WASHINGTON, D.C. — The U.S. Department of Education has proposed sweeping changes to the accreditation system governing access to more than $100 billion in annual federal student aid, with its own analysis projecting approximately $490 million in yearly compliance and reporting costs despite the administration’s stated goal of reducing regulatory burdens.
The proposed regulations, published August 20 in the Federal Register, would make it easier for new accrediting agencies to gain federal recognition, allow colleges greater flexibility to change accreditors and require closer scrutiny of graduation rates, employment outcomes and earnings.
The department estimates annualized costs of $490.3 million using a 3% discount rate and $494.2 million using a 7% rate. Those expenses include updated procedures and reporting requirements for accrediting agencies, colleges and individuals.
A separate calculation prepared under another executive-order framework estimates annualized costs of approximately $417.9 million over a perpetual time horizon, discounted relative to 2024.
Federal officials do not anticipate a significant net budgetary effect on student loans and Pell Grants, although the proposal could redistribute costs among students, institutions and accrediting organizations.
One significant provision would require colleges to explain which previously earned credits they will accept before prospective students make nonrefundable financial commitments.
When an institution rejects a transfer credit, it would have to provide a written explanation for each course and disclose the additional coursework or time required to replace those credits.
The department concluded that students could save money by avoiding repeated coursework, while colleges could lose tuition revenue from classes transfer students would no longer need to retake.
Institutions would also face new administrative expenses to update policies, train employees and revise information systems. The department estimates those changes would require approximately 470 hours of one-time work per institution.
The proposal would eliminate the existing two-year waiting requirement for new accrediting agencies seeking initial federal recognition and remove geographic limitations that can restrict a college’s choice of accreditor.
Colleges could more easily switch agencies or work with multiple accreditors, while federal recognition would explicitly provide no immunity from state or federal antitrust laws.
The department is also proposing stronger separation between accrediting agencies and affiliated trade associations, including tighter controls over governance, finances, shared resources and conflicts of interest.
Accreditors would be expected to evaluate student achievement using measures such as graduation and retention rates, professional licensing results, employment and educational returns relative to the cost of attendance.
Earnings assessments could incorporate federal wage data, unemployment insurance records or other reliable income information.
The rule would require accrediting agencies to conduct cost-benefit analyses for the institutions they oversee. The department estimates that requirement alone would generate approximately 750,150 additional hours of administrative work annually.
Other provisions would require accreditation decisions to remain neutral regarding political viewpoints and ideology, with exceptions for institutions operating under religious missions.
Accreditors would also examine academic freedom protections, faculty evaluation policies, compliance with federal and state laws, and procedures addressing plagiarism, falsification and other research misconduct.
The proposal would strengthen requirements for protecting students when institutions experience disruptions, including access to transcripts and plans allowing students to complete their education elsewhere.
Under Secretary of Education Nicholas Kent argued that the existing accreditation system has contributed to higher tuition, administrative expansion and an insufficient focus on measurable student outcomes.
“The Department’s proposed changes to our higher education quality assurance system will improve college affordability, reconnect education to workforce needs, strengthen accountability, and restore confidence in our accreditation system,” Kent stated.
The proposed framework implements Executive Order 14279, titled “Reforming Accreditation to Strengthen Higher Education.”
A negotiated rulemaking committee representing students, veterans, taxpayers, colleges, accrediting agencies, businesses and state officials reached consensus on the proposal in May after sessions held April 13-17 and May 18-22.
Public comments must be submitted by September 21, 2026, through www.regulations.gov. The proposal is identified as docket ED-2025-OPE-1042.
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