Document Type

Working Paper

Publication Date



Chambers College of Business and Economics

Document Number





Since the passage of the Veterans Readjustment Act of 1952, private accrediting agencies have held the purse strings to all federal student aid. Today, six regional accrediting agencies and ten national accrediting agencies act as the gatekeepers of these federal monies. No college or university can access federal funds without receiving the imprimatur of one of these recognized accrediting agencies. Proponents of the current system of accreditation argue that the framework presently in place ultimately benefits both students and the public at large by fulfilling quality assurance and information signaling functions. Applying Yandle’s “Baptists and Bootleggers” model, we examine whether the accreditation system in this country exclusively serves the public interest by ensuring that institutions are meeting high standards of excellence or whether this system instead serves private interests. We begin by briefly outlining the history of accreditation in the United States before explaining the public choice lens through which we explore the issue of higher education accreditation—Yandle’s Baptists and Bootleggers model. After highlighting the public interest (“Baptist”) arguments many policy advocates have raised in favor of accreditation, we consider whether the quantitative and the qualitative evidence supports the public interest story. We then turn to the public choice (“Bootleggers”) account of the current accreditation system and argue that the current system of higher education accreditation serves as a cartel aimed at keeping the price of a college education high, with little incentives for anything beyond minimum quality standards. We test this hypothesis by analyzing the opposition raised by universities and accrediting agencies alike to 34 C.F.R.§ 600.9—a regulation promulgated in October 2010 dealing with the state’s power to deny federal funds to schools that fail to meet its independent authorization requirements, even if the school is already accredited by one of the recognized accrediting agencies. We suggest that the current system of compulsory accreditation should be abolished and should be replaced by a system run independently by each state. Ultimately, competition between the states both for students and for new and innovative universities would result in reforms that the accreditors have no incentive to pursue under the current system.