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When the State Authorization Reciprocity Agreement was established in 2013, few would have imagined that just five years later, almost every state in the U.S. would be involved.

Despite initial opposition, Massachusetts is expected to become the 49th state to join the agreement later this year. If that happens, California will be the only state that is not a member of SARA -- a regulatory framework that makes it simpler for colleges and universities to gain state-level approval to offer online education across the U.S.

Marshall Hill, executive director of the National Council for SARA, said the team that worked to develop SARA “never thought that all the states would join” but that “now that we’re so close,” getting California on board is “an obvious goal.”

Many California institutions, he said, would strongly support this move.

Hill believes that California “will eventually join” SARA, but when and how is unclear. California will need to enact legislation to enable its participation in SARA, and none has been introduced this session. This means the earliest California could begin the process to join SARA is 2019, said Hill.

Passing the legislation required to join SARA is unlikely to be straightforward.

A bill was previously introduced in 2015, but the effort was abandoned after a coalition of consumer advocacy groups voiced strong opposition to the bill. Joining SARA, they said, would “strip California of its authority” to regulate online for-profit institutions in the state.

Bad Experiences With For-Profits

California, perhaps more than any other state, has been burned by for-profits in the past. California was dubbed the “diploma mill capital of the world” after the federal government cracked down on an explosion of fly-by-night operators in the 1980s. Later, it was in California that the for-profit Corinthian Colleges chain was founded. In 2015, the U.S. Department of Education ordered Corinthian to close after it was found to have misled students about their job prospects. Many Californians are still fighting to get their money back.

Bob Shireman, a senior fellow at the Century Foundation, has been a vocal critic of plans for California to join SARA. He said it was “highly unlikely” that California would join SARA as it is currently designed. “Institutions that are hungry for out-of-state enrollments like the idea of joining SARA, but frequently those institutions are blind to the consumer protection needs of Californians,” said Shireman, who as an Education Department official led the Obama administration's crackdown on for-profit higher education.

For-profit colleges, though, aren't the only ones who want California to participate in the reciprocity agreement. Kristen Soares, president of the Association of Independent California Colleges and Universities, said that not being part of SARA was an “administrative and cost burden” to the private nonprofit institutions her organization represents. She said that joining SARA would “ease regulatory requirements across state lines,” enabling Californian institutions to more easily "serve students wherever they live."

Robert Johnson, executive director of the California Association of Private Postsecondary Schools, which overwhelmingly represents for-profit institutions, said that many states had signed on to SARA “for very sound reasons, including assurances that every institution must be approved and in good standing.” (Note: This paragraph has been updated to correct the nature of the association's membership.) 

“To argue that for-profits can ‘game’ SARA is only valid in the mind of someone who has blind hate for the sector,” said Johnson. “There are no policy reasons that support a refusal to support SARA.”

Currently, if a California institution wants to offer online courses to students living out of state, they must enter into agreements with each state where they wish to operate. This can be a lengthy and costly process, said Soares. She said that being part of SARA would negate the need for these kinds of agreements and save institutions tens of thousands of dollars.

However, Shireman said he believed SARA had been “oversold” to colleges, as they would still need to arrange state-by-state agreements for online training in professions that require state licensing, such as teaching or nursing. “I think a lot of institutions in California are under the illusion that joining SARA would somehow dramatically increase their online enrollment, or make it a lot easier for them to enroll students in other states,” he said. “But the reality is there’s no magic to SARA, and there are a lot of regulatory issues that it doesn’t deal with.”

Though she favors California joining SARA, Soares said the process will not be easy. Aside from opposition from consumer advocacy groups, California is one of the few states that has no higher education coordinating body to lead a legislative push. The creation of such an organization would be required for California to join SARA, as one state organization must decide which institutions can join SARA and which can’t. This organization must also review and resolve any complaints against approved institutions.

While no “champion” has emerged to lead California to SARA membership, Russell Poulin, deputy director of research and analysis for the WICHE Cooperative for Education Technologies, thinks that plans to create an online community college in California could provide a push for legislation, particularly if it is decided that the institution should enroll out-of-state students. “I think eventually the assembly in California will pass it, but the situation has been fairly political so far, with no movement on the horizon,” said Poulin.

Strengthened Protections for Students

As the SARA framework requires that all types of institutions -- public or private, nonprofit or for-profit -- be treated the same, with no differing requirements or burdens, consumer advocates worry that the state's existing protections for students against unsavory for-profits will be “done away with” if California joins SARA, said Soares.

The California Legislature has worked hard in recent years to strengthen protections for students, particularly at for-profit institutions, said Soares. The requirements to operate in California are “significant,” and should ideally be maintained, she said. For example, for-profit institutions must pay into a State Tuition Recovery Fund, which reimburses tuition money if an institution unexpectedly closes. Institutions are also required to disclose the salaries of their graduates and the rate at which borrowers default on their loans.

Joining SARA would “completely eliminate” California’s ability to enforce these protections, said Shireman. He is concerned that if California joined SARA, it would become much easier for “problem institutions” to expand in the state. “California would be signing away its right to protect California consumers,” he said.

A recent report from the Children’s Advocacy Institute at the University of San Diego School of Law found that California currently has the strictest oversight of for-profit institutions of any state in the U.S.

The report, called “Failing U,” was highly critical of states that had joined SARA. It said the agreement “fails to guarantee sufficient consumer protection standards, minimum performance standards or minimum standards with regard to state inspection, oversight, and regulation of private for-profit postsecondary institutions.” The report also said that SARA gives for-profit schools an incentive to locate in states with “weak regulation.”

The report echoed concerns voiced by consumer groups such as Public Advocates, which has previously described SARA as a “race-to-the-bottom formula for the oversight of online education.”

Hill has strongly disputed this characterization of SARA. In a blog post written in response to the “Failing U” report, Hill said that rather than “a race to the bottom” formula, SARA has been criticized for setting standards that are “too high, not too low.” He added that there was no benefit to an institution seeking to locate in states with weak regulation “because SARA provisions are uniform across the country.”

“No SARA institutions are exempt from meeting required SARA standards due to their size, prestige, wealth, political influence, accreditation, religious affiliation, or sector (public, independent non-profit, independent for-profit),” wrote Hill. He added that SARA does not reduce the authority of any member state’s attorney general “to investigate and deal with fraud, misrepresentation or abuse on the part of any institution -- including SARA institutions within or outside the state.”

Asked how he responded to concerns that SARA makes it easier for for-profit institutions with bad practices to expand and attract more students, Hill said that “there is no evidence of widespread misbehavior” in the quarterly reports he receives. He added, “I think it’s fair to say that 48 states would not have thus far joined SARA if they thought that SARA would lead to that situation for their states.”

But Shireman suggests that those 48 (and soon to be 49) states might not have been paying close attention. He noted that California, perhaps more than other states, is also wary of a federal government that “is essentially repealing everything.”

“Now is the time for states to step up to the plate and ensure their students are protected,” said Shireman. “I think California is unlikely to give up that authority any time soon.”

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