My colleague Bob Blumenthal has turned himself into something of an expert on the finances of colleges and universities. You can read the most recent fruit of his efforts here, where he writes about a dispute between one of the regional accreditors (for which he has worked in the past and for which I’ll work early next year) and a college that it has stripped of accreditation on grounds that are far from transparent.
The short of it is that the accreditor doesn’t believe that the college has resources sufficient to support its mission. One could respond that the best evidence that the resources are adequate to the mission is that the school is in fact fulfilling its mission, something that can be measured by student satisfaction, student success, and so on, in other words, by the educational marketplace.
Or, if that’s too subjective for you (since education isn’t a "product" like others, to be measured by consumer preferences), one could look at the quality and content of the curriculum (and so on), and render a professional judgment about whether the college ought to be granting degrees, regardless of how the place is managing to do it (financially and administratively). Regional accreditors don’t like to do that, since it requires rendering judgments about curricular quality that require the application of standards much in dispute. The American Academy for Liberal Education (on whose Council of Scholars I serve) unapologetically applies such standards.
I’m tempted to argue that there’s a way of dispensing with regional accreditors whose principal purpose seems to be to audit the books of the places they accredit. My colleague Bob suggests it, at least implicitly: if there were transparency, if audited financial statements were available to the public, parents, students, and peers could make their own judgments about the quality of the "product" offered, properly focusing on the distinctiveness and quality of the curriculum offered. The only way then that regional accreditors could continue to justify their role as gatekeepers is to get into the business of certifying quality. Colleges and universities probably don’t want that, however. They’d rather have an opaque accrediting process that enables them to avoid financial transparency and accountability for curricular content.