States Struggle to Regulate Online Colleges That Lack Accreditation

Regulators struggle to crack down on institutions that can relocate quickly

By SARAH CARR and ANDREA L. FOSTER

Dean Darris, a popular political-science instructor, was put on an accelerated schedule for raises at Clackamas Community College, in Oregon City, Ore., when he received a

ALSO SEE: 3 Unrecognized Accrediting Agencies Some Professors Are Surprised to Be on a University's Roster Colloquy Live: Join a live, online discussion with Alan L. Contreras of the Oregon Student Assistance Commission, about state efforts to regulate unaccredited, online colleges, on Wednesday, March 21, at 12:30 p.m. U.S. Eastern time.

doctorate in government from Berne University in 1998.

But a year ago, Mr. Darris received a letter from Oregon's Office of Degree Authorization that told him to stop using the title "doctor." The letter said that Berne, a distance-learning institution that promotes itself with a Web site and is based in the Caribbean country of Saint Kitts-Nevis, is not accredited by an agency recognized by the U.S. Department of Education or a foreign equivalent, nor is it approved by Oregon's degree-authorization office. The letter added that Saint Kitts-Nevis "is notorious in the hemisphere for licensing just about anything as a college."

Mr. Darris was incensed. "Why should I be ashamed of an institution that's legitimate, scholarly, and meaningful?" he asks. Indeed, Clackamas administrators reviewed the course of study Mr. Darris had completed with Berne and determined that it was comparable to doctoral programs at accredited colleges, says John S. Keyser, Clackamas's president, and the college's catalog still lists Mr. Darris's doctorate. In fact, Berne is accredited now in Saint Kitts-Nevis, and the secretary of the ministry of education, labor, and social security for Saint Kitts, Osmond S. Petty, calls the statement about the island's accrediting leniency "outrageous," with "no basis in fact."

But Oregon has not removed Berne from its online list of 33 institutions whose degrees cannot be cited in the state (http://www.osac.state.or.us/oda). The list is accompanied by a disclaimer that neatly sums up the quandary posed by unaccredited institutions: "Some of the institutions listed below are diploma mills that simply provide a paper degree in exchange for money. Some provide actual course work in a classroom or online setting that may be suitable for some students' needs. Some are difficult to classify."

Oregon's approach to regulating unaccredited higher-education institutions is among the strictest in the nation, and is unusual in that the state both keeps a close eye on its own such programs and warns its residents about questionable ones elsewhere. "The harm, in my view, is that the students in these institutions are given the impression that these people have higher levels of knowledge and experience than they really have," says Alan L. Contreras, the administrator of the state's Office of Degree Authorization.

Other states -- most recently Iowa, Louisiana, and South Dakota -- have also cracked down on suspect institutions within their borders in the past several years, and more state legislatures are approving bills that allow only accredited universities to establish bases in their states. Despite the trend, a few states -- including Wyoming, Montana, and Hawaii -- still permit unaccredited universities to do business as long as they have a physical presence in the state.

Their most obvious presence, though, is on the Web, which unaccredited colleges rely on both for advertising and, in some cases, for offering courses. Many of the institutions have ".edu" Web addresses, adding to the sense of legitimacy that their Web sites -- many with long lists of programs, and some mentioning accrediting bodies that have never been reviewed or approved by the Education Department -- are designed to convey.

Diploma-mill experts say unaccredited distance-learning universities use the Internet to prey on naive foreign students, including many whose native language is not English. Those students are drawn by the cachet of a degree from an institution in the United States but may not understand how accreditation works or its importance.

"The notion of accreditation, approval, and license -- they sound all the same," says John Bear, one of the authors of Bears' Guide to Earning Degrees by Distance Learning, which charts various unaccredited institutions and diploma mills. "And if you're given the words in Portuguese or Japanese, you couldn't appreciate the nuances or differences." State education officials say Mr. Bear is one of the few people in the nation closely tracking diploma mills.

The U.S. Education Department does not follow trends among unaccredited institutions, says Stephanie Babyak, a department spokeswoman, so the issue is left largely to state regulators.

