The Department wants accreditors to compete and to be measured on outcomes. Here is what that means for institutions starting July 1, 2027.
On October 30, 2026, the U.S. Department of Education (the “Department”) published the Accreditation, Innovation, and Modernization (“AIM”) final rule at 91 FR 68626. The rule implements Executive Order 14279, Reforming Accreditation to Strengthen Higher Education, and is effective July 1, 2027. In its fact sheet accompanying the AIM rule, the Department stated that it adopted the consensus language from negotiated rulemaking sessions earlier this year.
A Market with a Yardstick
The AIM rule is best read as pursuing two goals simultaneously. The first is to frame accreditation as a market and reduce barriers to competition within it. The Department describes a system that has “historically seen very little competition,” in which institutional accreditors “rarely engage in head-to-head competition” and where institutions face “high switching costs and potential risks in maintaining eligibility for Federal student aid.” Its stated aim is to “increase competition among accrediting agencies by reducing barriers to entry, facilitating institutional mobility among recognized agencies,” and cutting rules that discourage new accreditors from forming.
The second goal is to give that market a common yardstick. The Department notes that the Higher Education Act (“HEA”) limits the Department’s power to prescribe the substance of accreditors’ standards, particularly student achievement standards, so the rule instead governs how accreditors apply their own standards. Accreditors have long been required to evaluate student achievement, including whether an institution is successful at both institutional and programmatic levels. The rule goes further: every recognized accreditor must now review a specified set of outcomes at both levels, including earnings relative to total cost of attendance, and set “minimum expectations” of its own.
The thesis behind some of the changes is that accreditors competing for members, measured on the same kinds of outcomes and subject to public disclosure of their findings, will deliver better quality assurance than the current, stable peer-review system does. Whether that holds is a question for 2027 and beyond, since the Department itself says it lacks sufficient data to estimate how the changes will affect the accreditation marketplace. The Department concedes that “empirical evidence measuring the causal effect of institutions changing accrediting agencies is limited,” but argues the broader economics of competition still support the policy. Its own data show that only 10 institutions have voluntarily left a former regional accreditor since 2020. Even so, it expects the credible possibility of switching to improve accreditor performance “even if relatively few institutions ultimately change accrediting agencies.”
The direction is clear. Accreditors are being pushed to behave less like membership associations and more like regulators that can be replaced. That could cut both ways for institutions. Institutions gain more room to choose an accreditor that fits their mission. But every accreditor will be under pressure to show that it holds its accredited institutions and programs to measurable outcomes, and the Department notes that wide variation in outcomes among institutions with the same accreditor suggests few meaningful outcome standards exist today. The Department expects some programs to face pressure to improve, and some institutions may close programs that cannot meet new standards.
With the Department’s goals and theory in view, here is what the rule actually changes.
What Changed, and What Didn’t
The final rule follows the August 20, 2026, notice of proposed rulemaking (“NPRM”) and a comment period that drew 7,051 comments. Despite that volume, the Department says it “made no substantive changes to the final rule, retaining the text agreed upon by the negotiated rulemaking committee and proposed in the NPRM.” It describes its edits as “minor, non-substantive technical edits to improve clarity.” Institutions that followed the proposal will recognize the final rule.
The Timeline
The rule takes effect July 1, 2027, the earliest date the HEA’s master calendar allows. The Secretary has designated every section of the rule for early implementation starting January 1, 2027, to facilitate implementation. The Department notes that accreditors may need stakeholder notice and comment periods and formal board adoption to revise their standards. Accreditors that implement new provisions early may not impose resulting requirements on institutions that take effect before July 1, 2027. The Department “strongly encourage[s]” accreditors to start revising policies and training staff and reviewers promptly. It considers eight months enough time to do so and has declined to commit to issuing guidance on any set timeline. The practical result is that most institutions should expect proposed changes to their accreditors’ standards, some with notice and comment periods, during the first half of 2027.
New Accreditation Requirements
The heart of the rule is revised §§ 602.16 and 602.17, which set out what accreditors must evaluate when they apply their standards. Highlights include:
- Student achievement, with minimum expectations. Accreditor standards must now “establish requirements” for student achievement at the institutional and program level, replacing the prior requirement to “set forth clear expectations.” When applying those standards, an accreditor must review student success “including minimum expectations” by assessing (a) State licensing or certification exam results, where applicable; (b) retention, completion, or graduation rates, including whether grades meaningfully reflect learning and support progression; (c) post-completion outcomes, including employment and continued education; (d) scores on relevant standardized assessments taken for admission to a higher-level degree; and (e) educational and economic returns, aligned to the program’s credential level, length, and occupational context, relative to total cost of attendance. Returns must be assessed using the Earnings Accountability data calculated under 34 CFR Part 668, Subpart Q, enhanced Unemployment Insurance wage records, or other reliable earnings data. The Department does not establish thresholds, so each accreditor sets its own, and it declined to offer carve-outs. The Department maintains that these provisions govern how accreditors apply their standards rather than prescribing the content of those standards.
