Hearings on the U.S. system of accrediting colleges are presented, with attention to the relationship between accreditation and the eligibility system of the Department of Education. Colleges approved by accrediting agencies become eligible to participate in federal financial aid programs, while schools that do not follow accrediting agency standards lose their eligibility for assistance. The Department has criteria and procedures to determine which national, regional, and specialized accrediting agencies should be included on its list of recognized agencies. Accreditation is largely a means of conducting nongovernmental, peer evaluation of educational institutions or programs. Cases are cited in which accrediting agencies have used their status to advance certain ends of special interest groups. It is noted that some accredited colleges have a loan default rate of 85 percent. Some representatives of higher education organizations advocate nongovernmental, voluntary institutional accreditation as the best mechanism to establish eligibility for federal funds. Enclosed materials include copies of a pamphlet on the governing board's role in accreditation and a booklet on strengthening quality in colleges. (SW)