ED Finalizes State Authorization for Distance Education Rules

Tying up loose ends before the end of the current administration, the Department of Education issued final regulations governing state authorization for distance education and foreign locations of domestic institutions on December 19. The rules are scheduled to take effect on July 1, 2018, but could be derailed by Congress or the incoming Trump administration. (The rules appeared on some lists of those targeted for repeal even before they were published.)

For the most part, the final rules adopt the provisions of July’s notice of proposed rulemaking. The notable exception is a change to the definition of a "state authorization reciprocity agreement" that ED would deem acceptable to demonstrate compliance with the requirement that an institution have authorization to provide distance education to students residing in other states. Under the final rule, such agreements must not "prohibit any State in the agreement from enforcing its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions."

The National Council for State Authorization Reciprocity Agreements (NC-SARA), which has overseen a voluntary effort by states and institutions over the last five years to develop and implement such agreements, called the provision a "puzzling view of reciprocity" in a statement: "A 'reciprocity agreement' that would satisfy ED’s definition strikes us as no reciprocity agreement at all. If these rules were implemented, institutions of higher education offering distance education throughout the country would likely have to go back to dealing with all of the 54 individual States, territories and districts in which they enroll students in order to retain Title IV eligibility for those students." To date, 47 states and the District of Columbia have joined SARA and more than 1,250 institutions participate.

Summary of Provisions

In order for students in distance education programs or studying at foreign locations of domestic institutions to be eligible for Title IV student aid, the final rules would:

• Require institutions offering distance education to be authorized in each state in which they enroll students, if the state requires such authorization. Authorization through a reciprocity agreement, as defined in the regulations, would suffice.
• Define state authorization reciprocity agreement as "an agreement between two or more States that authorizes an institution located and legally authorized in a State covered by the agreement to provide postsecondary education through distance education or correspondence courses to students residing in other States covered by the agreement and does not prohibit any State in the agreement from enforcing its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions."
• Require institutions to document the complaint processes for distance education students in each state where it enrolls students.
• Require institutions to provide public and individualized disclosures to students and prospective students regarding programs provided, or that can be completed, solely through distance education. Schools must disclose, for instance, if the school is authorized by the state individually or through a reciprocity agreement, the consequences if a student were to move to another state, various state complaint processes, and any adverse actions taken against the school by a state or accrediting agency.
• Require institutions that operate branch campuses or additional locations outside the United States at which 50 percent or more of an educational program is offered to be authorized by an "appropriate government agency" in that country. Institutions must also report such programs to their home state and have approval from their accrediting agency. Programs located on U.S. military bases are exempt.
• Require institutions that operate additional locations at which less than half of an educational program is offered to meet the requirements for legal authorization established by the host country.

It remains to be seen if these regulations take effect as drafted. Because ED missed the November deadline in the Higher Education Act for rules to take effect the following July, the Trump administration will have 18 months to revise or withdraw the regulations.