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Ashford University, a unit of Bridgepoint Education Inc. (NYSE: BPI), has been denied its initial accreditation by the Western Association of Schools and Colleges (WASC), an action that could force the school to close. A closure is a fair distance away, given that the school plans both to appeal the decision and to re-apply for accreditation.

And while the decision is specific to Bridgepoint’s Ashford University, other for-profit schools are seeing shares fall as well today. Career Education Corp. (NASDAQ: CECO) is off the most, down -6.4% at $6.43 in a 52-week range of $5.32-$25.26.

Apollo Group Inc. (NASDAQ: APOL) is off -3% at $35.21, Corinthian Colleges Inc. (NASDAQ: COCO) is down -2.7% at $3.05, and DeVry Inc. (NYSE: DV) is off -2.4% at $30.74.

ITT Educational Services Inc. (NYSE: ESI) is off -2% and Strayer Education Inc. (NASDAQ: STRA) is down -1.4%.

In order to qualify for federal funds, colleges must be accredited. For-profit schools depend on student fees — some 90% of which are paid with federal grants and guaranteed student loans — for the lion’s share of their revenues. The loss or denial of accreditation could well be a death knell for a for-profit institution.

Ashford is currently accredited by the Higher Learning Commission of the North Central Association of Schools and Colleges through the 2014-2015 school year. But this accrediting body is also bearing down on Ashford, telling the school that “it has until December 1, 2012, to demonstrate compliance with HLC’s ‘substantial presence’ requirement.” Ashford had intended to gain accreditation from WASC because a substantial portion of the school’s activities to support its online programs are based in the WASC accrediting region.

Bridgepoint’s stock is down -23% at $16.57 after posting a new 52-week low this morning of $14.25. The previous 52-week range was $16.01-$30.62.

Paul Ausick