'Breathing Room' on State Authorization

WASHINGTON -- The Education Department did not go nearly as far as college leaders would have liked in backing away from a new rule requiring colleges to get approval from every state in which they operate distance education programs.

April 21, 2011

WASHINGTON -- The Education Department did not go nearly as far as college leaders would have liked in backing away from a new rule requiring colleges to get approval from every state in which they operate distance education programs. But in announcing Tuesday that, for the next three years, the agency would not meaningfully punish institutions that have shown "good faith" efforts to get such approval, the federal government sought to provide some additional latitude, its officials say.

"This should give breathing room to institutions and states to work together" to come into compliance with the new regulations, James Kvaal, deputy under secretary of education, said in a conference call with reporters. Asked if he hoped the announcement would satisfy the objections of college leaders, Kvaal said he hoped so. Asked if he had an "expectation" that it would do so, he responded: "Desire."

It is likely to remain an unfulfilled desire, to judge from the early reactions of higher education leaders. Officials at the Association of Private Sector Colleges and Universities, which sued the Education Department in January to stop enforcement of the rule on state authorization and two other regulations issued in October to ensure the integrity of federal financial aid programs, declined to comment, citing the litigation. Given their aggressive opposition to the department's regulatory efforts, however, this is unlikely to satisfy them.

Meanwhile, senior leaders at two other college associations -- which had asked the department to withdraw the rule on state approval, and Congress to delay its implementation -- offered mixed assessments of the concession.

"Our first goal was to have the effective date [of the regulation] deferred" beyond July 1, 2011, said M. Peter McPherson, president of the Association of Public and Land-grant Universities, which had lobbied hard over the last 10 days for a delay. "But 'good faith' should be of some real assistance, and I am confident that many of our institutions will find this helpful."

Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, called the department's plan for "softer" enforcement of the new rule a "step in the right direction." But he said that the delay in enforcement would do nothing to alter the government's decision to apply the existing "antiquated" system of state regulation to the new and complex world of distance education rather than helping colleges and state leaders create a new one. He compared Tuesday's announcement to "putting a new coat of paint on a broken-down car -- it looks better but it won't necessarily run better."

The new rule on state authorization was motivated by concerns (primarily driven by the 2008 demise of California's regulatory agency for for-profit colleges) that states were not doing enough to oversee colleges authorized to operate in their states. It was designed to strengthen state requirements and to ensure that any college educating students in a state be authorized to operate there -- even if its only "presence" was to educate state residents over the Internet.

College groups raised a series of objections to the rule, noting that the original state authorization rule was designed in an era when brick-and-mortar colleges typically operated in only one physical place and that the current maze of inconsistent state approval processes would create a bureaucratic nightmare for distance education programs that operated in 20 states, or 50.

Some also complained that by requiring a college to earn state approval as a condition of receiving federal aid, the regulation would essentially put the federal government in the position of enforcing state laws. A coalition of higher ed associations, though taking a less confrontational tack than did the career-college group, has sought help from lawmakers in trying to quash or delay the rule.

Department officials were said in recent weeks to be trying to find ways to accommodate the concerns, and they have made several changes. Although administration officials declined to confirm it when asked, they reportedly had concluded that they could not delay or significantly change the regulation itself without undermining the federal government's position against legal challenges such as that from the private-sector colleges.

In the letter to colleges Tuesday, and in explaining the guidance to reporters, department officials insisted that the state authorization rule merely "reinforces current requirements that distance education programs be authorized by a state," and that the regulation does not increase the requirements on states.

But acknowledging "complaints from some institutions, or their representatives, that they are encountering challenges in seeking and obtaining State authorization for distance education programs," the guidance says the department will develop a "comprehensive directory" of state requirements to make it easier for colleges to apply for state approval, and will encourage efforts by states to coordinate their rules -- perhaps through networks in which one state's approval would be reciprocal in others, for instance. The State Higher Education Executive Officers group is planning to create its own directory of state laws and regulations about postsecondary education delivery, with the goal of fostering "reciprocal agreements among states and the development of model state laws and practices to achieve effective regulatory protocols with the smallest possible burden and cost," the group said last week.

Most significantly, however, the department said it "will not initiate any action to establish repayment liabilities or limit student eligibility for distance education activities undertaken before July 1, 2014, so long as the institution is making good faith efforts to identify and obtain necessary State authorizations before that date." The Dear Colleague letter seeks to define "good faith" efforts, saying they could include such things as "developing a distance education management process for tracking students' place of residence when engaged in distance education," contacting a state directly to discuss its programs, or applying to a state for authorization.

Hartle of the American Council on Education said that while the department's guidance appeared to make the rule "less immediately threatening," its list of "safe harbors" isn't entirely clear, and it probably will not ease the "chaos" that is likely to ensue July 1 when the rule takes effect.


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