As required by the Higher Education Act, State authorization has been a longstanding requirement that necessitates state oversight of institutions. Each Title IV eligible institution has to be authorized in the state in which they are located as a condition for participation in Title IV Federal student aid programs.  While all higher education institutions must have state authorization in the states in which they are physically located, there have been no federal regulations for distance education providers in states where the institutions are not located and since 2010, ED has been seeking tighter regulations.

Just before the holidays, the U.S. Department of Education announced final rules on State Authorization of Postsecondary Distance Education detailing new requirements for colleges and schools that offer online distance education programs to students physically located in other states to follow. The rule is scheduled to go into effect July 1, 2018 and requires institutions offering distance education to be legally authorized to operate and monitored by an appropriate state agency in each state where their students reside. For schools with a national presence, this requires a school to obtain authorization is nearly every state in the country. Fortunately, the new regulations recognize authorization through participation in a state authorization reciprocity agreement such as SARA (which now boasts as many as 45 states sharing reciprocity), as long as the agreement does not prevent a state from enforcing its own laws.

Here’s a summary of the new rules:

  • Student Complaint Process Documentation – Institutions must document the state process for resolving student complaints regarding distance education programs.
  • Disclosure Requirements – Institutions must provide public and individualized disclosures to enrolled and prospective students in distance education programs, including adverse actions taken against the school, the school’s refund policies, and whether each program meets applicable state licensure or certification requirements. Schools must also explain to students the consequences of moving to a state where the school is not authorized, which could include loss of eligibility for federal student aid.
  • Branch Campuses or Additional Locations in a Foreign Location Authorization – Foreign branch campuses or locations must be authorized by the appropriate foreign government agency and, if at least half of a program can be completed at the foreign location or branch campus, be approved by the accrediting agency and reported to the state where the main campus is located.

Read the Federal Register, which includes important preamble info here and be on the lookout for implementation guidance later this year.