ED Issues Final State Authorization Regulations

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(January 20, 2017 – Jennifer Ortega) On December 16, 2016, the U.S. Department of Education (ED) released its final rules regulating state authorization for postsecondary distance education programs. The changes go into effect on July 1, 2018.

Many states require postsecondary education providers to be authorized by the state to deliver postsecondary education within the state. The new federal regulations establish that, for states with relevant requirements, an institution of higher education must have such authorization for any distance learning programs it delivers in that state; if the institution doesn’t, its students in those programs cannot use federal student aid to pay for their education.

Initially, there was much confusion about the impact the regulations would have on the State Authorization Reciprocity Agreement (SARA) administered by the National Council for State Authorization Reciprocity Agreements (NC-SARA). SARA has rapidly become the primary vehicle for states and institutions to harmonize their distance learning state authorization requirements. To date, forty-seven states and the District of Columbia have joined SARA, allowing over 1,200 participating colleges and universities to deliver distance education programs in any SARA state.

The final text of the rule seemed to indicate that states participating in authorization reciprocity agreements, including SARA, would still be able to enforce individual, distinct higher education requirements under the guise of “consumer protection statutes and regulations.” This would essentially make the agreements useless since the basic rationale behind them is to make relevant requirements consistent across all participating jurisdictions. Many in the higher education community strongly requested that ED consider whether the new regulations as written would inadvertently invalidate the entire SARA project. NC-SARA’s statement [http://www.nc-sara.org/files/docs/Response_EDRules_122016_final.pdf] explained, “A ‘reciprocity agreement’ that would satisfy ED’s definition strikes us as no reciprocity agreement at all.”

Fortunately, Department officials recently clarified the intent of the regulations in a telephone conversation with Russ Poulin of WCET, who has participated in the development of SARA and ED’s related regulatory efforts since their inception. On the call the officials reaffirmed their support for state authorization reciprocity agreements and explained that the regulations are not meant to undercut them. The point of the regulatory provisions in question, they indicated, is to make sure that state laws and the requirements of any reciprocity agreement a state joins actually align, such that institutions and students can rely on the state authorization an institution purports to have under the agreement. The new ED rules simply emphasize that, should a state choose to join an authorization reciprocity agreement, it should abide by the requirements established in the agreement, which includes ensuring relevant state laws and regulations are consistent with it (and vice versa).

The outgoing Under Secretary of Education, Ted Mitchell, recently made this clarification official via a formal public letter [http://wcet.wiche.edu/sites/default/files/Ted-Mitchell-Reciprocity-Response.pdf], much to the relief of many in the higher education community. The rules will not take effect, however, until well into the Trump Administration. Thus, higher education may ultimately see further changes to the regulations or their complete withdrawal. EDUCAUSE will continue to monitor implementation of the rules as well as their potential evolution or elimination. In the meantime, we recommend reading Poulin’s previous and future posts on the regulations (see the WCET Frontiers blog) for further details.

Jen Ortega serves as a consultant to EDUCAUSE on federal policy and government relations. She has worked with EDUCAUSE since 2013 and assists with monitoring legislative and regulatory proposals across a range of policy areas, including cybersecurity, data privacy, e-learning, and accessibility.