fire Of Federal And State Regulators For Deceiving Students

For Nearly Five Years, Diane Auer Jones Was A Chief Lobbyist For Career Education Corporation, Which Drew Scrutiny From The Senate, FTC, SEC, And 22 Attorneys General For “Misleading And Deceptive Recruiting Tactics.”

From 2010 To 2015, Diane Auer Jones Worked On “Regulatory Operations” And “Government Affairs” As An Executive At Career Education Corporation. Diane Auer Jones was “SVP and Chief External Affairs Officer” of Career Education Corporation from October 2010 to March 2015. She said she, “[s]erved as the senior executive responsible for company-wide regulatory operations, licensure and accreditation, corporate communications, public relations, government affairs and centralized academic services.” [LinkedIn Profile for Diane Jones, accessed 05/23/18]

During Jones’ Tenure At CEC, A Senate HELP Committee Report Noted There Were “Allegations of Misleading And Deceptive” Recruiting Practices Against CEC. “The company appears to offer little in the way of student support services, and has struggled to address allegations of misleading and deceptive recruiting tactics as well as misrepresentations in its job placement rates.” [“Career Education Corporation,” U.S. Senate Committee on Health, Education, Labor, and Pensions, accessed 10/11/18 and “FOR PROFIT HIGHER EDUCATION: The Failure to Safeguard the Federal Investment and Ensure Student Success,” U.S. Senate Committee on Health, Education, Labor, and Pensions, 07/30/12]

Career Education Corporation Has Been Investigated By The FTC, SEC, And Twenty-Two Attorneys General. “In recent years the company has been under investigation for deceptive practices by the Federal Trade Commission; the Securities and Exchange Commission; and the attorneys general of Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Washington, Illinois, Tennessee, Hawaii, New Mexico, Maryland, Florida, Massachusetts, Minnesota, New York, and the District of Columbia.” [David Halperin, “Another For-Profit College Lobbyist To Join DeVos Education Department,” Republic Report,03/06/18]

In 2013 Career Education Corporation Had To Pay $9.25 Million In Restitution And A $1 Million Penalty For Having “Significantly Inflated Its Graduates’ Job Placement Rates.” “Attorney General Eric T. Schneiderman today announced a $10.25 million settlement with Career Education Corporation (‘CEC’), a for-profit education company. The settlement resolves an investigation that revealed that in disclosures made to students, accreditors, and New York State, CEC significantly inflated its graduates’ job placement rates. CEC will pay $9.25 million in restitution to students, a $1 million penalty, and has agreed to substantial changes in how the company calculates and verifies placement rates.” [Press Release, New York State Office of the Attorney General, 08/19/13]

In 2011 Career Education Corporation Settled A $40 Million Class Action Lawsuit For Claiming Its Job Placement Rate Was 97% Without Noting That A “‘Substantial Majority’“ Of The Jobs Paid Less Than $12 An Hour And Were Largely Entry-Level. “In 2011, CEC agreed to pay $40 million to settle a class action lawsuit involving another of one its subsidiaries, the California Culinary Academy in San Francisco. In that case, former students allege that the college’s admissions representatives and catalog boasted a job placement rate of 97 percent, but that the college did not tell applicants that the statistics included graduates working as baristas, prep cooks, line cooks and waiters, jobs for which no degree was necessary. The complaint also contends that wages for a ‘substantial majority’ of the jobs included in the statistics paid $12 an hour or less.” [“Career Education Corporation,” U.S. Senate Committee on Health, Education, Labor, and Pensions, accessed 10/11/18]

Since Joining the Department of Education, Diane Auer Jones Has Been Intent On Loosening Accrediting Standards To Let More For-Profit Schools Feed On Federal Funding

Diane Auer Jones Is Focusing On Loosening Oversight Of Accreditors, Giving Them A “Safe Space,” Having Them “Tolerate Some Risk,” And Arguing That They And Other Regulators Should “Stay In Their Lanes.”

