Critics of for-profit higher education have of late drawn attention to what they see as a pattern of "accreditation shopping" in which for-profit entities purchase financially struggling nonprofit colleges, and then hold on to the regional accreditation that the nonprofit colleges had for years, even as the new owners expand or radically change the institutions’ missions.
One accreditor is saying "not so fast." The Higher Learning Commission of the North Central Association of Colleges and Schools has recently rejected two "change of control" requests to have accreditation continue with the purchases of nonprofit colleges (Dana College, in Nebraska, and Rochester College, in Michigan) by for-profit entities. Further, the accreditor insisted on a series of stipulations to approve the continued accreditation of Iowa’s Waldorf College — stipulations that will effectively keep the near-term focus of the college on its residential, liberal arts mission.
The rejection of the accreditation continuation for Dana led the college’s board to announce Wednesday that its purchasers no longer consider the deal viable. As a result, the sale will not take place and the college, founded in 1884, will shut down. There will be no operations for the 2010-11 academic year.
The decisions by the Higher Learning Commission (HLC) have been based on a new set of policies the accreditor approved that require that the mission remain similar after a purchase if the new owner wants the accreditation to carry over. A new owner who wants to change an institution’s mission still has the right to apply as a candidate for initial accreditation, but that process takes longer and is one that many purchasers of colleges want to avoid.
Sylvia Manning, president of the HLC, said that the new policy was designed to prevent the use of a struggling college’s accreditation to launch entirely new institutions. "This practice that has been called ‘accreditation shopping’ — that’s something we are very much opposed to. Accreditation is not like a liquor license."
The HLC does not release details on its decisions, although it announces them in general terms and plans to announce its decision on Dana today. A letter delivered to the college Wednesday was leaked to The Lincoln Journal Star. Manning declined to confirm the details in the letter that were quoted by the newspaper, but other sources verified its authenticity.
Dana, a Lutheran liberal arts institution, announced in March that it was being purchased by a new for-profit company. The new owners at the time said that they were going to be focused on building up the college in its present form — and that they were committed to keeping the college’s tenure system, an unusual move in for-profit higher ed.
The HLC letter, as described in the Lincoln newspaper, suggested that the investors had in mind a much more dramatic shift in Dana’s mission than they indicated at the time the purchase was announced. According to the Lincoln newspaper, the HLC rejected the idea of maintaining accreditation because of "an inability to demonstrate sufficient continuity of the college’s mission and educational programs," in part due to an interest in offering online programs that would represent a shift from the college’s "residential liberal arts programs."
Further, the HLC found that the new board lacks enough autonomy from the investors, and that the proposed leaders of the new college lacked sufficient experience leading liberal arts colleges to manage Dana.
Manning said that HLC acted in the Dana case, as well as in the reviews of the purchase of Rochester and Waldorf, under new rules that were adopted last year and finalized this year to govern the reviews of accreditation status in such shifts of ownership. The new rules place a strong emphasis on continuity of mission — a standard that could be difficult for purchasers who want to revive the finances of a traditional college by launching a major distance education operation.
The new rules say, for instance, that HLC will consider "the extension of the mission, educational programs, student body and faculty that were in place when the commission last conducted an onsite evaluation of the affiliated institution" and "the ongoing continuation and maintenance of the institution historically affiliated with the commission with regard to its mission, objectives, outreach, scope, structure, and related factors."
There is nothing wrong, Manning said, with purchasing a college with the idea of shifting its mission, but the appropriate thing to do in such cases is to apply as a candidate for initial accreditation, not to transfer existing recognition. "If it’s the same college, then we can extend the accreditation," she said.
She said that the policy on change of ownership was detailed over the last year because of the increasing number of for-profit purchases of nonprofit institutions. "We didn’t have this 10 years ago," she said.
Manning confirmed that HLC has also rejected the continuation of accreditation for Rochester College under a planned purchase, but she declined to say why. Rochester, a Christian college in Michigan, announced that it was being purchased by University Education, which is a subsidiary of K12 Inc., a publicly traded company that has focused on providing online education for elementary and secondary school students. K12 has been building links with higher ed of late, announcing a deal in April in which it is working with Middlebury College to apply the college’s expertise in foreign language instruction to the pre-college population.
The deal with Rochester, according to a description on the college’s Web site, seems to be based on the kind of mission shift that creates a conflict with the new HLC rules. "After exploring other potential candidates, K12 has selected Rochester College as its partner of choice for beginning its work in higher education. Through K12’s wholly owned subsidiary, University Education, the school will continue to operate as Rochester College — under a new Board of Trustees and with access to its world-class technology platform for delivering online courses," the statement says, adding that a physical campus will also be maintained and improved.
Officials of Rochester and K12 did not respond to requests for comment. Rochester’s statement on the reason for selling cited financial reasons: "Harsh economic realities have closed several small colleges over the past few years. Onerous debt, a declining donor base, poor financial decisions, and a harsh recession have combined to put Rochester College at risk."
As for Waldorf, whose accreditation was allowed to continue after a for-profit purchase, Manning stressed that many stipulations were placed on the college as a condition of continued accreditation. Those stipulations, Manning said, "essentially controlled the growth and required them to sustain the college." There are "limits on programs not already in place," she added. "They can’t walk away from that traditional mission."
At Dana, college leaders were clearly frustrated with the decision to deny continued accreditation after a sale. The official statement announcing closure said that "HLC’s decision was inaccurate, unfair and based on speculation and information not included in the required change of control request."
The college has about 550 students, and officials said that agreements with the University of Nebraska at Omaha and Grandview University, in Iowa, would allow students to continue their studies.