While they struggle to stamp out the worst of the unaccredited institutions, such businesses appear to be here to stay, because of their ubiquity and the ease with which they can now be set up on the Internet. "In one hour or less you can create a virtual university, and have a Web page up and running," says Steve Levicoff, author of Name It & Frame It? New Opportunities in Adult Education and How to Avoid Being Ripped Off by "Christian" Degree Mills. The book identifies institutions that offer clerical titles in exchange for money.

"It's a pernicious problem," says Michael Lambert, executive director of the Distance Education and Training Council. "The bloom is off the rose on degrees via online learning."

One state that's getting tough on diploma mills is South Dakota, which just last month approved a bill that requires its degree-granting institutions to be accredited. The law is set to take effect July 1. Unaccredited universities will have to flee to another state, fold, or become accredited. James F. Shekleton, the general counsel for the South Dakota Board of Regents, says he knows of approximately 20 unaccredited institutions that were registered in the state, and that his office regularly receives inquiries about 12 of them.

Still, when one state tightens the screws, unaccredited institutions often simply change mailing addresses. The goal is to obtain state licenses as degree-granting universities -- licenses they can then show to prospective students as proof of legitimacy.

More than 100 such institutions have moved to Hawaii in the past decade for this reason, according to David P. Lohmann, a professor of management at Hawaii Pacific University who has asked state lawmakers to crack down on unaccredited institutions. "Hawaii has been characterized as being the laughingstock of the educational community," he says. "It kind of tells me that we are at the bottom in terms of regulating unaccredited institutions."

The state's lawmakers did pass a measure in 1999 that requires unaccredited institutions to disclose that they are not accredited; the measure also mandates that unaccredited institutions have a physical presence in the state, with at least one employee and 25 in-state students, if they want to obtain a license to operate as a business in Hawaii.

But Mr. Lohmann doubts that the legislation will have much of an impact when it goes into effect next year. "It is useless, absolutely useless," he says. "The provisions are so easy to comply with. There are few stipulations on the definition of a full-time employee, and no precise definition of what a student is."

Even in states that have tried to regulate the unaccredited institutions, they continue to thrive. In sparsely populated Wyoming, for example, at least four such colleges have a presence, and a fifth, Rushmore University, is considering moving its office there from South Dakota. But Wyoming students are not flocking to the universities, which instead rely heavily on students from the Middle East and developing countries.

Preston University, for example, claims to have 30 "affiliated" campuses in 19 countries, and virtually all of its students are abroad. Abdul Basit, the university's president, is a native of Pakistan who rarely visits the university building at the airport in Cheyenne.

According to Jerry P. Haenisch, who is chancellor and chief executive officer of Preston, the university has about 8,000 students, the bulk of whom are in Pakistan. About 18 students take classes on the Preston campus, and, by the end of 2002, the university expects to have completed its own building near the airport. It now leases the building it occupies.

Mr. Haenisch says that half of the university's operating income comes from nine campuses in Pakistan. The rest comes from other campuses worldwide and from the university's distance-learning program, which enrolls about 300 students. Preston recruits distance-learning students through advertisements in international periodicals such as The Economist, and attracts between seven and 10 new students per month, most of them interested in business.

Students and faculty members exchange exams and assignments through express mail, Mr. Haenisch says. The tuition for distance-learning students ranges from $4,950 for an associate degree to as much as $9,950 for a bachelor's degree. He says faculty members are paid $100 to create a course syllabus, $50 to grade an exam, $250 to evaluate a masters' thesis, and $1,250 to supervise a candidate for a doctorate.

While Mr. Haenisch readily spouts facts and figures about his university, his remarks about accreditation appear at odds with some of the university's promotional material. He says Preston eventually would like to become accredited but cannot afford the expense of having each of its campuses evaluated. The university also would be too confined by accreditation, he says -- specifically by the requirement that an institution have full-time faculty members. Preston, which has no full-time faculty, relies instead on adjunct instructors who are affiliated with other institutions.

"We can live with or without it," says Mr. Haenisch. "We're definitely going to seek it, but we'll have to wait until we build our income stream." Nonetheless, the university's Web site (http://www.preston.edu) puts it this way: "Presently, the University is pursuing accreditation through a U.S. Department of Education recognized accrediting body."

