The Role of Accreditation Commissions in Higher Education

[أحمد أبو زنط]

The Role of Accreditation Commissions in Higher
Education: The Troublesome Case of Dana College


Richard A. Epstein




INTRODUCTION: EDUCATIONAL ACCREDITATION
AND THE MARKET FOR INFORMATION
One of the standard results of modern economic theory is that it
is far easier for consumers to obtain reliable information about
goods than it is about services. The ordinary consumer of goods
often buys fungible products in small quantities, which can typically
be inspected before use. Even with respect to those attributes that
are latent, experience with the initial purchase generates a lot of
information about product characteristics that influences the
willingness to make the next purchase.1 With most consumer goods,
individuals can rely on some mixture of search and experience.2 They
can rely on brand reputation, obtain free samples, review consumer
reports, or rely on word-of-mouth endorsements from strangers and
friends. Taken together, these multiple sources ensure that the
information deficits for standard goods are relatively small, so that
people know that once they purchase branded commodities they are
confident of having uniform experiences from one case to the next.3
Services are often far more difficult to evaluate. To be sure,
there are some services supplied by TV repairmen, plumbers, and
† Laurence A. Tisch Professor of Law, New York University Law School; Peter and
Kirsten Bedford Senior Fellow, the Hoover Institution; James Parker Hall Distinguished
Service Professor Emeritus of Law and Senior Lecturer, the University of Chicago Law
School.
This paper has been prepared for the Understanding Education in the United States: Its
Legal and Social Implications Symposium held at the University of Chicago Law School on
June 17 and 18, 2011. My thanks to Sean Childers, Chris Dodge, and Chris Lang, NYU Law
School, Class of 2013, for their able research assistance.
1 For a discussion of the relationship between search and experience goods, where the
former refers to “qualities of a brand that the consumer can determine by inspection prior to
purchase of the brand” and the latter refers to “qualities that are not determined prior to
purchase,” see generally Phillip Nelson, Information and Consumer Behavior, 78 J Polit Econ 311
(1970) (exploring the implications of search and experience goods on market behavior). See
also Phillip Nelson, Advertising as Information, 82 J Polit Econ 729, 730 (1974).
2 See Nelson, 78 J Polit Econ at 321–23 (cited in note 1). See also Martin Meyers,
Meeting the Challenge of Marketing Intangibles, 15 Acad Mktg Stud J 145, 147 (2011).
3 See William M. Landes and Richard A. Posner, Trademark Law: An Economic
Perspective, 30 J L & Econ 265, 270 (1987).
84 The University of Chicago Law Review [79:83
automobile mechanics whose quality can often be determined
relatively quickly after use: we know whether the TV works, whether
the pipes are still clogged, or whether the engine turns over. But with
many types of services, such as health care and education, the
evaluative process is a far chancier operation for two reasons. First,
the time horizon on which these judgments have to be made is often
quite long. Second, the nonstandard nature of the treatment and the
intervention of other relevant causative factors make it difficult to
determine whether favorable or adverse consequences should be
attributable to the efforts of these service providers or the behavior
of the service recipient. The likely fit between a given student and a
given institution is often hard to measure, and the simple strategy of
trying the product once and then switching to a close substitute if it
fails to meet expectations does not work well in many service
markets. Education at a college or university is ordinarily consumed
in one-, two-, or four-year quantities, and any effort to switch
educational institutions midstream is a costly alternative that in most
settings (but not, as we shall see, in the case of Dana College) is
taken up only by a relatively small number of students.4 Choices are
largely made in an environment that poses a high risk of information
failure.
In markets characterized by delayed outcomes and massive
confounding factors, reputation continues to matter, perhaps even
more than it does with inspection-type goods. Yet the information
shortfall systematically leads to the introduction of intermediate
institutions to evaluate key information about these products. This is
surely the case with education, where gaps in information about the
quality of education have led to the rise of intermediate institutions
whose function is to organize information about the comparative
strength of different institutions in any given market segment.5 It is
for these reasons that the rankings offered in such publications as the
Princeton Review,6 Bloomberg Businessweek,7 and US News & World
Report8 on colleges, business schools, and law schools pack so much
punch.9 They offer a common reference point that allows applicants
4 See Government Accountability Office, Transfer Students: Postsecondary Institutions
Could Promote More Consistent Consideration of Coursework by Not Basing Determinations
on Accreditation 1 (Oct 2005).
5 See Paul L. Caron and Rafael Gely, What Law Schools Can Learn from Billy Beane
and the Oakland Athletics, 82 Tex L Rev 1483, 1510–13 (2004).
6 See http://www.princetonreview.com/college-rankings.aspx (visited Oct 22, 2011).
7 See http://www.businessweek.com/bschools/rankings (visited Oct 22, 2011).
8 See http://www.usnews.com/education (visited Oct 22, 2011).
9 See Jeffrey Evans Stake, The Interplay between Law School Rankings, Reputations,
and Resource Allocation: Ways Rankings Mislead, 81 Ind L J 229, 232–42, 244–60 (2006).
2012] Role of Accreditation Commissions in Higher Education 85

