In 2010, the Department of Education (ED) issued rules (CFR 600.9) that defined minimum requirements under which a state’s authorization for a school to operate within its borders is acceptable for institutional eligibility to participate in the Title IV programs. Implementation of these rules was repeatedly delayed by ED, finally going into effect on July 1, 2015, as applicable to institutions physically located in a particular state. The rules generally require that an institution be authorized by name by an appropriate state agency and that the state agency must have a process for reviewing and acting upon student complaints. Those provisions apply to each separate state in which the institution has a main or additional location offering at least 50 percent of a Title IV-eligible educational program.
A section of the original rule affected distance education programs [600.9(c)], although ED did not intend to take punitive action for three years to allow institutions time to comply. Shortly thereafter, 600.9(c) was voided by court action. The voided distance education portion of the original rule has never been reinstated, although the activity surrounding the federal rule did not abrogate any institutional responsibility to states for compliance with any state laws related to distance education.
On Monday, Inside Higher Ed reported that ED has taken the issue up again, submitting a proposed rule to the Office of Management and Budget. The proposed rule is not yet publicly available. ED’s statement to OMB indicates that it “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.”
The basis of the court’s decision was procedural rather than content related. The court vacated the rule requiring schools that provide distance education services, such as online courses, to obtain authorization from both the state(s) in which the school is located and the state(s) in which its students reside (if authorization is required by the student’s state of residence) because the rule had not been included in the Notice of Proposed Rulemaking leading up to the final rule, thus precluding public comment on it.
When the final rules were published in 2010, many higher education advocates believed it represented unwarranted intrusion in state affairs. Further, the complexity of every institution with distance education offerings trying to understand, keep up with, and comply with as many as 50 sets of requirements seemed unattainable. Bills were introduced in 2011 in both the House of Representatives and Senate to repeal the regulations, but, although the House bill passed, the initiative did not become law. Bills in subsequent years, including riders to appropriations legislation, continued to seek repeal, but have not been successful.
Even though the distance education portion of the state authorization rule had been vacated, a great deal of attention continued to be paid to the issue. Exploration of reciprocity agreements among states, especially through the National Council for State Authorization Reciprocity Agreements, has likely changed the face of this issue. However, until ED’s proposed rule becomes public, we cannot know whether such initiatives have had an effect on ED policy. NASFAA will continue to monitor the progress of this rule.
Publication Date: 6/9/2016