April 20, 2026, By Chet Haskell – Like all higher education institutions in the United States, small colleges operate within a complex regulatory framework known as institutional accreditation. Originally an initiative by colleges and universities to ensure basic quality and a level of consumer protection, various accreditation entities have evolved in multiple ways, most importantly as gatekeepers to access to Federal Government Title IV student financial aid resources. Over the twentieth century, this framework developed what is often referred to as the “triad”: the federal government, state agencies, and accrediting bodies (formerly known as “regional accreditors”).
Key Aspects of Accreditation
Prior to 2020, the nation was divided into six large regions, covering every state and US territory. This monopsony controlled higher education but had somewhat varied approaches, policies, and practices. It is now possible to be accredited by one “regional” despite being located outside their region (or even outside of the US). This situation is about to change further, as pending changes to the US Department of Education’s accreditation requirements will allow more types of accreditors and greater competition.
It is also important to understand that there are other types of “specialized” accreditors. These bodies focus on specific disciplines or professional fields to ensure minimum quality standards in academic programs. For example, ABET (Accreditation Board for Engineering and Technology) oversees accreditation of engineering programs in the US and in 40 other countries, covering more than 950 institutions. There are competing specialized accreditors for business programs, many health care programs, and a plethora of other specialized professional fields.
The key thing to remember is that specialized accreditation assumes the base institution is also accredited. Specialized accreditors are generally less important to small colleges that largely lack graduate professional programs.
US Title IV aid requirements mean that virtually every institution needs accreditation recognition by the Federal government in order for its students to receive Federally related financial aid. Such student aid is the lifeblood of most institutions and especially so for small, private non-profit colleges. These institutions generally rely almost totally on revenue from enrollments, and Federal student aid typically accounts for at least 35% to 40% of that revenue. However, access to Title IV comes with strings. Most importantly, institutional accreditation bodies authorized by the Federal Government are supposed to hold institutions to certain standards in order to be accredited.
The final important element is that the institutional accreditors are membership organizations that receive their funding from member fees and similar sources. Unlike the case in many other countries, these accreditors do not receive funding from the US Government.
Thus, the situation exists in which the institutional accreditors (originally the six “regional accreditors”) are de facto agents of the US government while strenuously defending their independent roles as peer-dominated institutions committed to quality assurance and improvement. While access to Title IV is the essential link to government, the fact of an institution’s accreditation is, of itself, of great reputational value. Every accredited institution proclaims its status as an accredited institution as a seal of approval or badge of excellence. This can be critically important for the recruitment of students, faculty, and administrators, as well as attractiveness for research and other grants.
Accreditation as Adequacy, not Excellence
In reality, accreditation standards are a lowest-common-denominator model. For example, WSCUC (formerly WASC, now the WASC Senior College and University Commission), the traditional accreditor for California, Hawaii, and the Pacific territories, has a set of standards that must apply equally and fairly to top universities like the University of California or Stanford University, as well as tiny religious schools and every type of academic institution in between. The general standards remain the same, but the expected outcomes cannot. Institutional accreditation is a necessary condition for an institution to exist, but it is hardly an indicator of more than minimal quality. (There are examples of smaller institutions with none of the assets of a Stanford proclaiming that they have the same accreditation as Stanford as evidence of their quality. This, of course, is misleading, at best.)
This entire situation arises from one of the strengths of American higher education – its diversity. Institutions have different missions, academic approaches, scales, specializations, and so on. Students seeking education have a tremendous range of institutional opportunities –from huge public universities to minuscule specialized schools. However, all of these institutions are bound to a single accreditation regime due to Title IV student aid funding.
It also creates a paradox: institutional diversity within a complex ecosystem is generally seen as valuable, yet accreditation requirements often constrain the expression of that diversity. There are significant accreditation pressures that push institutions to become similar in many ways. These standards also make it difficult for institutions to be truly innovative. There is a set of isomorphic norms, expectations, leadership requirements, and best practices. All the diverse institutions, in some ways, look quite similar. The student outcomes – degrees that certify a certain level of educational achievement – are similar whether one attends an elite research university, a small regional public institution, or a minuscule independent school. Yes, there are subjective reputational differences, but in many ways, a degree is a ticket punched.