without direct information to make choices that, while imperfect, are
thought to be more reliable than those choices that would be made
in the absence of any such source of information.
One of the great virtues of this voluntary market is that entry
into that space is not hampered by any form of government
regulation. The information from one source can be offset, at least in
part, by information gleaned from another source, which results in a
useful, if imperfect, limitation on the information so generated. In
some cases, organizations that receive negative rankings can—
indeed, they are invited to—make presentations to these various
ratings organizations, which may in some instances result in either
the reworking of the standard or a revaluation of the institution in
question.
In many ways, however, these self-generated, third-party
evaluations are often incomplete; so, many educational institutions
commission other organizations to rate their overall performance.
From such modest origins are various accreditation systems born. It
is no accident that accreditation systems tend to flourish in those
areas where participation in the market is voluntary, which includes
virtually all educational institutions above K–12 and the private
educational market for the K–12 level. In one sense, these
accreditation associations are more comprehensive than the
standardized audits that many financial firms commission about their
own affairs. Few private institutions are so confident of their own
stature that they are willing to forsake all forms of evaluation by
independent accreditation organizations of which they are a part.
In many instances, the voluntary nature of these organizations
works well because what is sauce for the goose is sauce for the
gander. As a matter of general practice, accreditation is, in the
absence of special circumstances, conducted on a regular cycle of,
say, seven years. Each institution starts with a detailed self-study in
accordance with a strict protocol set out by the accrediting body.
Once that study is completed, it is circulated to an accreditation team
that is typically made up of senior members of other institutions
within the group. The accreditation committee meets on its own to
plan a site visit during which it collects information. After the visit, it
writes a report that contains its recommendations and supporting
reasons for the accreditation or reaccreditation of the school.10
10 See American Bar Association Section of Legal Education and Admissions to the Bar,
The Law School Accreditation Process *3–11, online at http://www.americanbar.org/content/dam
/aba/publications/misc/legal_education/2010_aba_accreditation_brochure.authcheckdam.pdf
(visited Oct 23, 2011).
86 The University of Chicago Law Review [79:83
In most instances, the programs work uneventfully. Because
each school in turn is subject to evaluation by teams made up of
people from other institutions, there is a natural check on what
members are likely to say about others. Outright refusals to accredit
established institutions are infrequent. But in some cases institutions
can be put on probation, especially if they fall short on some key
measurable variable relating to such matters as endowment, budget,
student-faculty ratios, and the like.11 Yet the sure knowledge that
each institution will soon find itself in the dock tends to place some
boundaries on the process. And in private markets at least, the threat
to withdraw, either individually or as a group, can also place some
constraints on how these accreditation bodies operate.
What is typical about how accreditation institutions operate
need not be universal, and for two reasons. First, one implicit
constraint against opportunistic behavior is a set of universal rules
that binds all parties equally. Rules of that sort are difficult to form
for markets that are undergoing rapid transformation. In addition,
further difficulties arise in connection with accreditation institutions
whose reach extends beyond the simple provision of information for
members and the world at large. In this regard, it is critical to note
that in many instances, decisions of accreditation agencies do not
only supply information to the world at large. Rather, they also are
used to meet legal preconditions for the ability of graduates of these
institutions to participate in certain markets. Thus the accreditation
system of the American Bar Association, which operates through its
Council of the Section of Legal Education and Admissions to the
Bar, becomes in practice relevant to whether graduates of those law
schools may be licensed to practice law.12 Indeed, the ABA is quite
insistent in its belief “that every candidate for admission to the bar
should have graduated from a law school approved by the ABA and
11 See, for example, Susan Kinzie, Panel’s Review Lands Medical School on Probation,
Wash Post B05 (Oct 16, 2008) (reporting that George Washington University School of Medicine
and Health Sciences was put on probation by the Liaison Committee on Medical Education,
making it the only institution on probation at the time and only the fifth since 1994).
12 See American Bar Association Section of Legal Education and Admissions to the Bar,
2011–2012 Standards and Rules of Procedure for Approval of Law Schools iv (2011), online at
http://www.americanbar.org/content/dam/aba/publications/misc/legal_education/Standards
/2011_2012_standards_and_rules_for_web.authcheckdam .pdf (visited Oct 23, 2011):
The majority of the highest courts of the states rely upon ABA approval of a law school
to determine whether the jurisdiction’s legal education requirement for admission to the
bar is satisfied. Whether a jurisdiction requires education at an ABA-approved law school
is a decision made by a jurisdiction’s bar admission authority and not by the Council or
the ABA.
2012] Role of Accreditation Commissions in Higher Education 87

that every candidate for admission should be examined by public
authority to determine fitness for admission.”13
The clear implication of this statement is that the ABA hopes
through its influence to make sure that it is the sole pathway through
which accreditation can take place. Yet there is no explicit
acknowledgement in this instance that any assertion of monopoly
power—an evocative word that the ABA does not use to describe its
powers—should be subject to any useful oversight on how these
accreditation standards should be set and applied. The ABA could
not, in my view, decide that the accredited law schools must all teach
courses that speak to the superiority of capitalism, the inevitability of
the social democratic state, the natural superiority of men over
women, or the imperative social need for gender equality. The
simple point here is that to the extent that this organization makes
itself into a portal—and especially the exclusive portal—for
occupational privilege, the correlative duties of nondiscrimination
should be quite clear.14
I. THE ACCREDITATION PROCESS AND DANA COLLEGE
The same issue applies to educational accreditation that does
not involve the practice of law. That observation quickly leads to the
particular subject of this paper, which reexamines a decision of the
Higher Learning Commission of the North Central Association of
Colleges (HLC), which operates out of Chicago.15 On June 30, 2010,
it moved to deny a “change of control” application of Dana (which
rhymes with the last syllable of banana) College. That application
was filed by the Dana Education Corporation (DEC), a for-profit
entity.16 Clearly nothing can be done to reverse that decision. But this
entire episode still offers an instructive lesson on the role of
accreditation in modern undergraduate education in the United
States.
13 Id.
14 A similar issue was raised regarding the ability of Hastings College of Law to keep out
student organizations that did not hew to its line on certain issues of gender equity. See
Christian Legal Society Chapter of the University of California, Hastings College of Law v
Martinez, 130 S Ct 2971, 2979–81 (2010), which I criticized in Church and State at the
Crossroads: Christian Legal Society v. Martinez, 2010 Cato S Ct Rev 105, 110.
15 For information about this organization, see http://www.ncahlc.org (visited Oct 23, 2011).
16 In the interest of full disclosure, one of DEC’s principals was my son-in-law, Daniel
Pianko, who was slated to become the chairman of the board of trustees in the reconstituted
institution. I had no role in filing the application and no financial stake in its operation. Indeed,
I only learned of the transaction after HLC had rejected the application of DEC. I have written
this entire paper by myself, based solely on information that is a matter of public record.
88 The University of Chicago Law Review [79:83
As with all stories, it is useful in this instance to note the two
parties who squared off in this debate. HLC controls the
accreditation for over a thousand colleges and universities located in
nineteen states.17 It is one of six regional accreditation organizations
for four-year institutions in the United States.18 All of these
organizations today work closely with the Department of Education
(ED), which is responsible for distributing massive forms of
government aid, chiefly in the form of subsidized loans, to the
students who attend these institutions. On a wide range of issues, the
central mission of HLC and its sister organizations is to make sure
that their accreditation stations work in harmony with ED on key
issues such as defining a credit hour, on which the allocation of about
$150 billion in student aid currently turns.19 The relationship between
the six accreditation institutions and ED is obviously a large portion
of any account of how these agencies operate, because there is no
doubt that they have a dual capacity. In some instances, the
accreditation institutions act as agents of the membership, but in
others they act as agents of the federal government—especially on
that critical issue of student aid.
On the other side of this transaction is, or was, Dana College,
which was founded in 1884 by Danish pioneers as a small Lutheran
college in the town of Blair, Nebraska, about twenty-five miles
northwest of Omaha, overlooking the Missouri River.20 As such, it
was—for the school has now closed its doors forever—one of the
17 The nineteen states are: Arizona, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas,
Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma,
South Dakota, West Virginia, Wisconsin, and Wyoming. See http://www.ncahlc.org/component
/com_directory/Itemid,192/form_submitted,TRUE/institution,/showquery,/state,ANY/submit,Sear
ch/ (visited Oct 23, 2011).
18 See Council for Higher Education Accreditation, Recognized Accrediting Organizations *1
(Aug 2011), online at http://www.chea.org/pdf/CHEA_USDE_AllAccred.pdf (visited Oct 23, 2011).
19 The issue is right now front and center, for as ED explained in its letter to the six
accreditation organizations:
The definition of a credit hour for Federal purposes is necessary, in part, because more
than $150 billion of Federal financial aid is awarded annually based on an individual
student’s enrollment, as represented in number of credits. The credit hour is a basic unit
of student aid eligibility, and the new regulations address vulnerabilities in the student aid
programs that leave them open to fraud and abuse.
Eduardo M. Ochoa, Assistant Secretary for Postsecondary Education, Guidance to Institutions
and Accrediting Agencies Regarding a Credit Hour as Defined in the Final Regulations Published
on October 29, 2010 (Mar 18, 2011), online at http://ifap.ed.gov/dpcletters/GEN1106.html (visited
Oct 23, 2011).
20 For more information about the college, see generally William E. Christensen, Saga of
the Tower: A History of Dana College and Trinity Seminary (Lutheran 1959); Peter L.
Petersen, A Place Called Dana: The Centennial History of Trinity Seminary and Dana College
(Dana 1984). For the most recent updates, see Wikipedia, Dana College, online at
http://en.wikipedia.org/wiki/Dana_College (visited Jan 31, 2012).
2012] Role of Accreditation Commissions in Higher Education 89