Under Diane Auer Jones And Betsy DeVos, ED’s Higher Education Policy Is “A Stark Contrast To The Obama Administration’s […] Tougher Scrutiny Of Accreditors.”“The broad plan from Education Secretary Betsy DeVos to ‘rethink’ higher education is a stark contrast to the Obama administration’s approach, which made a signature policy of tougher scrutiny of accreditors, often citing oversight failures involving low-performing for-profit colleges. ‘Accreditation is right at the crux of almost everything you do in higher ed,’ Jones said last week. ‘We’re looking at every aspect of accreditation and saying, ‘Does this make sense?’“ [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Diane Auer Jones “Said The [Trump] Administration’s Goal Is To Reduce Compliance Requirements For Accreditors.”“Diane Auer Jones, the department’s principal deputy under secretary, delegated to perform the duties of under secretary and assistant secretary for postsecondary education, said the administration’s goal is to reduce compliance requirements for accreditors, freeing them up to focus on educational quality while more clearly defining the college oversight roles of those agencies, state governments and federal regulators.” [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Jones Is Working To Have Accreditors “Tolerate Some Risk” To More Easily Grant Title IV Funding To Schools.“Jones said DeVos wants to allow accreditors to ‘tolerate some risk.’ For example, she said, the administration is interested in encouraging colleges to offer degrees through new online models at more affordable prices. The federal government outsources much of its gatekeeping role for student aid to accreditors. Without their approval, colleges and universities can’t maintain their access to Title IV federal funds.” [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Jones Has Argued That Accreditors, Federal Regulators, And State Regulators Should “Stay In Their Lanes,” And That Accreditors Should Not Have Oversight Of For-Profits Converting To Nonprofits.“Part of the administration’s goal with the accreditation overhaul, Jones said, is to better define oversight roles and to ensure that accreditors and state and federal regulators ‘stay in their lanes,’ focusing on their core strengths.”

  • “For example, she said, accreditors tend to be ill suited to properly scrutinizing the financial health of colleges or the specifics of complex financial interactions, including the wave of large for-profits that are seeking to convert to nonprofits. Those jobs are best left to the feds and state regulators, she said. “Their expertise is not in evaluating contract terms,” Jones said of accreditors. “The role of the accreditor is to make sure the institution is well run.” [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Jones Said, “The Credit Hour Probably Interferes With Innovation Almost More Than Anything” While Issuing A “Controversial Proposal” To Undo Obama-Era Rules To Hold Accreditors More Accountable For Overseeing Credit Hours.  “‘The credit hour probably interferes with innovation almost more than anything,’ she said. ‘I think most educators believe we should go back to the way we did it for 100 years where institutions determine what the credit hour should be and justify it to their accreditor.’“ [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

  • Diane Auer Jones Described Plans To Drop The Obama Administration’s “Standardized Definition For Academic Coursework.”“In what will be the one of the most controversial proposals, [Jones] said the department wants to drop a standardized definition for academic course work, known as the credit hour, that the Obama administration rewrote in 2010 to curb credit inflation.” [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]
  • “The Obama administration issued the credit-hour definition in 2010 after the inspector general found that colleges had inflated the value of credits to get more federal student aid.” [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Jones Argued In 2018 That “We Have To Give Accreditors A Safe Space To Support That Innovation. “‘We have seen some accreditors that want to be bold. Too many times they’ve done it with the department’s blessing and have gotten blindsided after the fact,’ said Jones, a former assistant secretary of education in the George W. Bush administration. […] ‘If we really want innovation to take place, we have to give accreditors a safe space to support that innovation.’“ [Andrew Kreighbaum, “DeVos to Announce New Push for Deregulation, Innovation,” Inside Higher Ed, 07/30/18]

Although Diane Auer Jones Acknowledged That Some Lenders “Behaved Badly,” She Defended Them, Claiming That They Have “Have Benefited Thousands If Not Millions Of Students.” “We must also acknowledge that while some FFEL lenders have behaved badly and all have enjoyed generous government guarantees for the non-secured loans they make, they have enabled millions of low- and middle-income individuals to attend college. These lenders have also achieved dramatic reductions in borrower default rates due to improved consumer counseling and customer service. In addition, many have used their profits to establish scholarship and college-readiness programs, which have benefited thousands if not millions of students.” [Carol Iannone, “Old Ills, New Remedies: A Conversation with Diane Auer Jones,” National Association of Scholars, 06/29/09]

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