Objectivity and Subjectivity in Accreditation
The process by which standards are set and evaluated is, by its very nature, highly subjective despite efforts at measurement. The actual standards have objective elements. For example, each institution must have a CEO and a CFO, an independent board of trustees, a statement of mission, and meet certain (minimal) financial standards; it must have ways of measuring student outcomes, and so forth. But assessing the degree to which an institution a) meets these minimum standards and b) can demonstrate some measure of quality is largely subjective in nature. Indeed, assessment is conducted by volunteer peer panels undertaking periodic reviews and reporting their findings. The essential value inherent in the process is “peer review.” Colleges and universities essentially review and rate each other, rather than having a government agency or other private, non-educational entity do so. Peer review has its strengths and weaknesses, but is often considered a preferred alternative to having the government perform the task.
Peer review teams typically include a senior financial officer, whose assessment of the financial status of the institution is combined with assessments of other members focusing on non-financial topics. While the comprehensive reports are important, the stark reality is that viability of institutional finances is key. After all, nothing else matters if the institution is not financially sustainable.
Accreditors also look at other sources of information. Institutions are required to submit annual reports, augmented by independent audits. Some accreditors have dashboards that provide partial financial data. However, most rely heavily on the Combined Federal Index (CFI, compiled by the Department of Education). While such data sources are valuable, they suffer from two inevitable limitations. First, broad comprehensive indices may not explain much about the particular financial issues of an individual institution. Second, all of these sources are retrospective in nature and may be of little value in looking forward.
An accrediting body staff (sometimes assisted by outside experts) will look carefully at an institution when the CFI and other indices are too low or when a peer review team raises significant financial concerns. But accreditors covering hundreds of institutions do not have the capacity to examine each institution’s situation in detail, leading to a necessary triaging approach. But are no “bright lines” unless an institution cannot make payroll or otherwise demonstrates extreme stress and by then, it is usually too late.
An institution seeking accreditation must demonstrate that it has the financial wherewithal to operate for the foreseeable future. After all, it is reasonable for prospective students and their parents to assume the institution will survive at least long enough for degrees to be completed. However, the typical reaccreditation cycle of 8-10 years means that outside of standard annual reports, the accreditor has little information about institutions that may be in financial trouble. There are no effective early warning systems, and institutions in trouble have few incentives to inform their accreditors, lest word of the problem further endanger the institution’s fiscal health by discouraging students from staying or even applying.
At the end of the day, the institutions themselves are fundamental to their own financial situations. The accreditors and the Department of Education may ring alarms in extreme cases, but the institutions –and especially the private institutions – are basically on their own in many ways.
How do these aspects of accreditation affect small colleges and universities?
Much attention has been paid of late to the number of smaller private institutions that have had to close and the growing risk of many more in the years ahead. Such closures – or the growing number of mergers and acquisitions among small colleges that are alternatives to closure—are at root financial in nature. No institution is saying that they have sufficient financial resources but do not care to continue.
The basic economics of small private colleges are well known. They have limited endowment resources and are almost totally dependent on tuition revenues. Their costs are rising, but the pool of traditional-age students is falling. Competition among all manner of institutions is increasing for the same students. In this situation, some institutions seek additional revenue sources by offering non-degree certificates or microcredentials, adding limited graduate programs, pursuing distance education, or increasing auxiliary activities. But at the end of the day, the core of any small college is its academic programs, and the only significant source of additional revenue for most is fundraising.
Competition among small institutions takes many forms. In some cases, it refers to academic environments, programs, and opportunities. In others, it refers to reputation, faculty, or facilities. Crucially, however, a principal competition is in pricing. These institutions have posted sticker prices, but almost all offer significant discounts (often exceeding 50%) to attract more students. The impact of this financial arms race is to constrain further the resources available to fund the institution.
A central problem for these institutions is one of scale, or more accurately, lack of scale. They have few opportunities to operate with any economies of scale. The cost of providing a class to 10 students is essentially the same as providing one to 30 students. Unlike larger institutions, these small schools do not have large introductory classes of 100 or more students that can, in effect, subsidize smaller specialized classes.
Another impact of institutional scale concerns the process of meeting accreditation standards. Successful accreditation requires various institutional commitments. For example, there are data requirements on student achievement, retention and completion. Such requirements mean an institution must have the administrative capacity to produce data. Furthermore, a central element of the process is the engagement of faculty in both ongoing student assessment and the creation of the documentation needed for demonstration of progress. Such processes cannot be done by staff members alone and require considerable time and commitment on the part of faculty members. Larger institutions have the necessary administrative staff such as institutional researchers to support this process. Smaller institutions are often challenged in this aspect. Again, a large university has plenty of faculty members among whom can be spread the required levels of faculty engagement. This is not the case with smaller institution. Simply put, small institutions carry an extra burden because of accreditation that is more easily borne in larger institutions.
