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WASHINGTON -- The Education Department’s first draft of new regulations for online programs operating across state lines is concerning some state regulators, who said the proposal would impose substantial burdens on their offices.

The department is looking to reinstate a requirement -- which a federal judge struck down in 2012 for procedural reasons -- that providers of online education obtain approval from state regulators in each and every state in which they enroll students.

A rulemaking panel is meeting here this week for its second of three negotiating sessions aimed at hammering out that a new “state authorization” rule, among other topics. Officials last week released a first draft of the department’s proposal for the new rule.

In order to participate in federal student aid programs, all institutions must be authorized by their state regulators. Under federal rules that take effect this July, colleges are required to follow whatever procedures a state lays out for authorization, though the department has some minimum standards for what that process must look like. States have to have procedures to handle student complaints, for instance.

But it gets murkier when online programs are beamed to students across state lines. As well as proposing to reinstate its state approval requirement, the Education Department is attempting to make additional changes to the 2010 version of its regulation.

In some ways, the department’s draft rewrite of the requirement would offer online education programs greater flexibility in how they can obtain approval from state regulators. It would recognize the validity of reciprocity agreements that states enter into with each other to allow programs to more easily obtain approval from multiple states at one time. Distance education providers authorized in one state would automatically become authorized in all of the states participating in the reciprocity arrangement.

That part of the proposal was cheered by supporters of such reciprocity arrangements, notably the National Council for State Authorization Reciprocity Agreement.

“It’s great that for the first time this is a path to authorizations,” said Russell Poulin, interim co-executive director of WCET - WICHE Cooperative for Educational Technologies.

But in other areas, the department’s proposal is more prescriptive about what state regulators have to do in order to approve programs. For institutions that do not obtain state authorization through a reciprocity agreement, state regulators must put those institutions through their formal review process. The proposal would also prohibit states from their current, common practice of exempting institutions from that process if they are accredited or for other reasons.

That requirement in the proposal alarms many state regulators because it would lead to a large influx in the number of institutions they need to review. And in some cases, the review would be for an institution headquartered elsewhere that serves only a handful of students in their state.

"The intentions are good, but the practical implications of the proposed changes are going to wreak havoc on many state regulators and institutions and ultimately students,” said Tanya Spilovoy, director of distance education and state authorization at the North Dakota University System.

She said that in North Dakota, 98 percent of the distance education programs that serve students in the state are exempt from the state’s typical approval process for distance education. State law there exempts online programs that don’t have a physical presence in the state as long as they have accreditation.

Poulin estimated that “easily over half the states are going to have to change their laws or regulations to do something to replace the exemption and come up with processes to implement the authorization review process.”

The department’s proposal would deem that process inadequate and force Spilovoy and her colleagues to put those programs through the more rigorous review process. That would require a change in state law, a change in state regulations and procedures, and “probably four or five more of me,” said Spilovoy.  

John Ware, the executive director of the Ohio State Board of Career Colleges and Schools, said that aside from the burden of creating new regulatory processes and changing state laws, confusion over what the department expects from state regulators has also been a problem.

“The bigger concern from the states’ perspective, we just need to have more dialogue with the department on these issues,” he said. “Otherwise, we’re going to have a situation like last time, when they put these rules out, they’re not clear and it’s unworkable.”

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