Rethinking State Authorization, Again

Controversial regulations requiring online institutions to be authorized to operate in multiple states were up for debate last week as part of the Trump administration’s planned overhaul of higher education rules.

For online learning leaders, it was a case of déjà vu. Last week’s discussion at the U.S. Department of Education represents the third time in a decade that department officials have moved to reshape state authorization rules for distance education through a process known as negotiated rule making.

After almost 10 years of discussion, one thing is clear: state authorization is complex. Few groups agree on exactly how it should be done, or even if it should be done at all. Yet Education Department officials are optimistic they can find a way forward that will make the rules simpler for colleges. The test will be whether they can do so without significantly reducing consumer protections for students.

In a position document published earlier this month, department officials proposed to eliminate state authorization rules developed by the Obama administration. Under these rules, all higher education institutions offering online programs must demonstrate they are authorized to operate in every state where they enroll students who receive federal financial aid. The institutions must also clearly publish their refund policies and complaint procedures. They're also required to disclose to students studying professions that require state licensure, such as nursing or teaching, whether an online program qualifies them to practice their chosen profession where they live.

The Obama-era regulations, published in December 2016, were due to go into effect in July 2018. However, the department delayed the rules for two years after some higher education groups complained of widespread confusion over how to implement the rules. In particular, college administrators said they were unclear about whether they should be tracking where students are registered as residents or where they are actually located while studying online -- an issue that is particularly important for military students who move around a lot. There was also confusion about how and when disclosures should be made to students, and concern about the amount of research needed to check whether online programs meet requirements for professional licensure in all states.

The confusion might previously have been addressed with additional guidance in a Dear Colleague letter, but the department has avoided publishing this kind of guidance on its website under the leadership of Education Secretary Betsy DeVos as part of her efforts to make higher education regulation less prescriptive.

Scrapping the Obama-era regulations would be in line with the deregulation agenda of the Trump administration, but in meetings with members of the rule-making panel's distance learning and educational innovation subcommittee last week, department officials appeared to walk back their initial proposal to remove the Obama-era regulations. They said the document outlining their position, known as a redline document, was just a starting point for negotiations and no decisions have yet been made.

Over two days, between discussions of the credit hour, regular and substantive interaction, and the definition of distance education itself, a range of views were shared on state authorization.

“It was clear from the debate that few people agree the department should eliminate the state authorization rule for online programs,” said Clare McCann, deputy director for federal policy at New America. “Eliminating the state authorization rule would only serve to reduce regulatory clarity for colleges and limit protections for students, and the subcommittee expressed that forcefully to the department.”

Jody Feder, director of accountability and regulatory affairs at the National Association of Independent Colleges and Universities, expressed frustration at the burden of state licensure disclosures, which she said particularly impact small private nonprofits with limited staff.

“It’s too much, I’ll leave it at that,” she said.

McCann said subcommittee members mostly agreed, however, that "students have the right to information about whether their programs meet the very low bar to allow them to succeed, such as fulfilling the basic requirements to take licensure exams in students' states."

There was support from several members of the subcommittee for the department to keep 2016 wording that would recognize multistate agreements such as the State Authorization Reciprocity Agreement (SARA), a voluntary regulatory framework that streamlines the approval process for colleges and universities to operate online programs in every state but California.

“I heard general support for the concept of reciprocity,” David Musser, a Department of Education representative, said of the discussion in the Jan. 18 distance ed subcommittee meeting. But while there was wide agreement that state reciprocity agreements reduce administrative burden and costs for institutions seeking authorization in multiple states, several committee members expressed concern about how SARA operates.

“We’ve heard concerns over a lack of department oversight of SARA,” said Musser. “It’s not clear right now if the department is able to do anything with SARA, but we’ll take it back and think about it.”

A key concern voiced by subcommittee members was that meeting SARA requirements might mean watering down state-level protections for students. Under the 2016 definition, a reciprocity agreement does not meet state authorization requirements if it prohibits a state from enforcing its own statutes and regulations. Yet reciprocity requires that “you all agree to use the same standards,” Russ Poulin, director of policy and analysis at the WICHE Cooperative on Educational Technology (WCET), said in the meeting. “If you make it that states can make different rules on top of that, you’re back to where you were prior to that. You don’t really have reciprocity.”

If the department chooses to keep language relating to state authorization, it will signal to institutions that these requirements should be taken seriously, said Marshall Hill, executive director of the National Council for State Authorization Reciprocity Agreements (NC-SARA). But ultimately the federal rule making will have little direct impact on SARA, he said.

“What so many people seem to struggle to understand is that SARA deals with state regulations, not federal regulations,” said Hill. “Even if the U.S. Department of Education were to eliminate any requirement for institutions to be authorized to deliver distance ed in states other than their own, state laws would still be in place. What we do is provide a streamlined way of having to deal with 54 states, territories and districts, and provide one set of requirements that institutions must meet.”

It’s anyone’s guess what the department will end up deciding on state authorization, said Hill. The subcommittee is due to meet again in February and March, but with so many pressing issues to work through, state authorization may be low on the agenda.

Cheryl Dowd, director for the State Authorization Network at WCET, said she was encouraged to see how open-minded department officials were about state authorization -- not only in discussing reciprocity but also lessening the burden of disclosure requirements and clearing up confusion over the term "residence" vs. "location" of students. “It was a very good conversation,” said Dowd.