Regardless of whether or when Preston will get accreditation, Mr. Haenisch admits that he has faced the unpleasant task of leveling with angry graduates who discover that, because the university is unaccredited, their Preston degrees will not help them obtain the jobs they seek. What does he tell them? "We're sorry, you'll have to get the job on other merits, other than your degree," he says.

Cheyenne is also home to Kennedy-Western and American Global Universities, which have small offices within a block of each other in the city's sleepy downtown. An unannounced visit to Kennedy-Western reveals a quiet and stark basement office. No one is seated at the front desk to greet visitors. After several minutes Stephanie Baty, whose business card reads "Wyoming Admissions/Coordinator of Alumni and Corporate Development," appears in the foyer.

She says she is not authorized to answer reporters' questions, and says the office is primarily used for data entry. Another person works there with her, and, she says, a third person will be joining the staff shortly. The university's Web site (http://www.kw.edu) encourages students to visit its "administrative" office in Thousand Oaks, Calif., where officials say staff members in admissions, student services, information services, and accounting are located.

But the university is barred from enrolling California students because it is not licensed by the California Bureau for Private Postsecondary and Vocational Education. Kennedy-Western also stopped recruiting Oregon residents through the mail after it was contacted by Drew A. Lianopoulos, an Oregon assistant attorney general. In a December letter, he said the university misleads Oregonians into believing that a Kennedy-Western degree is recognized in Oregon, which it is not.

Kennedy-Western honored Mr. Lianopoulos's request even though officials said the college was doing nothing illegal. Christine S. Upton, a Los Angeles lawyer representing the university, wrote in a January letter to Mr. Lianopoulos that the U.S. Constitution does not allow Oregon to regulate a distance-learning institution licensed by another state.

Kennedy-Western at one time used an Idaho mailing address, but when it sought renewal of its registration there in 1998, it was turned away by the state board of education because the university lacked accreditation. Robin Dodson, chief academic officer for the Idaho State Board of Education, estimates that Kennedy-Western's revenue is between $6-million to $10-million a year. "It's a big international operation," he says. His office used to receive as many as 200 telephone calls a month from people inquiring about the university, he adds.

Kennedy-Western officials declined to reveal how many students are enrolled at the university or what percentage are from foreign countries. They say it also has offices in Jakarta, Indonesia; Moscow; and Singapore.

Tuition is based on students' professional experience and ranges from $4,500 to $8,200. Kennedy-Western says students do assignments and communicate with faculty members through the Internet, telephone calls, and faxes. Students can also take exams and listen to lectures online, Kennedy-Western officials say, but the university's Web site has no links to courses, which are a common feature of accredited distance-learning institutions. The site does, however, have an array of marketing features, including audio clips of unidentified students enthusiastically promoting the college.

The site also has a picture of Kennedy-Western's Wyoming private-school license and a newsletter trumpeting, among other things, a "faculty update" about a professor with a Ph.D. from Columbia Pacific University. Last month, a judge in Marin County Superior Court, in California, ordered Columbia Pacific to cease operations in California because it had been operating without state approval.

The extent of American Global's operation is more difficult to assess. When asked about the institution, S. A. Samadani, its president, digresses into his own educational and professional background, people who have betrayed him, and his native Iran. But he says American Global has about 100 students, roughly 60 percent of them abroad. Instruction is mainly online. Most university students enroll in alternative-medicine or business-administration programs.

Until fall 1999, the university gave its address as a rented mailbox in West Des Moines, Iowa, although Mr. Samadani operated the institution from Upland, Calif. After Iowa passed a law that allows only accredited universities to be registered in the state, Mr. Samadani moved the university's address to Cheyenne, and Wyoming licensed the institution in February 2000. Robert Berntsen, director of business services with the secretary of state's office in Iowa, recalls that officials there were angered that Mr. Samadani promoted American Global using an Iowa certificate of operation. "The certificate is not supposed to be used in advertising, and that's what they were doing with it," he says.

Arash Samadani, a California lawyer who is the president's son, is also the spokesman for American Global. He says that once the Iowa secretary of state's office told his father to stop advertising his university using the Iowa certificate, he complied. He says American Global established the mailbox in Iowa with the intention of moving its operations to the state from California.