many small colleges in the United States that served its core
constituency well for many years. Its small faculty had 45 professors
and 8 instructors, and its student body at the time of closing
numbered 637, all of whom were able to finish their educations at
other institutions once Dana closed its doors.21
Prior to that time, Dana had entered into a period of decline
that accelerated over time. In the years before it closed its doors, it
ran progressively larger deficits between 2005 and 2009.22 By early
2010 the endowment stood at only $1 million, which was not enough
to sustain Dana past July 1, 2010.23 The difficulties with its sagging
enrollment lay at both ends, with insufficient recruitment efforts in
the core region of Nebraska and Iowa, coupled with the inability to
retain students after their first year, when close to 40 percent of the
student body transferred to other institutions.24 These internal
difficulties were aggravated by the nationwide economic downturn that
made it impossible for Dana to increase its alumni contributions even
though it added two new development officers.
The dire internal situation made it clear to all concerned that
Dana could survive as a college if only it could find outside financial
support strong enough to alter that downward trajectory. One key
question therefore was how to structure the change in control with
the continuity of its mission. As a first step, Dana College in effect
put itself up for sale by interviewing several potential takeover
candidates.25 Eventually the key college officials decided that DEC
offered the best prospects for the survival and recovery of the
college, and it thus acceded to a transaction whereby most of the
assets of the college were to be sold to DEC, with the exception of
land and buildings that were to be transferred to a nonprofit
foundation, which was to operate as the successor to the original
nonprofit college.26 The land and buildings were in turn to be leased
to DEC for an eighteen-year period.27 DEC itself was not a
freestanding entity. Rather, it was formed as the sole sponsor of the
21 See Wikipedia, Dana College (cited in note 20).
22 Dana College Change of Control Request, Mar 12, 2010, *6 (“Dana Change of
Control Request”) (“In 2005 it was $7.17M, in 2006 it was $8.16M, in 2007 it was $9.58M, in
2008 it was $11.33M, and in 2009 it was $12.55M.”).
23 See id at *4, 6; Higher Learning Commission, Public Disclosure Notice on Dana
College *1 (Nov 30, 2010); Letter from Dennis Gethmann, Chair, Dana College, to Dr. Sylvia
Manning, President, Higher Learning Commission *1 (July 3, 2010) (on file with author).
24 See http://www.american-school-search.com/review/dana-college (visited Oct 23, 2011).
25 See Goldie Blumenstyk, Dana College, Once under Pressure to Merge, Now Has a
Buyer, Chron Higher Ed (Mar 16, 2010), online at http://chronicle.com/article/Dana-College-
Once-Under-Pr/64687/ (visited Oct 23, 2011).
26 Dana Change of Control Request at *3 (cited in note 22).
27 Id at *7.
90 The University of Chicago Law Review [79:83
new college. It in turn was a wholly owned subsidiary of Nebraska
Higher Education, which received its financial support from a group
called Chicago Growth Partners.28
By working on this deal, the DEC approach turned Dana
College from a nonprofit institution that could claim tax-deductible
contributions into a profit-making institution that could not receive
such tax-deductible donations. In order to forestall the financial
demise, the acquisition rested on a two-part strategy. The first part of
that strategy called for an immediate infusion of $4.5 million in cash
from DEC to staunch the immediate cash drain. It was anticipated,
but not guaranteed, that a second $5.5 million contribution would
then cover the deficits for the 2011–12 academic year.29
At the same time that these financial actions were taken, DEC
sought to reconstitute how Dana ran its recruitment and retention
operations. Part of that strategy depended on the ability to use
Internet outreach as an effective recruitment tool: DEC’s forte is in
the aggressive use of the Internet as a marketing and recruitment
tool. Down the road, DEC also proposed to allow its students, and
students from other universities, to study abroad in a variety of new
programs, as is commonly done in other colleges in its same
educational niche.30
Part of it depended on the actions of Dana College insiders to
improve the retention rate for current students. That effort was to be
headed up by Janet Philipp after she stepped down from her role as
president of the college. The college and DEC calculated that the
marginal cost of adding new students would be low because the
physical plant of the college had been expanded in the 1970s to
accommodate a student body of around one thousand students.31 It
was therefore not necessary in the short run to expand the physical
plant in order to expand enrollment.
Apart from these major changes, the primary emphasis in the
Dana-DEC agreement was the retention of its mission statement and
core values. On that point there was a certain irony. Dana had been
28 Letter from Gethmann to Manning at *1 (cited in note 23); Blumenstyk, Dana College,
Chron Higher Ed (cited in note 25).
29 See Letter from Dr. Sylvia Manning, President, Higher Learning Commission, to Dr.
Janet Philipp, President, Dana College *2 (June 30, 2010) (“First Rejection Letter”) (on file
with author).
30 See Lauren Etter, A College Closes for Good as Rescue Plan Is Rejected, Wall St J A3
(Sept 15, 2010).
31 See Dana College: Adaptive Reuse Opportunity *3 (CB Richard Ellis), online at
http://www.selectgreateromaha.com/omaha/media/docs/development/Dana%20College%20Ca
mpus%20(Blair,%20NE).pdf (visited Oct 24, 2011); Etter, A College Closes for Good, Wall St
J A3 (cited in note 30).
2012] Role of Accreditation Commissions in Higher Education 91

