NAICU Washington Update

Education Department Proposes Expansive State Authorization Requirements For Distance Education Programs

April 11, 2014

Colleges and universities offering distance education programs would be required to secure state authorization in each state in which a participating student resides, according to a new set of proposed distance education regulations offered by the Education Department.

The new proposal was one of six subject areas taken up during a Program Integrity and Improvement Negotiated Rulemaking Committee session held March 26-28. The session also included in-depth discussion of state authorization for foreign locations of U.S. institutions, PLUS loan eligibility, debit card restrictions, the clock to credit hour conversion formula, and aid for repeated course work. [See News and Notes from Negotiated Rulemaking] Many of these issues were introduced during the first session in February.

The Education Department’s previous regulation in this area was struck down in court. The new proposal, which is described in Issue Paper #2 on the Education Department’s website, is significantly more expansive than what was previously in place. The prior regulation, two sentences long, required an institution offering distance education to “meet any state requirements for it to be legally offering postsecondary distance or correspondence education in that state.”

The new proposal, some 11 paragraphs, requires each state to authorize “by name” all institutions that are providing distance education services to its residents and to have a process for resolving complaints about those institutions. The regulation would compel states which do not currently have an authorization process to develop a process.

The proposed regulations would permit participation in a reciprocity agreement such as the State Authorization Reciprocity Agreement (SARA) to satisfy a portion of the proposed new requirements. However, participation in such an agreement would not satisfy requirements relating to the resolution of student complaints. SARA, for example, assigns responsibility for complaint resolution to the “home state” of the institution participating in the agreement. The proposed regulation, however, would require both the institution’s home state and the student’s state of residence to be responsible for resolving any complaints.

At the March session, several negotiators cited the scope, complexity and confusing language of the proposal as significant problems. It is unclear whether or how Education Department officials will respond to these concerns.

A related proposal under discussion would require U.S. institutions operating a branch campus or additional location outside of the U.S. to be authorized by three entities: the country in which it is located, the institution’s home state, and the institution’s accreditor. An exception is made for campuses/locations on U.S. military bases, if exempted by the foreign country.

Moving forward, state authorization must include disclosure by the institution of the existence of, or plans for, a foreign branch campus/additional location. States must have the authority to deny authorization of the additional campus/location. The state also must be able to review and take timely final action on complaints about the foreign branch campus/location—including enforcement of applicable state law. In addition, students and prospective students at the foreign branch campus/additional location must be notified that they may use the complaint process in the institution’s home state to resolve disputes.

The next rulemaking session will be held April 23-25 and is intended to be the final opportunity to discuss the distance education proposals. A fourth session has been scheduled for May 19-20, primarily to discuss the PLUS Loan issue; however, other issues could be raised if time permits.

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