Regulating Distance Ed

Institutions that offer online education programs should not be forced to answer to regulators in each and every state where they enroll students, according to a group led by the former U.S. Education Secretary Richard Riley.

Instead, institutions could be regulated by a single state where they are based, the Riley-led Commission on the Regulation of Postsecondary Distance Education said in a report released Thursday.

The commission’s proposal seeks to provide a long-sought answer to the knotty problem of regulating institutions that offer online classes across state borders, a regulatory process often called state authorization. (The subject has gained increased currency as more institutions move online, and 2010 federal regulations to toughen state enforcement -- now withdrawn -- generated additional attention to the issue.) Such institutions include for-profit institutions like the University of Phoenix and traditional public colleges that are trying to reach new students across the country with online education programs. (Existing state regulations and the Riley proposal do not currently apply to massive open online courses, or MOOCs, since they are not offered for credit.)

There is no national regulatory standard. Because each state can come up with its own authorization regulations, online institutions are supposed to comply with varying regulations and pay fees to states across the country in order to enroll students in those places.

“States have been forced to deal with this national phenomenon through their own prism -- the resulting multicolored checker board is costly and inefficient,” said Peter McPherson, president of  the Association of Public and Land-grant Universities and a member of the commission.

This, said Riley, who served in the Clinton administration, has forced institutions to deal with “multiple and often-inconsistent state laws and regulations,” which he said add costs and inefficiencies. About a third of American college students are taking at least one online class.

Instead, Riley and his colleagues propose a national network of voluntary reciprocity agreement among states. The report suggests baseline regulations designed to protect students across the country.

State regulators would commit to minimum standards for regulating institutions based in their state. For instance, institutions based in Michigan would be regulated by Michigan officials. If Michigan and Ohio signed a reciprocity agreement, Ohio would rely on Michigan regulators while Michigan would rely on Ohio regulators to regulate Ohio-based institutions. Institutions operating in states that did not sign such agreements would still need to seek approval from each non-participating state.

The plan’s backers said this would be a boon for consumer protection efforts because there would be one place for students to turn if they have problems.  

States could be expelled from the compacts if they failed to uphold their end of the bargain, said Paul Shiffman, the executive director of Presidents' Forum, a group of distance learning providers hosted by Excelsior College.

The plan, which will be discussed by officials from 48 states at a conference next week in Indianapolis, will at the very least take time to go into effect. Across the country, policy makers – including state legislators – would need to modify existing laws and regulations that apply to online education.

There are also states that may be reluctant to cede power to regulators in other states, given the wide variation in how aggressive and rigorous states are in regulating their colleges (or at the very least in the perception of some states' officials that they are much more rigorous than their peers).

“There are going to be a number of states that decide whatever the final version of the plan is, it’s not going to work for them,” said Alan Contreras, a former director of college authorization in Oregon who was not involved with the commission’s work.

Even before the Riley report was formally released, Wisconsin regulators called the plan “problematic” because it would tie their hands in trying to protect students in their state from institutions regulated by officials elsewhere. The Wisconsin Education Approval Board also said it could be hard to determine what state should regulate what institution because institutions can operate from different states.

The current system asks institutions to comply with regulations and pay fees to each state where they enroll students. So far, it’s not exactly working.  About a third of distance learning operations have not applied for any authorization to operate, though on average they serve students in more than 30 states or territories, according to a recent survey.