On May 14, 2025, the American Council for Education, backed by over 50 higher education groups, issued a statement titled “A Call to Reforge the Historic Compact Between Higher Education and the Federal Government.” They’re pushing back against the Trump administration’s plan to cut university funding and eliminate DEI programs, claiming the government-university partnership makes American higher education “the envy of the world.” …
Every year, the federal government doles out over $100 billion to college students through loans, grants, and work-study programs. But how does it decide which schools are worthy? It doesn’t. That job is outsourced to private gatekeepers: the accreditors.
Accreditation is pitched as a quality-control system for higher education. In reality, it’s a government-backed cartel. Seven regional accrediting agencies control access to federal funds. If a school isn’t accredited, its students can’t get federal aid. That’s the kiss of death in modern higher ed.
These accreditors aren’t neutral observers. They’re associations of existing colleges, meaning they have a strong incentive to block or limit competition. Imagine if new airlines had to get permission from Delta and United before taking off. …
In a competitive market, accreditors would have reputational skin in the game. Endorsing a failing institution would damage their brand and drive away member schools. …
The Solution: A Market for Accreditation
Does accreditation improve the quality of higher education? Not when it’s backed by federal power. Government intervention shields accreditors from competition, allowing established institutions to block reform, suppress dissent, and entrench ideology.
It’s a good sign that the Trump administration is moving to reform the system. But the executive order doesn’t go far enough. The real problem is structural: accreditors enjoy monopoly control because they determine access to public funds. As long as the state picks the gatekeepers, accreditors have no reason to innovate, no fear of failure, and no accountability to students.
The solution isn’t better bureaucrats—it’s markets. Sever the link between accreditors and government money. Let institutions choose among competing evaluators. Let accreditors earn their reputation, not inherit it. Real reform means trusting markets, not the state.
Who’d a thunk it, government granted monopoly works like the classical monopoly from classical economics? In other words, they shut out competition while benefiting the members of the monopoly or in this case probably better called the oligopoly. Is it any wonder that the colleges are failing on all kinds of grounds. They are failing the students, they are not providing a decent education, they are politically indoctrinating the students and they are failing society and future employers. Why don’t we try to back up to the system that worked so well before the state jumped in and granted an accreditation monopoly? Can’t we do things voluntarily by the economic means any more?