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Education Secretary Miguel Cardona stands at a podium. A blurred-out image of the White House seal is in the background.

A proposal from Miguel Cardona’s Education Department would make state authorization reciprocity unworkable, institutional leaders say.

Jim Watson/Getty Images

A proposal from the Biden administration could reshape how states oversee online education. Supporters say it’ll provide much-needed consumer protections, while colleges and universities worry that it could limit access to online classes for students who need them the most.

The administration wants to allow states to enforce all their applicable laws and regulations on online colleges, regardless of whether the institution is part of a state authorization reciprocity agreement to provide distance education. Currently, reciprocity agreements allow colleges to enroll out-of-state students online while bypassing some laws in the states where the students are located. For example, an institution headquartered in Colorado has to adhere to Colorado laws—but it can enroll students in New York without having to get that state’s permission or follow most of its regulations.

Online educators say the current reciprocity agreements, which cover more than 2,200 institutions and more than 1.5 million students, would become unworkable if the administration’s proposals become policy. They say smaller institutions—as opposed to mega-institutions like Southern New Hampshire University, with its nearly 149,000 online out-of-state students—would be hurt the most if reciprocity was upended, as they lack the resources to go state by state to seek authorization and comply with the different sets of laws. That, they say, would mean less access to online programs for students.

Consumer protection advocates counter that institutions’ fears are overblown and that stronger regulation outweighs their concerns.

“We know reciprocity can co-exist with oversight,” said Kyle Southern, associate vice president for higher education quality at the Institute for College Access and Success, which has advocated for stronger consumer protections for out-of-state online students.

Education Department officials said earlier this year that current reciprocity agreements fail to protect students and taxpayers by sidelining states, which make up one-third of the so-called triad that regulates higher education, along with accreditors and the federal government. Department officials said they were concerned states were “deferring all, or nearly all, of their oversight responsibilities to other states and the governing bodies that oversee these agreements for approval of educational institutions.”

States joined together in 2013 to form the State Authorization Reciprocity Agreement (SARA), a voluntary interstate compact for distance education that has since grown to include every state except California. SARA allows the states to focus on institutions located within their own boundaries and makes it easier for colleges to enroll out-of-state students, providing consistency in terms of the rules and regulations they must adhere to. State policies vary, from minimal requirements to more stringent measures—but under SARA, all participating institutions must follow the policies and procedures of the agreements.

“We’re disappointed and concerned by the shape and direction of this new proposal,” said the National Council for State Authorization Reciprocity Agreements (NC-SARA), the nonprofit that oversees the agreements, in a statement last week to Inside Higher Ed. It said the plan “represents a dramatic overstep of federal oversight into independent nonprofit governance.”

Consumer protection advocates say that states should be able to enforce their own laws. Currently, states can enforce their laws related to misrepresentation and fraud, among others, but are blocked from enforcing so-called education-specific consumer protection laws, such as tuition recovery funds that reimburse students if a college closes.

The proposed change, released last week, would be a “huge improvement” that recenters the role of states in protecting consumers, said Stephanie Hall, acting senior director of higher education policy at the Center for American Progress, a left-leaning think tank.

“One of the key functions of the state as like a third of the triad is really the consumer protection,” Hall said. “If you have a problem with a thing you are purchasing or trying to access in your state and you are looking for legal protection or redress from mistreatment, you may go to your state.”

But with SARA, consumers have limited options in terms of what protections their state can provide if they are attending a distance education program out of state that’s part of the agreement, Hall and others say. They note that online education is more important now than when SARA began, making a reset in the rules necessary to ensure students have access to high-quality programs.

A group of state attorneys general said in 2021 that NC-SARA’s policies didn’t “adequately guard against the unique risks” associated with distance education—an area they argue is more ripe for deceptive and unlawful practices that take advantage of students and taxpayers.

The arrangement, they wrote, “incentivizes NC-SARA–participating schools to locate in states with weaker education-specific consumer protection laws, such as financial protections in the event of unanticipated closure, to avoid having to comply with more student protective laws.”

NC-SARA officials say their student consumer protections, which include requiring that institutions are accredited, located in the U.S. and demonstrate “healthy finances,” serve as important guardrails to ensure the quality of programs and raise the floor in terms of protections in some states. Over the past five years, they say, only 29 SARA colleges have closed, compared to the more than 200 degree-granting institutions outside of the agreement that have shuttered.

Unintended Consequences for Students

The state authorization proposal is part of a series of issue papers from the Education Department that will be discussed this week at the third and final round of rule-making sessions that began in January. With changes to the rules for accreditation, state authorization and cash management, among other topics, the department is aiming to enhance consumer protections for students and strengthen the so-called regulatory triad that oversees higher education. Any changes that result from this round of rule making won’t take effect until July 1, 2025, at the earliest.

Higher education groups and negotiators representing institutions and accreditors have raised concerns about a number of the department’s proposed changes. Along with upending reciprocity agreements, the department is proposing to end colleges’ ability to automatically bill students for books and supplies as part of tuition and to require accreditors to set student achievement standards.

“We definitely can understand where the department is coming from with these things, but we just want to ensure that there are not any unintended consequences and they’re really thinking about these issues holistically,” said Emmanual Guillory, senior director of government relations at the American Council on Education.

Guillory said that requiring accreditors to set student achievement standards, for instance, would undercut the “expertise and purpose of the holistic review by the accreditors.”

“This actually is a process that the department itself has consistently rejected,” he said, “because it really can't be done in a way that reflects individual and institutional circumstances.”

The proposed changes to state authorization are also problematic and would disincentivize institutions from joining SARA, Guillory said. In addition to narrowing the scope of reciprocity agreements, the changes would require colleges to obtain direct authorization in any state where they have enrolled more than 500 students, subjecting them to the laws and regulations that SARA currently exempts them from.

Institutional leaders and some experts question whether states will have the capacity or interest in following through on their renewed oversight and authorization responsibilities if the department’s plan were to take effect. They note that 21 states have no policies regulating out-of-state distance education.

Russell Poulin, who leads Western Interstate Commission for Higher Education’s Cooperative for Educational Technologies, said that the department’s proposed changes would remove uniform protections for students and leave few reasons for states or institutions to remain in SARA. WICHE is a regional state authorization compact that is part of SARA.

“If they wanted to kill state authorization reciprocity, why did they not have the courage to just do so?” Poulin said. “The irony is that in seeking to improve consumer protections for students, they will do so in a few states while reducing protections in most states … Students typically disenfranchised by on-campus postsecondary education, such as working mothers, low-income [and] rural residents, will be the ones who suffer the most.”

Gregory Fowler, president of the University of Maryland Global Campus, said SARA has been a “major win” that allows his institution to serve its 55,000 military-connected students as well as those who are mobile or in rural areas where access to brick-and-mortar higher education is limited. “It’s absolutely essential, and not only to us but to any institution that’s trying to serve students, wherever they may be,” he said.

If SARA went away, Fowler said, it would create chaos for out-of-state students in online programs and make it more difficult for them to complete their degrees, because their classes might not be able to continue.

Additionally, institutions would need a “huge bureaucracy” to keep up with the different processes in the states. Only the “very largest” of institutions would be able to thrive and survive without SARA, he believes.

Fowler said he and other institutional leaders want to partner with the department to address its regulatory concerns while preserving reciprocity. “Most of the students we’re talking about,” he said, “are the students who don’t have many different options.”

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