Delay of State Authorization Rule Struck Down by Judge

A federal court has struck down a delay of the Obama-era rules on state authorization for distance education and foreign locations of domestic institutions and has given the Department of Education 30 days to implement them. It remains uncertain whether the Trump administration will appeal the decision.

The rules were originally issued in December 2016, at the end of the Obama administration, and were scheduled to take effect in July 2018.  After taking office, the Trump administration began looking at regulations that were promulgated at the end of the previous administration, seeking opportunities to delay or rescind rules. Ultimately, on May 25, 2018, ED announced a two-year postponement in the Federal Register. At the same time, ED began the process of issuing its own version of the state authorization rules through the negotiated rulemaking process. Those negotiations concluded in April 2019, with proposed rules expected late this spring and final rules by November 1. 

Judge Laurel Beeler ruled that ED should have gone through the negotiated rulemaking process to delay the 2016 rules and that the agency did not have good cause to forgo the process. Now, one of three scenarios could play out:

1. ED appeals the ruling and is issued a stay while the appeal is considered, effectively re-delaying the Obama rules.
2. The Obama-era regulations go into effect, as ruled, on May 26, with the Trump administration rules becoming effective on July 1, 2020.
3. ED marks for early implementation the rules that would ordinarily be effective on July 1, 2020.

Summary of the 2016 Final Rules

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 a 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 current and prospective students regarding programs provided, or that can be completed, solely through distance education. For instance, a school is authorized by the state individually or through a reciprocity agreement, it must disclose 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.