- Faculty, academic freedom, and intellectual diversity. Accreditors must evaluate whether an institution maintains (a) a sufficient number of “appropriately qualified” faculty and instructors who are regularly evaluated; (b) written faculty performance-evaluation policies with defined criteria; (c) clearly articulated, consistently applied academic freedom protections; (d) staffing flexibility to respond to persistent material changes in student demand, program viability, or finances; (e) for public institutions, policies protecting First Amendment rights; (f) research-integrity policies; (g) a policy or policies protecting civil rights and, as applicable, First Amendment rights; and (h) a policy supporting intellectual diversity. Institutions with a religious mission are evaluated against protections consistent with that mission.
- Public disclosure of noncompliance findings (§ 602.23(d)). Accreditors must require institutions to publicly disclose any agency action that begins the enforcement timeline in § 602.20(a) or (b). In plain terms, that means any written finding that the institution or a program is out of compliance with a standard, which starts the clock for coming into compliance (capped at the lesser of four years or 150 percent of the length of the longest program), as well as any immediate adverse action. What the agency calls the finding does not matter: noncompliance must be communicated in writing “no matter the term or status used by the agency,” so a warning or special report that cites noncompliance counts. The disclosure must include the reasons for the action. The Department calls the disclosure “mandatory” and refused to add a materiality threshold. The Department noted that accreditors can tell institutions how to distinguish preliminary or remediable findings from adverse actions.
- A longer public record. Accreditors must note probation and adverse decisions in their online directories within one business day. They must also keep a five-year online record of all actions for each institution, beginning on the rule’s effective date.
- Earlier teach-out planning. A move from full to provisional certification now triggers a teach-out plan due within 30 days. Accreditors may instead collect plans at regular intervals, which relieves that deadline.
- Cross-regulator triggers. Under the current rule, an accreditor must promptly review an institution only when another recognized accrediting agency takes adverse action against it or places it on probation or an equivalent status. The final rule extends that trigger to “a similar action or status by a State agency or Federal agency,” and covers programs as well as institutions. The Department describes the change as broadening the circumstances requiring review to include adverse or certain negative actions by other State or Federal agencies. The rule does not define a “similar” State or Federal action, so depending on how accreditors read it, a Department action affecting an institution’s Title IV participation could prompt an accreditor review.
- Cost/benefit review. When it applies its facilities and fiscal and administrative capacity standards, the accreditor must review “any cost/benefit analysis performed by an institution.” That review looks at the institution’s budget, resource allocation, and any strategic plan, and at whether the institution weighs the expected benefits of its activities against their financial, administrative, and opportunity costs and the effect of capital spending on future operating expenses. The current version of § 602.17 has no comparable requirement, and the Department assumes most accreditors do not review these analyses today. The Department says the provision places no requirement on institutions themselves, but it also expects accreditors to review whether institutions have conducted such an analysis.
Obligations That Land Directly on Institutions
Two sets of provisions reach institutions more directly than the accreditor-facing rules above.
Transfer of credit. Transfer policies may not deny credit based on the sending institution or its recognized accreditor. Conditioning credit on a subset of accreditors, such as former “regional” agencies, is prohibited. For undergraduate programs, comparable coursework must be accepted unless the institution gives a written basis for denial, and students get 15 calendar days from receipt of a denial to appeal. Under revised § 668.43, a student who submits a transcript on time must be told which courses will and will not transfer, receive a course-specific rationale for each denial, and get an estimate of the time and courses needed to replace denied credit. These disclosures are due before the student signs an enrollment agreement, completes registration, or makes a nonrefundable financial commitment, whichever comes first.
Changing or adding accreditors. The rule removes the formal requirement to wait for Department approval before changing accreditors. The Department is not out of the picture, however. The Secretary does not recognize an institution’s accreditation while it is changing agencies unless the institution gives the Secretary all materials related to its prior accreditation and materials demonstrating reasonable cause for the change. The Secretary will find cause for a change reasonable unless the institution is seeking to evade federal law, avoid or delay oversight, gain eligibility through misrepresentation, or otherwise undermine Title IV integrity. In the preamble, the Department states that an institution “would retain title IV eligibility under its original agency until the change in accrediting agency was complete.” In other words, the Department expects institutions to maintain their existing accreditation until the change is complete; it “does not envision a circumstance in which an institution voluntarily chooses to switch accrediting agencies and causes a gap in title IV funds access.” The institution must disclose the change on its website within 10 business days and make reasonable efforts to notify current students and recent graduates.
Getting Ready
Institutions that start now will be best placed to shape their accreditors’ 2027 standards rather than simply react to them. In the coming months, institutions should consider:
- Benchmarking program-level outcomes and earnings data before their accreditor sets minimum expectations;
- Documenting a budget and capital-planning cost/benefit analysis;
- Rewriting transfer policies and admissions workflows to meet the pre-enrollment disclosure deadlines;
- Asking their accreditor how it will handle public disclosure of preliminary findings;
- Weighing whether their current accreditor remains the best fit, keeping in mind that the Department urges institutions to carefully evaluate whether a change, and its costs, serve their students’ best interests; and
- Taking part in accreditor comment periods on revised standards.
Institutions with questions about the AIM rule are welcome to contact Roger Swartzwelder ([email protected]) or Aaron Marks ([email protected]).
