Accreditors serve as key gatekeepers in higher education. Without accreditation, a college’s students are not eligible to receive federal financial aid such as Pell grants and student loans. This gives accreditors a fairly unique status—private entities that can determine if taxpayer dollars flow to a college. Given that accreditors have this power bestowed upon them by the public, it is vital to ensure that accreditation functions in the public interest.
Unfortunately, my past research highlights five areas where accreditation fails (and also offers some suggestions about what to do about it). One of those failures is that accreditation functions much like a cartel.
“Accreditation is a cartel” is obviously a contested claim, but the evidence just keeps pointing in the affirmative direction. For starters, very few colleges lose accreditation and very few new colleges obtain accreditation. This is consistent with accreditors having different standards for existing colleges (low standards) and new colleges (high standards), exactly what you would expect from a cartel which tries to protect incumbents and prevent new competition.
Thanks to a 2019 change in regulation, there is a new indicator that “accreditation is a cartel” is true. Prior to 2019, regional accreditors could not compete against each other because each was restricted to a few states where they had a legally enforced quasi-monopoly (a few national accreditors do exist, hence the “quasi” qualifier on monopoly, but the regionals are the dominant players, and they were barred from competing). But in 2019, the legally enforced quasi-monopolies were abandoned, and the regional accreditors are now allowed to compete.
If the regional accreditors were not operating as a cartel, then we would expect the 2019 change to have ushered in a wave of new competition as the former regional quasi-monopolies competed amongst themselves for market share and high-status colleges.
That is not what happened.
Instead, the regional accreditor’s behavior is consistent with the cartel model, as they largely avoid stepping on each other’s turf. Consider for example a recent story by Emma Whitford in Inside Higher Ed, which shows that one of the regional accreditors, the New England Commission of Higher Education, is preemptively ruling out competing with another regional accreditor:
A bill currently sits on Florida governor Ron DeSantis’s desk that would require public institutions in the state to switch accreditors at the end of each cycle, which typically lasts five to 10 years. If the bill is signed and implemented, all Florida institutions will be seeking a new accrediting agency within the next decade.
Yet the leader of the New England Commission of Higher Education (NECHE), one of the regional accreditors had this to say about the possibility of NECHE accrediting Florida colleges:
“We have no interest in having someone join us for a moment,” he said. “We would not have interest in pursuing any of those Florida publics that are being forced to make these moves.”
Such a statement is easy to understand if accreditation is a cartel. First, NECHE doesn’t want to step on the turf of Florida’s regional accreditor since that would signal to other regional accreditors that they can poach NECHE colleges. Second, NECHE recognizes that the Florida bill undermines the very foundations of the cartel by forcing, rather than allowing competition. A cartel can survive a de jure competitive landscape if they can collude to prevent de facto competition. But a cartel can’t survive if forced to compete.
While NECHE’s position is easy to understand in the cartel model, this statement is tough to understand if accreditors are not acting like a cartel. What organization wouldn’t welcome the opportunity to serve new (and fast-growing customers), even if only for a five–10-year term. In accounting, it is common to impose term limits, forcing a switch in accountants every so often to reduce opportunities for fraud and embezzlement. Accounting firms don’t shun such opportunities. Accreditors do shun such opportunities the leading explanation for why is that they are a cartel.