founded as a Lutheran institution, and at the time of its closing, it
was in fact a member of the Evangelical Lutheran Church in
America.32 Part of the new change-of-control agreement called for
the college to sever that connection.33 As such, that action
represented a deviation from the long-time mission statement of
Dana College, which read as follows: “[T]he establishment and
maintenance of an institution of learning of collegiate rank, in which
higher education shall be given in harmony with the Christian faith
as taught by the Evangelical Lutheran Church in America.”34
The change, however, is one that would have been in the offing
even if Dana had remained solvent so that no change-of-control
agreement was required. Quite simply, the number of Catholic
students at Dana College had for several years exceeded the number
of Lutheran students, which would have forced the issue of
institutional self-identification in any event. Given the absence of
any perceived difference of mission inside Dana, the arrangement
with DEC had gained the strong support of the administration, the
faculty, the alumni, as well as both student and parent groups, who
all saw the application as a lifeline and not a hostile takeover.35 To
the faculty at Dana College, the issue was whether the new
management would retain the “tradition of excellence” of Dana
College as it historically operated.36 Its letter claimed that the faculty
had received “ample assurance that Dana’s tradition of excellence
will not only be maintained but enhanced.”37 It also stated that the
faculty was “particularly enthusiastic about DEC’s plans to create a
robust study abroad program.”38 Officials from other universities
chimed in with their unqualified support of the change-of-control
request.39 In their view, the change of control would make roughly
32 See ELCA’s Dana College to Close, Board of Regents Announces (Evangelical Lutheran
Church in America News Service June 30, 2010), online at http://www.elca.org/Who-We-Are/Our-
Three-Expressions/Churchwide-Organization/Communication-Services/News/Releases.aspx?a=4567
(visited Oct 24, 2011).
33 See Dana College to be Sold, Will End Affiliation with ELCA (Evangelical Lutheran
Church in America News Services Mar 17, 2010), online at http://www.elca.org/Who-We-Are/Our-
Three-Expressions/Churchwide-Organization/Communication-Services/News/Releases.aspx?a=4482
(visited Oct 24, 2011).
34 See Dana College Catalogue 2009–2011 *3, online at http://www.dana.edu/downloads
/DanaCollegeCatalog09-11(1).pdf (visited Oct 24, 2011).
35 See Letter from Dana College Faculty Senate to Dr. Karen Solomon, Vice President
for Accreditation Relations, Higher Learning Commission (Apr 1, 2010) (on file with author).
36 Id.
37 Id.
38 Id.
39 See Letter from Patricia Carlson, Undergraduate Program Coordinator, and Theresa
Barron-McKeagney, Director, University of Nebraska–Omaha School of Social Work, to
Higher Learning Commission (May 3, 2010) (on file with author); Letter from John E.
92 The University of Chicago Law Review [79:83
those changes that the old management would have done if it had
been able to remain in power as part of its natural course of
evolution. But one of the keys to the deal was the conviction of the
Dana College board of regents that DEC had a strong understanding
of, and commitment to, the new mission.
The support for the transaction was not confined to the college
itself. In addition, it had the support of a larger number of major
public figures in Nebraska, including its two senators, E. Benjamin
Nelson40 and Mike Johanns,41 former senators Bob Kerrey (by that
time president of the New School)42 and Chuck Hagel,43 Governor
Dave Heineman,44 Michael Flood, the Speaker of the Nebraska state
senate,45 and Jeff Fortenberry, the state senator for the district in
which Dana was located.46 Letters in support of the proposal were
also submitted by the mayor and council members of Blair,
Nebraska,47 and on behalf of the various merchants and civic groups
in Blair.48
In looking at this transaction, it is evident that it was a high-risk
operation even under the best of circumstances. Both halves of the
Christensen, Chancellor, University of Nebraska–Omaha, to Dr. Karen Solomon, Vice
President for Accreditation Relations, Higher Learning Commission (Apr 20, 2010) (on file
with author); Letter from Adam R. Nelson, Associate Professor, University of Wisconsin–
Madison, to Dr. Karen Solomon, Vice President for Accreditation Relations, Higher Learning
Commission (on file with author); Letter from Dr. Jack Kay, Provost and Executive Vice
President, Eastern Michigan University, to Dr. Karen Solomon, Vice President for
Accreditation Relations, Higher Learning Commission (May 7, 2010) (on file with author).
40 See Letter from E. Benjamin Nelson, United States Senator, to Dr. Sylvia Manning,
President, Higher Learning Commission (Apr 30, 2010) (on file with author).
41 See Letter from Mike Johanns, United States Senator, to Dr. Sylvia Manning,
President, Higher Learning Commission, and Dr. Karen Solomon, Vice President for
Accreditation Relations, Higher Learning Commission (Apr 15, 2010) (on file with author).
42 See Letter from Bob Kerrey, President, The New School, to Dr. Sylvia Manning,
President, Higher Learning Commission, and Dr. Karen Solomon, Vice President for
Accreditation Relations, Higher Learning Commission (May 4, 2010) (on file with author).
43 See Letter from Chuck Hagel, Former United States Senator, to Dr. Sylvia Manning,
President, Higher Learning Commission, and Dr. Karen Solomon, Vice President for
Accreditation Relations, Higher Learning Commission (Apr 23, 2010) (on file with author).
44 See Letter from Dave Heineman, Governor of Nebraska, to Dr. Sylvia Manning,
President, Higher Learning Commission, and Dr. Karen Solomon, Vice President for
Accreditation Relations, Higher Learning Commission (Apr 23, 2010) (on file with author).
45 See Letter from Michael J. Flood, Speaker of the Nebraska State Senate, to Dr. Karen
Solomon, Vice President for Accreditation Relations, Higher Learning Commission (Apr 21,
2010) (on file with author).
46 See Letter from Jeff Fortenberry, Nebraska State Senator, to Dr. Sylvia Manning,
President, Higher Learning Commission (Apr 27, 2010) (on file with author).
47 See Letter from City of Blair to Dr. Sylvia Manning, President, Higher Learning
Commission, and Dr. Karen Solomon, Vice President for Accreditation Relations, Higher
Learning Commission (Apr 27, 2010) (on file with author).
48 See Letter from Blair Area Chamber of Commerce to Dr. Karen Solomon, Vice
President for Accreditation Relations, Higher Learning Commission (Apr 22, 2010) (on file
with author).
2012] Role of Accreditation Commissions in Higher Education 93

