Accreditation Reform and Enhanced Accountability Act of 2016

This bill amends the Higher Education Act of 1965 to require the Department of Education (ED) to revise standards governing accreditors of institutions of higher education.

ED must establish student achievement criteria that accreditors must use when evaluating an institute of higher education, including retention rate, graduation and course completion rates, cohort default rate, repayment rate, transfer rate, student earnings after graduation, and job placement rates, professional and vocational certification and licensing examination pass rates, as applicable. Further, ED must establish criteria for evaluating: (1) the affordability of the institution, (2) actions taken against the institution by any state or the federal government, and (3) enrollment levels of students receiving Pell Grants.

ED must establish baseline thresholds for student achievement measures. Accreditors must require institutions to meet or exceed those thresholds.

Accreditors must: (1) carry out enhanced accreditation review immediately after learning of investigations or lawsuits by federal or state governments about the institution's fraud or abuse, deceptive practices, or material harm to students; and (2) take action when there are signs of institutional instability.

The bill addresses conflicts of interest between accreditors and the institutions.

The bill gives ED additional authority with respect to fining or terminating accreditors.

ED must establish standards for online accreditation disclosures by institutions of higher education.

Accreditors may designate an institution as accredited with distinction or accredited with risk.