The D.C. Circuit will hear oral argument on February 2, 2017 on the CFPB’s appeal from the D.C. federal district court’s April 2016 ruling that the CFPB exceeded its statutory authority when it issued a CID to the Accrediting Council for Independent Colleges and Schools (ACICS) in August 2015.
After denying ACICS’s petition to modify or set aside the CID in October 2015, the CFPB filed a petition in D.C. federal district court to enforce the CID. The CID’s statement of purpose indicated that the purpose of the CFPB’s investigation was “to determine whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges.” The CFPB argued that because it has authority to investigate for-profit schools in relation to their lending and financial advisory services, it also has authority to investigate whether any entity has engaged in any unlawful acts relating to accrediting such schools.
According to the district court, the CFPB’s justification was “a bridge too far.” The court observed that ACICS had “repeatedly and accurately explained [that] the accreditation process simply has no connection to a school’s private student lending practices” and that ACICS was not involved in financial aid decisions, meaning that it played “no part in deciding whether to make or fund a student loan.”
Should the D.C. Circuit side with ACICS, it could prove to be a hollow victory. On December 12, 2016, the Secretary of Education issued a decision adopting the decision of the Department of Education’s Senior Department Official terminating and withdrawing the Department’s recognition of ACICS as a nationally recognized accrediting agency. The interim president of ACICS has issued a statement indicating that ACICS “will seek immediate redress from the courts in order to maintain our status as an accreditor.”