plan had to kick in quickly for the revival effort to succeed, for the
outside cash was only sufficient to make the college self-sustaining
financially for two years at most. Yet by the same token, all the
parties had some confidence that they could pull off the program, for
otherwise Dana had no reason to choose this option over others, and
the investors in DEC had no reason to spend $10 million that they
could never hope to recoup.
The key for having this deal happen depended on receiving a
transfer-of-control approval from HLC, for otherwise its students
would be ineligible to receive subsidized federal loans under Title IV
that were available to a wide range of nonprofit and for-profit
institutions.49 The accreditation process itself was a difficult one, for
Dana College submitted its change-of-control request on March 15,
2010, knowing that its resources could last only until July 1, 2010—
the day after HLC responded to the request for the approval of the
application. What made matters more difficult is that accreditation
works through a two-stage process whereby a special committee
investigates the request, after which it writes a report to HLC, whose
board then makes the final decision.
The first stage in this process took place with an extensive site
visit on May 13–14, 2010,50 where the accreditation team of four
members contained two representatives of HLC, including Karen
Solomon, who, as vice president of Accreditation Relations was
either the sole or the second addressee on many of the letters that
poured into HLC during April and May of 2010. The field report
followed an intensive investigation with a large on-campus
component, during which the team met with all the faculty and staff
of Dana College and with representatives of DEC. In essence that
report recommended that the change of control be approved for
reasons that bought into the Dana narrative described above: “[T]he
Fact-Finding Team found that all participating parties involved are
acting in good faith, that they are working intensely to bring all
transactions into alignment, and there is evidence that all parties are
committed to bringing successful closure to the proposed transaction
in a timely manner.”51 The report was well aware of the financial risks
outlined above, but took this overall position:
Dana College has a rich and unique history intertwined with
that of Blair, Nebraska and the region. One strength of the
49 For the details of Title IV, see generally Department of Education, Title IV Programs,
online at http://federalstudentaid.ed.gov/about/title4_programs.html (visited Oct 24, 2011).
50 See Dana College Fact-Finding Team Report *2–6 (unpublished report, May 13–14,
2010) (on file with author).
51 Id at *6.
94 The University of Chicago Law Review [79:83
proposed transaction is that it would provide the opportunity
for that history to continue to evolve. Considerable effort has
been made to engage in a high level of verbal communication
with members of the current Board of Trustees, faculty, staff,
students, and members of the Blair, Nebraska community. To
have failed to engage in these conversations would make it
possible to conclude that the proposed transaction is a sham to
transfer the name and accreditation of a proud institution as
though a mere conduit for revenue. The representatives of the
Dana College community who talked with members of the team
conveyed their trust in the individuals working on behalf of the
DEC.
Another strength is that if the change of control occurs, and the
plans articulated by the Dana Education Corporation come to
fruition, the college will be much stronger. There is reason to be
optimistic for this outcome because the investors will do
everything they can to protect and enhance the value of their
investment. There is also great constituent support for this
transaction given that it seems to be the only way for this
institution to stay open. Dana College community members
know that without this transaction, or one similar, Dana College
would not hold classes come fall of 2010.52
At this point, the clear betting would have been that approval
for the change of control was in the bag, given that Solomon was also
a part of the final review team at HLC. It is impossible to draw
definitive conclusions about either the make-up of this team or its
decision-making process because I do not have access to the “staff
recommendation” that the fact-finding team made to HLC. But in
light of the fact that two of its four members were from HLC,53 it
seems as though that recommendation would have had to have been
positive in keeping with the overall tenor of its balanced and fairminded
report. In light of these important background facts, it has to
be rated on the record as something of a surprise that the Board of
HLC rejected the change of control. Nonetheless it seems clear that
in this instance more than the record was at work. What clearly
mattered was the strong intervention of Senator Tom Harkin, who,
during a March 11, 2010, committee hearing on the status of forprofit
colleges, raked Sylvia Manning over the coals because she had
52 Id at *6–7.
53 See id at *1.
2012] Role of Accreditation Commissions in Higher Education 95

approved the Ashford University transaction. It is worth noting
some of the highlights of the Senate hearing:54
Sylvia Manning, president of the regional agency [(HLC)] that
accredited Bridgepoint’s Ashford University, probably wishes
she too had found an excuse not to attend.
The hearing before the Senate Committee on Health,
Education, Labor and Pensions was framed as a “case study” of
how for-profit colleges have embraced online education to fuel
explosive growth and drive large profits, and Bridgepoint [which
owns Ashford University] and for-profit colleges in general took
a lot of hits from Harkin. He at one point called Bridgepoint “a
scam, an absolute scam.”
. . . Harkin, for one, made it clear that he believes many
accreditors lack the expertise to keep tabs on the increasingly
complex operations of the biggest for-profit colleges, and
warned that “something has got to change” if the agencies—as
the federal government’s subcontractor on assessing
institutional quality—are to continue to grant colleges access to
federal financial aid.55
At this point, the link to Dana College was made explicit when
Harkin asked about how Manning’s operation had changed since the
Ashford incident:
“Unfortunately, [the accreditation process] wouldn’t have
[stopped the abuses] a couple years ago,” but it would now,
Manning said, citing a series of new policies that the Higher
Learning Commission has, or soon will, put in place, which will
flag institutions that change programs significantly or increase
the size of distance programs. She also noted on multiple
occasions that in the past year, the accreditor has twice rejected
efforts to transform struggling nonprofit colleges (Rochester
College in Michigan and Dana College in Nebraska) into forprofit
institutions—suggesting “our new, strengthened policy on
acquisition.”56
54 See Doug Lederman, More Than Bridgepoint on Trial, Inside Higher Ed (Mar 11,
2011), online at http://www.insidehighered.com/news/2011/03/11/senate_hearing_on_for_profit_colleges
_singes_accreditors_as_well_as_bridgepoint (visited Oct 24, 2011).
Harkin has made the accreditation issue a prominent part of his website. See
http://harkin.senate.gov/help/forprofitcolleges.cfm (visited Oct 24, 2011).
55 Lederman, More Than Bridgepoint, Inside Higher Ed (cited in note 54).
56 Id.
96 The University of Chicago Law Review [79:83
At this point, it becomes possible to put into context the reasons
for the denial of accreditation that Manning offered to Janet Philipp
in her letter of June 30, 2010.57 Her three-page letter also notes that
HLC took into account all of the materials submitted by the college,
the report of the fact-finding team, and the staff summary report.58
Nonetheless, that letter looks to be incompatible with the underlying
record in ways that augur ill for any future application for a change
of control from nonprofit to profit-making institutions. The letter
does not say that the board decision was unanimous, which seems
unlikely given that Karen Solomon was on the fact-finding team. But
there is no direct confirmation on the point. It could have been that
Solomon did not vote in opposition to her president, Manning, who
could have never written the letter she did if, as president, she had
dissented from the decision of the board.
It is worth looking at the key points of the letter as it addresses
the four central factors that guided HLC’s denial of the Dana
College application.
First, the letter insisted that there could not be “sufficient
continuity” with the previous mission owing to the possibility that
“the educational programs anticipated by the buyers include online
or hybrid programs, or study abroad programs to non–Dana College
students, which are not the residential liberal arts programs that have
been historically offered by Dana,” even though these are people
“who are not the historic populations of Dana students.”59
It is hard to imagine a less persuasive case on this dimension. It
was recognized by everyone at the college and on the fact-finding
team that the college had to change or it would perish. Wholly
without regard to any change-of-control status, many colleges and
universities introduce overseas exchange programs and avail
themselves of online tools to advance their mission. It is hard to
think that any current college would lose its accreditation if it took
those same natural steps for expansion. It then seems extremely odd
to reject the application on these grounds. There is no reason why
any system of accreditation should lock any college or university into
a losing business strategy, with or without a change of control.
Second, the First Rejection Letter seriously misstates the timing
of the various reforms. As all the internal documents at Dana
College and the fact-finding report make clear, the first line of
business was to control costs and to boost enrollment on campus.
The online activities integral to that task, insofar as they related to
57 First Rejection Letter at *1–2 (cited in note 29).
58 Id at *2.
59 Id at *1.
2012] Role of Accreditation Commissions in Higher Education 97

