Issue Briefs

About

The state authorization regulations were a part of a broad package of program integrity regulations issued in 2010 by the Department of Education. The intent of the regulations was to crack down on unscrupulous higher education providers.

Under the regulations, a postsecondary institution is deemed to meet the HEA’s state authorization requirement if it qualifies under one of the following exceptions: 1) it is named in a state charter, statute, or constitution; and 2) state law provides an exemption to institutions based on the institution being in operation for at least 20 years.  Alternatively, colleges can demonstrate that they are authorized through "other action issued by an appropriate State agency or State entity."

The regulations also require a state to have a process to review, and appropriately act on, complaints about an institution. Most institutions have chosen to meet this requirement by posting the information on their websites.

State authorization should not be confused with the totally separate and distinct concept of state oversight or consumer protection. Although a state may choose to establish additional approval or licensure requirements, it is not required to do so by the federal regulations. In addition, basic state authorization should not be confused with state authorization of distance education programs via reciprocity agreements, which was also addressed by the 2010 regulations.

Compliance with the state authorization requirements is determined as part of the Department’s recertification, audit, or program review activities conducted by its regional offices. Several private, nonprofit institutions have been needlessly threatened with the loss of Title IV eligibility due to inconsistent application of the authorization requirements by regional offices.

History

The state authorization provisions were included in a broader package of program integrity regulations published in 2010. The portion of the regulation dealing with distance education was struck down in federal court in 2011.

The other state authorization requirements were originally scheduled to go into effect on July 1, 2011. However, implementation was delayed several times, and the requirements did not take effect until July 1, 2015. At the time, the provisions created confusion about the legal status of many private, nonprofit colleges—some of which were needlessly threatened with loss of eligibility for federal student aid dollars.

In 2024, the Biden Administration established a negotiated rulemaking committee to amend regulations governing multiple Title IV issues, including state authorization. During negotiations, the Department proposed to eliminate the exception allowing states to exempt institutions from state authorization or licensure requirements if they are established through a charter, statute, constitutional provision, or other action. After NAICU raised significant concerns about this proposed change, negotiators agreed to restore some of the exceptions in modified form. Citing stakeholder concerns, the Department ultimately terminated the negotiated rulemaking on state authorization without making changes, leaving the current regulations intact.