As noted, there are increasing pressures for institutional consolidation. One current barrier is the time and complexity required to put a merger or partnership in place. The actual process of institutional negotiations is complex and difficult. But then the proposed arrangement requires approvals from accreditors, state higher education regulatory bodies, and the US Department of Education, all of which can take years. The cost of pursuing first an agreement and then the approvals is extensive –legal fees, financial advisors, project management and other consultants all add up. Additionally, there are the opportunity costs of institutional leadership being consumed by the merger or partnership process, rather than focusing on the institution’s regular business or on alternative institutional directions.
The pending Trump Administration changes to the accreditation processes are, in some ways, designed to mitigate these constraints. For example, there is a proposal to streamline the Department of Education approval process. And, as noted, the Administration also seeks to promote increased flexibility for institutions and accreditors, in part through more market-centered, competitive approaches to accreditors.
While increased flexibility would be welcome, one expected outcome is to facilitate the entry of for-profit institutions into the competitive space. Prior administrations acted to curb the perceived excesses of earlier for-profit models (think Trump University). A resurgence of for-profit institutions might be welcomed from an institutional diversity perspective. Still, the impact on the small private colleges is likely to be negative, as it will further increase competition for students.
Another change that is discussed is institutional transparency. While there are efforts to provide dashboards, student cost calculators, and other data-oriented information sources, the fact of the matter is that higher education is complicated. Currently, most of the accreditors post their findings about an institution on their websites. This may simply be a statement that Institution X is accredited. Or it may include more basic information.
One accreditor, WSCUC, posts the actual reports of peer review committees, as well as the formal outcomes of accreditor decisions. The problem with this is that such reports are generally arcane for people outside higher education and are written in a stylized manner designed for other academics and the top accreditor decision-making body. And these reports and decisions are written with great care to avoid, as much as possible, further undercutting institutions. A review that focuses on a college’s financial weaknesses can easily become a self-fulfilling prophecy. Nonetheless, consumer protection goals should tilt toward greater, not lesser, transparency.
Most small colleges need support of various kinds. This may come in the form of advice or access to specialized expertise, the provision of which might be a useful accreditor task. Most accreditors already share experience and knowledge through conferences, workshops and the osmotic effects of peer review itself. Accreditors should consider ways to ease the consolidation process, seeking a balance between becoming more supportive and less regulatory
However, at the end of the day, most problems are not rooted in definitions of academic quality or lack thereof, but in raw finances. All too often, accreditor focus on an institution’s financial problems comes too late and the only remaining task is to ensure options for students to complete their studies through transfers or teachouts. Finding ways to identify such problems earlier and providing access to supportive advice would be salutary.
Small colleges are an essential component of American higher education. The fact of the matter is that most could not exist without governmental support. Rather than direct governmental control, the provision of student financial aid is the principal means for doing this. (While there are other forms of Federal aid, notably research funding, most small institutions have limited capacity to access these resources, which, as has been demonstrated by the Trump Administration, come with additional strings attached.)
Accrediting bodies need to explore ways to fulfill their basic functions while also serving as sources of advice and support for their member institutions, especially the smallest of them. It is in everyone’s interest that they do so.
Dr. Chet Haskell serves as Co-Head for the College Partnerships and Alliances for the Edu Alliance Group. Chet is a higher education leader with extensive experience in academic administration, institutional strategy, and governance. He recently completed six and a half years as Vice Chancellor for Academic Affairs and University Provost at Antioch University, where he played a central role in creating the Coalition for the Common Good with Otterbein University. Earlier in his career, he spent 13 years at Harvard University in senior academic positions, including Executive Director of the Center for International Affairs and Associate Dean of the Kennedy School of Government. He later served as Dean of the College at Simmons College and as President of both the Monterey Institute of International Studies and Cogswell Polytechnical College, successfully guiding both institutions through mergers.
An experienced consultant, Dr. Haskell has advised universities and ministries of education in the United States, Latin America, Europe, and the Middle East on issues of finance, strategy, and accreditation. His teaching and research have focused on leadership and nonprofit governance, with a particular emphasis on helping smaller institutions adapt to financial and structural challenges. He earned DPA and MPA degrees from the University of Southern California, an MA from the University of Virginia, and an AB cum laude from Harvard University.
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