recruitment, would have to be introduced immediately. The effort to
run overseas programs, whether a good or bad idea, would only take
place at some future time, if it took place at all. The use of the verb
“anticipated” in the First Rejection Letter has no temporal qualifier,
which makes it odd to deny a transfer of control today for programs
that might take place, if at all, five or ten years in the future.60 Surely,
the sensible alternative is to approve the current transfer and to
reserve the right to evaluate either the online or overseas ventures
when they are in sufficiently concrete form. Reaccreditation is
required as a matter of course for all institutions. It allows ample
time for these matters to be sorted out on a more complete record.
The second factor relates to the revised governance structure as
it must be structured to (1) “legally enable the organization to
protect its institutional and educational integrity,” and (2) “promote
effective leadership and support collaborative processes that enable
the organization to fulfill its mission.”61 The First Rejection Letter
claims that the change-of-control transaction failed to meet this test
because the Dana College board “lacks sufficient autonomy from the
shareholder to make critical decisions including but not limited to
hiring/firing the CEO or approving the operating budget, to protect
the integrity of the College.”62
The objections to this conclusion in the First Rejection Letter
have both a broad and narrow basis. On the narrow ground, the First
Rejection Letter contains absolutely no specific reference to any of
the findings contained in the fact-finding report, which indicated
precisely the opposite. The high level of voluntary buy-in from
everyone at Dana College, such as the willingness of outgoing
President Philipp to take a supporting role on the new venture,
offers powerful evidence that the transaction in question took all
sorts of preliminary steps to assure the degree of collaboration
needed to make this operation run.
The broader implications of this decision cast a huge shadow
over the for-profit control of any small liberal arts college. More
concretely, the denial of the change-of-control request in the First
Rejection Letter does not rest on any specific element of the DEC
transaction. It turns solely on the a priori ground that any change of
control to a for-profit entity will necessarily founder on this one
ground, for it is always possible that some conflict will arise between
the interests of the shareholder and the college that needs to be
resolved. It is as if the only criterion that matters is the phrase
60 Id at *1.
61 First Rejection Letter at *1–2 (cited in note 29).
62 Id at *2.
98 The University of Chicago Law Review [79:83
“legally enable.” But if that is the concern, then the appropriate
response is to announce in advance a per se rule that prohibits
transfers of nonprofit educational institutions to for-profit
institutions. So understood, there is then really no reason to require
anyone to go through the time and expense of preparing any factfinding
reports in the first place, because of the incurable corporate
taint. Announce the rule in advance, and the whole process comes to
a stop before it begins, which would mean that Dana College would
never have a chance to react to the one proposal that it thought best
increased its chances of survival.
At the same time, if we run the logic in reverse, it becomes clear
that, since these change-of-control transactions are allowed in
principle, it cannot be correct for HLC to veto them at the time of
the initial application on the mere prospect of some future conflict
over educational control. As with the previous question of the
continuity of mission, there is no reason to make a definitive
judgment on future outcomes when the application is filed, at least in
cases that exhibit extensive coordination and cooperation between
the current college officials and their new owners. Reaccreditation is
still part of the process, and any worst-case scenarios that turn out to
be true can wait for resolution until that time. The accreditation
denial on the initial applications should be reserved for those cases
where a hostile takeover that could easily cloud future cooperation
exists. Further, the utter unwillingness to refer to either the
supporting letters or the fact-finding report represents a serious
dereliction of duty. Any commission that rejects its fact-finding
report should always give clear and explicit reasons as to why it
chose to take that course of action. Silence on that issue is a clear
abuse of administrative discretion.
The third factor referred to in the First Rejection Letter
addresses the sufficiency of the financial support. As noted earlier,
no one was under any illusion that the initial contribution of
$4.5 million in new cash was sufficient to turn the operation around,
but as the fact-finding report explicitly noted, Dana could not open
for fall classes unless this deal went through. And everyone agreed
that the transaction was fraught with uncertainty and risk. But the
right question in this instance is to ask, “Compared to what?” On
this point, the fact-finding panel noted the whole project was at the
“mercy” of getting additional funds “because the investors will do
everything they can to protect and enhance the value of their
investment.”63 So the real choice here is certain failure versus a
63 Dana College Fact-Finding Team Report at *7 (cited in note 50).
2012] Role of Accreditation Commissions in Higher Education 99