Wyoming took action against the worst fly-by-night institutions several years ago, says Jim Boreing, former head of the state's private-school-licensing office. About 50 diploma mills that claimed Wyoming as their home were forced to move away after the state passed a law that required institutions to have a physical presence in the state, he says.

But "any law that man enacts, someone will find a loophole," he concedes. "This is an ongoing situation that needs to be revisited periodically."

Wyoming's experience resonates with that of other states that have attempted to stamp out the more egregious mills. Louisiana officials, for instance, are hoping that a law passed there in 1999 will rid the state -- once famed for its many diploma mills -- of the last of the shady institutions. Louisiana now requires that colleges have a physical presence in the form of offices and personnel, and also that the institutions be on the path toward accreditation from an agency recognized by the U.S. Department of Education.

"The motivation for the original statute was to ensure the worth and value of an academic degree," says John Kay, an assistant commissioner for research and data analysis. "I've actually been very encouraged by the response that we have had from our schools."

"In many ways it seems clear to me that Louisiana is now past history in terms of diploma mills," says Mr. Bear, the author of the guidebook. "No new unaccredited schools would ever consider starting up there."

Some unaccredited institutions have not moved or closed, though, and say they are seeking accreditation from the Distance Education and Training Council. The council, which is recognized by the Education Department, only accredits institutions that offer programs primarily through distance education. It currently has 60 members, including Cardean University, the Center for Lactation Education, Concord University of Law, and the Gemological Institute of America. Cardean is the degree-granting portion of the high-profile company Unext.com, which has signed on such universities as Columbia and Stanford to offer courses.

Mr. Lambert, the council's executive director, says his group has received several inquiries and applications for accreditation from Louisiana colleges since that state cracked down. Mr. Bear has his doubts that many will earn accreditation. "My suspicion in most of these cases is that the places are buying time," he says. "You have your hardware store, and you are told that the freeway is coming through, but you keep it going as long as you can."

But some people are hoping that they will be able to do more than simply buy time -- they're hoping that they can turn their institutions into mainstream, accredited, degree-granting programs. Louisiana's LaSalle University operated as a "degree mill," says Mr. Bear, from 1986 until mid-1997. In 1996, an F.B.I. raid led to the imprisonment of its original owner, Thomas J. Kirk, who was indicted for mail and tax fraud, money laundering, and other charges, and was imprisoned after pleading guilty. In late 1997, according to Mr. Bear, the institution was purchased by "new and serious owners," who appear to be respectable and include, for example, the chairwoman of the state's Republican Party. They created Orion Education Corporation, which now operates LaSalle University and Orion College, a distance-learning institution.

"We know who we are and where we are going," says Evans C. Spiceland, the corporation's chief operating officer.

A visitor to the Orion administrative buildings outside New Orleans can still see many vestiges of the old LaSalle. A church that Mr. Kirk built still looms large beside the two college buildings. And LaSalle continues to maintain its Web site and award degrees -- at least for now.

"We had a contractual obligation to the old LaSalle students to stay in operation until they could finish up their course work and degrees," says Mr. Spiceland, who asserts that Orion is a much cleaner operation than the old LaSalle. He adds that LaSalle stopped accepting new students at the end of February, although the university Web site still had an electronic application option in mid-March.

Unlike LaSalle, Orion does not offer doctoral programs and does not rely as heavily on "portfolio assessment," which looks at the past work and education experience of students in awarding credit. More frequently, Orion requires its students to complete courses, or to take exams if they want to qualify out of courses.

Administrators created Orion when LaSalle failed in its bid for accreditation from the Distance Education and Training Council in 1999. This year, they say, Orion will apply for accreditation in its own name. "It is easier to start a new school from the ground up than to convert an old school," says Mr. Spiceland.

While officials at Orion say they welcome the tightened legislation in Louisiana, they also admit that LaSalle may have been a more financially viable operation than Orion. Fewer than 100 students have enrolled in Orion since it opened this past winter. The institution has had to cut back drastically on its marketing to international students and limit the number of its degree programs to meet the standards set out by the Distance Education and Training Council.

"When you go legitimate," says Darrell Milburn, the chief academic officer at Orion, "the sad thing is that it is not a good thing for the money situation."

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