Pending Federal State Authorization Regulations-What Might Be Included?

It’s coming back! The federal regulation for the state authorization of distance education appears to be returning. The Department of Education submitted a proposed regulation to the Office of Management and Budget for its review. The abstract on the OMB website reads:

“The Department is proposing to amend the regulations governing the legal authorization of institutions by States.  The Department is also proposing to issue regulations for the State authorization of distance education providers and correspondence education providers as a component of institutional eligibility for participation in Federal student financial aid under title IV of the Higher Education Act of 1965, as amended.” 

We won’t know what exactly is proposed until they release the regulation for public comment. My comments in this blog post are speculation based on my experience and conversations with others who also are guessing on the content.

A Brief History

As you may recall, the last time this regulation was considered was during the 2014 Negotiated Rulemaking process. I (with Marshall Hill of SARA as an alternate) represented the distance education community on the Program Integrity Negotiated Rulemaking panel convened at that time. One of the six proposed regulations that we negotiated involved the state authorization of distance education. “Consensus” to pass the regulations required every member to agree on all six proposed regulations.

The state authorization for distance education proposed regulation was one of two that did not reach full consensus. Not only did it not reach consensus, but a large majority of the panel members were against what was proposed. My blog post at the time gives more details on what happened and why consensus was not reached.

As a result, the Department of Education is free to issue its own regulation. My colleagues and I were surprised that it took them two years since the end of the Negotiated Rulemaking process to take action. One assumption is that the current administration is trying to clear out all of the remaining unfinished regulations prior to the next President taking office.

What Provisions Might Be Included?

Since it appears that the Department has not talked to the institutional members of the Negotiated Rulemaking process since our last session, the following list are my guesses on what will be included in the proposed regulations. A recent analysis by Cooley, LLP agrees with my opinion that they will probably not stray far from what was in the final proposal from the Negotiated Rulemaking process. Even though there was agreement on some of the elements of the regulation, the Department is free to propose something completely different.

Demonstrate Compliance. This is the most important provision. The institution would need to show that it has the right (whether authorization, registration, or other approval action) to serve students in each state (whether at a distance or face-to-face) in which the institution wishes to serve those students. The institution would need to demonstrate compliance during the financial aid review (lovingly labeled an “audit” by some) that is held every few years. Additionally, the Department may request this information on demand. Institutions could be asked to refund federal aid for students in states for which your institution cannot demonstrate that you possess the proper approvals.

Disallow State Exemptions. States could no longer exempt an institution. This is a common practice by states, especially for public and non-profit institutions enrolling students completely at a distance in the state. Many states did not encounter many (if any) problems with these problems. States would be expected to conduct an “active review” of the institution. I sincerely hope that the Department can define an “active review” for us as they failed to do this adequately for the rules regarding the authorization of in-state institutions. This issue was the major sticking point causing more than half the members of the Negotiated Rulemaking team to vote against the Department’s last proposal. SARA makes it less meaningful, but this requirement will be seen as an “unfunded mandate” by many states.

Support Reciprocity. While they cannot endorse the State Authorization Reciprocity Agreement (SARA) specifically, I continue to expect the Department to continue its on-going support to recognize reciprocity agreements as a valid path to authorization.

Exempt Military. Members of the armed forces, their spouses, or their children would be exempted for the purposes of federal financial aid. This would be at odds with some state laws, but we should work with those states to follow suit. Long overdue.

Increase Notification Requirements for Licensure Programs. As SARA requires, institutions should be more forthcoming when notifying students whether their program meets the academic requirements for programs leading to licensure (e.g., nursing, education, social work). I realize this is hard for licensure programs in some states. Some of the requirements proposed during negotiated rulemaking were amazingly complex. Let’s hope that they settle on a reasonable requirement and be prepared to do much more work on this issue. SPECIAL NOTE: Don’t be surprised if this requirement is placed on ALL programs that lead to licensure, whether at a distance in another state or face-to-face in the institution’s home state. Expanding to the every activity will be controversial.

Introduce a Per State Minimum. There was confusing wording in the final proposal that set a threshold as to the number of students in a state before needing to demonstrate compliance. However, it also allowed the state to overrule this minimum, which meant that this minimum would almost never (if ever) take effect. While it sounds nice, the ultimate outcome is probably to add more confusion.

The Death Penalty. If an institution loses authorization in state then the institution is expected to stop disbursing federal financial aid and must notify its students. This makes sense if the removal is “for cause,” but the Department should leave itself leeway to address special cases when authorization is lost due to the state’s error.

We also had three members of the Negotiated Rulemaking Committee at the WCET Summit last week give their opinion of what might be coming:

Next Steps and Timeline

Assuming that the Department is trying to release this regulation while the current administration is in office, then they need to release the final recommendations by the end of October. The following timeline

 

Action	Possible Dates
Department issues regulation for public comment.	Maybe by July 1??
Department considers comments and issues the final regulation.	October 31??
Regulation goes into effect.	July 1, 2017??
The Department will probably set later dates for elements of the regulations to be enforced. For example, if they require states to change regulations, states need time to make those changes.	Dates specified in the final regulation.

In Conclusion

Again, the above are just my guesses as to what might be in the regulation. We should know soon. Meanwhile, I wanted to repeat my position on authorization that was in my blog post on the Rulemaking process from two years ago:

“So that you know where I’m coming from, unlike many in the distance education community, I believe that the states still are responsible for consumer protection and that institutions should follow state laws. I don’t agree with all their laws and regulations and processes and whatnot, but I’d rather work to fix them or create alternatives, like reciprocity.

I also believe the Department should be able to use a college’s authorization status in a state as a determining factor for eligibility for federal financial aid. I do not believe that the Department should impose its will as to what the states should use as authorization criteria.”

Let me know if you have additional information or questions.

Russ

Russell Poulin
Director, Policy & Analysis
WCET – WICHE Cooperative for Educational Technologies
rpoulin@wiche.edu

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