possibility of success that comes with the transfer in question. At this
point, a simple error analysis gives a clue to the proper choice: let
them go ahead, as the only alternative to DEC is a complete
shipwreck. The DEC alternative offers a positive chance of success
by a party that has put its money on the line. If it fails, the college
will fail anyhow, and HLC would not have blood on its hands. The
fact-finding team noted all these complications, but still had a
generally positive tone.
That level of confidence may well have been fully justified.
Although it was not discussed in the Dana College materials, HLC
had, in the previous year, approved a change-of-control request for a
similar small Lutheran institution, Waldorf College of Forest City,
Iowa, which was in a similar financial predicament.64 The buyer in
that case was Columbia Southern University, which took over
Waldorf in 2009.65 By May 2010, Columbia Southern had nurtured
Waldorf back to financial health by adding new degrees in business,
psychology, criminal-justice administration, and fire-science
administration. It raised faculty salaries on term (not tenure)
contracts and lowered its tuition as it reached out for online
students.66 Many of these activities were in progress when the Dana
application was reviewed, but the comparisons were not made. But
the instructive point here is that the infusion of entrepreneurial skills
can turn bad situations around by using techniques whose efficacy
was not apparent to HLC.
On the fourth factor, the First Rejection Letter noted that the
new team put in place by DEC was inexperienced in dealing with the
transactions of running a liberal arts college, even if they had
extensive experience in working in the for-profit educational space.67
But once again, this point had fully been disclosed to everyone, and
the conclusion on that ground was that they had the right intellectual
skills and temperament to make this new venture work. It was
perfectly clear that DEC impressed both all the insiders and the factfinding
team. Yet neither the supporting letter nor the fact-finding
report referred to either of these sources.
In the end, therefore, the key element is just as it was before.
Inexperience compared to what is the question. Since the alternative
was to go under, the correct result is to abide the event and allow the
64 For a fuller account, see Lawrence Biemiller, Sale to a For-Profit Company Pulls a
College Back from the Brink, Chron Higher Ed (May 29, 2011), online at http://chronicle.com
/article/Sale-to-For-Profit-Company/127687/ (visited Dec 28, 2011).
65 See Scott Jaschik, The Sale of Waldorf, Inside Higher Ed (May 6, 2009), online at
http://www.insidehighered.com/news/2009/05/06/waldorf (visited Oct 24, 2011).
66 See Biemiller, Sale to a For-Profit Company, Chron Higher Ed (cited in note 64).
67 See First Rejection Letter at *2 (cited in note 29).
100 The University of Chicago Law Review [79:83
operation to go into effect, knowing that the shared goodwill could
make up for these deficits. If they did not, the college would fail
anyhow. To be sure, the board held out this olive branch to the
college—the option for DEC to file its own separate application for
approval after a site visit in time for the board meeting of February
2011,68 which, even if granted, would have left the situation in limbo
until full accreditation could have been awarded. But given what is
said above, a decision to schedule a shortened period for review after
one year or eighteen months would have allowed DEC to put its
house in order so that there would be something to present.
The June 30th letter was not the last exchange between Dana
and HLC. During the days that followed, the head of the Dana
board of regents made a direct appeal to Manning, who turned it
down cold in her response of July 5, 2010.69 The letter from Dana’s
board of regents indicated that it lay within the power of HLC to
offer a conditional approval of the transaction, which might have
addressed the online and overseas aspects of the program.70 But as
Manning responded, HLC declined to exercise its discretion over
this matter:
The fact that the College might close in the event of a denial is
significant, but by Commission policy it is not among the factors on
which the decision to extend accreditation must be based. The
decision to extend accreditation is based on the Board’s judgment of
whether the proposal advanced by the College and its buyers shows
that the approval factors outlined in the policy are met. In this case,
the Board reasonably determined that they were not met.71
The letter also reiterated that the buyers could submit a new
application in the next several months, without any presumption of
its approval.72 To do so would have required an extensive investment
in the interim period, with no greater prospect of success, given that
the situation on the ground would have surely deteriorated further
without the accreditation in hand. The July 5th letter from Manning
also mentioned the possibility that Dana College could become a
branch of another institution, but again not within any sensible
timetable.73 It was clear to everyone that the denial of accreditation
spelled the end of Dana College. The Second Rejection Letter
68 See id.
69 See Letter from Gethmann to Manning at *1–2 (cited in note 23); Letter from
Manning to Dennis Gethmann, Chair, Dana College *1–2 (July 5, 2010) (“Second Rejection
Letter”) (on file with the author).
70 See Letter from Gethmann to Manning at *1 (cited in note 23).
71 Second Rejection Letter at *2 (cited in note 69).
72 See id at *3.
73 Id at *2.
2012] Role of Accreditation Commissions in Higher Education 101

insisted the college’s closure was “ultimately” the choice of the
college, not of the HLC.74
II. LESSONS FROM THE DANA SHIPWRECK
Looking over this sequence, it is clear that the rocky reception
that Dana College received from HLC presents an important
challenge to all accreditation proposals. How does one deal with
future uncertainty in connection with the current prospects?
Without the ability to gain accreditation in the short run, the
entire organization had to fold. As the last page of the letter from
Dana’s board of regents to Manning made clear, the denial of
accreditation is not just a private act.75 It is one that has real public
consequences. To be sure, the transfer of control could go forward so
long as DEC and Dana College were willing to stay in business
without accreditation. If the only thing that accreditation did was to
supply a “Good-Housekeeping Seal of Approval” to the college, it
might have taken that course. But as the closing paragraphs of the
Second Rejection Letter make clear, the denial of accreditation quite
simply means that students who attended the struggling college could
not obtain the same tax-subsidized Title IV loans from the federal
government that would be available to all its competitors.76 No
institution on either the for-profit or nonprofit side of the line can
operate in an environment where it is denied the subsidy that is
given to its key competitors.
The question here is not, of course, whether the overall program
of government subsidies to educational loan programs is or is not a
good idea. In general I think that it is a bad idea. First, it distorts the
choices that students make in their own educational careers.77
Second, it puts the federal government in the business of defining
how these institutions should be accredited for the loan programs,
which necessarily requires all sorts of oversight of private institutions
and high compliance costs. Thus, to give only one example of the
endless struggles that have to be faced in this regard, the process of
accreditation raises the question, “Accreditation for what?” As
reports from ED make amply clear, it is in the interest of both
accredited institutions and students to reduce the requirements for
earning a credit hour in order to increase the fraction of education
74 Id.
75 See Letter from Gethmann to Manning at *2 (cited in note 23).
76 See Second Rejection Letter at *2–3 (cited in note 69).
77 See Neil S. Seftor and Sarah E. Turner, Back to School: Federal Student Aid Policy and
Adult College Enrollment, 37 J Hum Res 336, 349 (2002).
102 The University of Chicago Law Review [79:83
that can be covered by subsidized loans.78 It is of course wholly
improper for the government to acquiesce in private efforts to
degrade the appropriate credit standards, just as it is improper for
any guarantor of a loan to be indifferent to the collateral that the
primary lender receives for the loan in question. The question here,
however, is twofold. The first part is whether the standards of review
should be tilted in favor of nonprofit over for-profit institutions. And
second, in dealing with individual cases, how the accreditation
process should work to ensure sensible decision making.
On the first of these questions, the clear concern in all cases is
that for-profit institutions are more prone to investor fraud and
abuse than the nonprofit institutions, which do not have the same
opportunities for abuse. It is more difficult to take money out of a
nonprofit institution that does not allow dividends than it is from a
for-profit institution, which makes that option available. But even
this point does not deny that for-profit institutions have several
advantages over their nonprofit competitors. In the first place, they
do not place any direct drain on state and local governments, which
often provide extensive subsidies for their in-state institutions,
including the community colleges and specialized programs that
account for the loan dollars. In general, it is less advisable to provide
subsidies for parties who have already received them than it is for
parties who have not already been so involved.
In addition, nonprofit institutions are more likely to be
innovators in education if only because they are more open to
change in dealing with new circumstances. Thus, in the Dana College
situation, it is odd that accreditation should have faltered on the
college’s willingness to adopt new online approaches to recruitment
and retention that most of these smaller institutions have done. It
follows, therefore, that the fraud issue may in some cases—perhaps
many cases—hoist a red flag over these accreditation reviews. But, in
light of the stated intention to preserve (to the extent possible) the
residential on-campus environment of a small-town college, the
atypical Dana College transaction did not raise this risk above a
background level.
The second question is what, if anything, could or should be
done in order to prevent the miscarriage of justice in the instant case.
The first point to note is that the types of remedies that might be
available in principle are heavily dependent on the legal status of
HLC. Should it be treated as though it were just another private
institution doing its own work, or should be it be regarded as a
78 See note 19 and accompanying text.
2012] Role of Accreditation Commissions in Higher Education 103

