Cutting Their Losses

In response to a survey on new "state authorization" rules, many colleges say they plan to abandon certain states rather than obtain permission from all 50.
August 18, 2011

Colleges trying to obtain permission from every state in which they enroll students, as required by a new Education Department rule, have confronted a patchwork of widely different regulations. Fees can range from none at all to thousands of dollars per course or degree program. Requirements range from lax (the institution must be accredited) to stringent (facing a possible site inspection -- and paying all of the inspectors’ travel costs).

In response to the rule, some institutions will abandon some states altogether, a survey released today by the University Professional and Continuing Education Association and the WICHE Cooperative for Educational Technologies has found. Many of those colleges cited Massachusetts, Minnesota and Arkansas as places where they will no longer enroll students. At least 19,000 students total will be turned away, the colleges who responded to the relevant survey questions estimated.

The state authorization rule, part of the Obama administration’s package of new regulations intended mainly to rein in for-profit colleges, requires colleges to obtain permission for every state in which they “operate,” even if that means only enrolling a student or employing a faculty member in that state. The rule was struck down by a U.S. District Court in July.

Even if the rule is eventually upheld, it won’t go into effect until 2014. But it has spotlighted the state-by-state rules for colleges and universities, which in the past were rarely enforced. Although the federal requirement is meant to govern institutions that receive federal financial aid, the state laws will remain on the books in any case. Colleges are now confronting a balancing act: devote time and resources to complying with more than 50 different regulations, or hope the rule will be struck down or that states will continue to make enforcement a low priority?

The survey asked colleges about what, if anything, they were doing to get into compliance with state authorization rules. Almost all of the 215 colleges offering distance learning who responded said they had taken some steps, but 69 percent have not yet applied for approval in any state.

“Even if you want to move forward, it’s very difficult to figure out what the regulations are and figure out the money and staff time to do it,” said Russell Poulin, deputy director for research and analysis at WCET. “It’s left a lot of colleges to struggle with the idea: Will we really get caught? What are the penalties? Should we even be doing this?”

Ony four for-profit colleges, considered the intended target of the regulations, responded to the survey. Poulin said many proprietary institutions have more resources and can more easily deal with the demands of pursuing authorization than can community colleges, which he said will be hit hardest by the new regulations

Fifty-nine percent of respondents, or 119 colleges, said they would cease to enroll students in at least some states rather than pursuing authorization. (The response rate for the question “Are there states from which you now believe you can no longer accept students?” was relatively low, which the authors said might be because some colleges are not far enough along in the process to be able to answer.)

Twenty-nine colleges said they would no longer enroll students from Massachusetts, the state most commonly named in that portion of the survey. Massachusetts has some of the strictest application requirements: it requires a nine-page application, a $10,000 fee plus $2,000 for each degree requested (if the college requests more than one), and may make a site visit, paid for by the applying institution. There are no exemptions, and the state charges a $4,000 annual fee for the first five years.

“The states that were mentioned were the ones where there’s probably the most difficult application process and the highest cost,” Poulin said.

Small colleges, those with enrollment under 10,000, were the most likely to say they would apply for authorization in 10 or fewer states.

“Every community college everywhere is facing budget constraints,” said Jean Runyon, chairwoman of the Instructional Technology Council of the American Association of Community Colleges. “As part of this process, we’re looking at whether we can we afford to be able to comply with the regulations for the state.”

Runyon’s college, Anne Arundel Community College, in Maryland, has requested information from all 50 states about their authorization requirements. But the college, which enrolls students in 38 states, has also “taken the steps necessary to really look at where we have a presence,” she said.

Few colleges are willing to publicly say, at least so far, that they will refuse enrollment to students in certain states -- or disclose that they are not authorized to operate there. Soon, though, that will have to change.

“They’re going to have to start declaring that,” Poulin said. “Students are going to need to know upfront.”


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