Accreditation is crucial for two reasons. First, it helps with marketing. Students assume "accreditation" means degree programs are legitimate and/or have gained an independent stamp of quality. Second, accreditation allows schools to participate in Title IV financial aid programs (the ones that require you to fill out a FAFSA form for grants, federal loan programs, etc.) which have brought billions of dollars in profit to UOP, Everest, DeVry, and other for-profits.
Thanks to Frontline, I knew that some for-profit schools "bought" regional accreditation by taking over failing non-profit schools. One famous example involved an obscure school with 312 students known as Franciscan University of the Prairies. It was bought in 2005 by Bridgepoint Education, renamed "Ashford University", and turned into an online university with 54,000 students. It was nevertheless able to keep its regional accreditation from the North Central Association of Colleges and Schools (details here). Google it now, and the first thing you'll see in the listing is "Ashford University is a top accredited university." It's a marketing cue that conveys legitimacy, even though the accreditation was gained through a financial takeover, as opposed to an academic program review.
But there's another path to accreditation, if taking over a regional accredited school proves too difficult or costly, or the schools in question otherwise want to buttress the reputations of their degrees and programs: The for-profits get "national" accreditation. Over the years, national accrediting agencies have sprung up around niche educational fields (business, nursing, etc.) to serve community colleges and small for-profit technical schools that offer live classes. In recent years, however, large for-profits (including many online universities) have latched onto these bodies, knowing that students don't know the difference between regional and national accrediting bodies. For instance, the MBA and other business degrees offered by the University of Phoenix (owned by Apollo Group) are accredited by the Accreditation Council for Business Schools and Programs (ACBSP), whose membership is dominated by small community colleges, international schools and for-profits. (Ashford is also a listed member of ACBSP, although it does not have accreditation from it -- although if its regional accreditation falls through, it will need a backup plan.)
Some for-profits even control their own national accreditation body, the Accrediting Council for Independent Colleges and Schools (ACICS). The current ACICS board is filled with for-profits such as Education Corporation of America, Corinthian College (Everest Institute), CollegeAmerica Services, and Lincoln Educational Services. Is it a conflict of interest? As noted by for-profit education industry critic Steve Eisman, "The scandal here is exactly akin to the rating agency role in subprime securitizations."
Further down the page, I've embedded a presentation by Eisman, a short-seller who is betting against for-profit schools. Despite his obvious interest in seeing the for-profits decline in value, his assessments of the industry should be seen by students -- much of his criticism is valid (Note that I did check Eisman's data about accreditation against other sources, including ACICS, ACBSP, The Department of Education accreditation website as well as the websites of the for-profit schools themselves).
Steve Eisman - Ira Sohn Conference - May 2010
Update 3/21/2011: Another interesting approach by an online diploma mill called "Lorenz University" to the pesky accreditation problem - use IAAFOE and ACTDE. Authentic-sounding acronyms, until you look at who operates the websites ...
For further reading on this topic, I would suggest the following posts:
- For-profit schools take a hit from Frontline
- SNL's "University of Westfield" ad: The reputation of online degrees takes another hit
- What's the value of a University of Phoenix degree?
- Online education: A teacher speaks
- Distance education at Harvard: I'm not convinced
- More distance education commentary from Harry Lewis, ClueHQ, and yours truly
- MBA math review