government agency whose actions necessarily attract scrutiny as a
constitutional matter, most notably in this context under the Due
Process Clauses of the Fifth and Fourteenth Amendments, given that
HLC has relationships with both state and federal agencies? As a
constitutional matter, I regard this question as straightforward.
Those agencies that act as portals for government approval programs
are state actors to the extent that their actions influence the ability of
individuals to recover state or federal money. It cannot be the law
that a single body that has the power to grant or deny government
benefits should be treated as a mere private actor when it exerts its
crucial gatekeeper function to federal funds.
The applicable constitutional issues are easy enough to discern.
The case law on this point has always been willing to treat the
question of whether the state or federal government “denies”
someone life, liberty, or property without due process of law as one
of state action,79 which is surely involved here. Indeed, in this case, it
is not necessary to go as far as 1961, when the Supreme Court, in
Burton v Wilmington Parking Authority,80 found state action under a
“facts and circumstances” test when the parking authority allowed its
tenant to discriminate on the grounds of race in deciding who should
be able to use its restaurants.81 The role of HLC is surely far closer to
the state action side of the line, since the federal government has
explicitly announced that it requires all accreditation organizations
to follow its explicit guidelines on such crucial issues as the definition
of an academic hour of credit.
The hard question is what to do with this classification once it is
established. In the first place, it raises the question of whether the
decision made with respect to Dana College was done only after
there had been some communication between HLC and ED with
respect to the case. Given the huge attention that is now being given
to the status of for-profit institutions with respect to federal loans, it
is altogether possible that ED did have conversations of some sort
with HLC. In and of itself, these conversations should be welcomed
if they improve coordination across the different accreditation
divisions. The necessity for this high-level cooperation conclusively
resolves the state action question and thus requires HLC to meet the
constitutional standards of procedural due process.
79 See, for example, Palmer v Columbia Gas of Ohio, Inc, 479 F2d 153, 160 (6th Cir 1973).
80 365 US 715 (1961).
81 Id at 725 (finding that Delaware’s inaction in addressing discrimination at a restaurant
meant that the state “not only made itself a party to the refusal of service, but has elected to
place its power, property and prestige behind the admitted discrimination”).
104 The University of Chicago Law Review [79:83
Did they? At one level the answer seems surely yes. There were
general rules, a specific investigation team, the opportunity to submit
evidence, and a written report that contained a statement of reasons
for the decision in question. So a frontal assault on the processes in
question surely fails. But at a second level, there is real doubt
whether the standard in question should be challenged as arbitrary
and capricious. Normally, this standard poses a heavy burden on
government officials, even if there are cases in which the phrase has
been read so as to invalidate decisions that ignore relevant factors or
take into account irrelevant ones.82
Unfortunately, in this instance, the argument for arbitrary and
capricious behavior stems from two features. The first is the radical
disjunction between the information collected in the record, and the
final determinations on questions of fact. It is not enough just to note
that all the information in question has been read. It is absolutely
critical that the board explain its final decision when it chooses to
reject the recommendations of the fact-finding commission,
especially when it makes findings that are nowhere supported by any
evidence in the record. It is equally arbitrary in the choice of remedy
to shut down an institution on the basis of what might happen
someday in the future instead of allowing it an opportunity to show
the feared consequences did not come to pass. The direct command
is too potent for the circumstances at hand. Try as one might, there is
zero support in the First Rejection Letter for the conclusions that it
reached.
The fiendish question here is to figure out what passes for a
remedy when the denial or approval for a change of control comes
one day before the institution has to close its doors. On this score, it
is pointless to initiate any litigation, which only slows down the
process still further without providing the instant relief that is
needed. The only way that this could seemingly work would have
been to ask for a judicial order for a provisional accreditation before
the HLC review process was complete, which would have been a
dead loser on ripeness grounds as a matter of hornbook
administrative law.83 Sad, but true: once the decision is made, it is
immune from judicial review.
That situation is of course intolerable as a matter of first
impression. But if no private actions can cure the defect, then all
82 See, for example, Citizens to Preserve Overton Park, Inc v Volpe, 401 US 402, 416
(1971), abrogated in part by Califano v Sanders, 430 US 99, 105 (1977).
83 See Charles Alan Wright, et al, 13B Federal Practice and Procedure: Jurisdiction and
Related Matters § 3532.6 (West 3d 2008), quoting Abbott Laboratories v Gardner, 387 US 136,
148–49 (1967).
2012] Role of Accreditation Commissions in Higher Education 105

attention must be turned to administrative remedies within the
system. On this ground, the key catalyst should be ED, which should
take the lead in setting standards for reviewing change-of-control
applications that involve the use of provisional accreditation,
coupled with an expedited review thereafter. These rules should be
announced in advance by all these agencies, so that they will be
subject to severe administrative sanctions if they pull a repeat of the
Dana College situation. Indeed, the only way to get to the bottom of
this situation is for ED to run its own investigation of HLC in order
to review the internal documents prepared after the submission of
the fact-finding team. What did the summary of the case provide?
Who wrote it? What happened inside the final review meeting that
led to the rejection of Dana’s change-of-control request? Was the
vote unanimous? If not, who dissented and why? If so, who changed
positions and why?
The stakes here are high because if the Dana-DEC application
cannot pass muster, it is hard to imagine any private takeover of a
nonprofit college by a for-profit institution could gain accreditation.
As the fact-finding team noted, the private parties all have incentives
to structure their arrangements for their mutual gain.84 The
presumption should be, therefore, that the new arrangements will
address difficulties that were not solved under the older system. To
insist that there be no change of character in an institution ignores
the powerful point that failing institutions, when acting under serious
pressure, can only succeed if they take bold steps to change their
character. That was the situation for Dana College. In other cases,
the change of control may not be a life-or-death situation, so that
closure is not the inevitable byproduct of the administrative denial.
But in the end, these cases, too, should be subject to provisional
approval, for otherwise the delay could easily lead to a demise of an
institution whose self-help could have saved it. The purpose of
accreditation is to maintain standards, not to close institutions before
they have a chance to show that their new plans will improve their
institutional performance.
Accreditation is never an engine for innovation or change. It is
at best a brake on reckless action that should be stopped before it
starts. But these reckless actions are few and far between. There is
nothing that can be done to lift Dana College from the grave. But
there are simple yet powerful administrative reforms that could
prevent the recurrence of a wasteful and senseless act: the premature
destruction of another Dana College.
84 Dana College Fact-Finding Team Report at *7 (cited in note 50).