The U.S. Department of Education recently released new regulations regarding the state approval of out-of-state institutions operating in each state.  These regulations put some expectations both on states in regulating those out-of-state institutions and the institutions in meeting the regulations of each state in which it “operates.”

As representatives from the U.S. Department of Education observe, most of this is actually NOT NEW.  There has always been an expectation that institutions follow the state laws in which they operate.  What is new is that the U.S. Department of Education is putting institutions on notice that they could be asked for proof of being approved to operate in specific states.  Failure to provide the proof to operate in a state will put the federal financial aid eligibility of students residing in that state in jeopardy.

Several signs with parking regulations on the same poll.
Interpreting regulations is not always easy.

While this might not be new, the letter of the law has not been followed completely either by states or institutions.

So, what do we know about the current state of this state regulatory process?  What is the impact on state regulators and what is the impact on institutions?  What does it mean to “operate” in a state? Three surveys give us a clue.

Impact on State Regulators

Earlier this year, the Western Association of Schools and Colleges (WASC), a regional accrediting agency, sought the advice of the Kessenick, Gamma, and Free law firm about the state approval regulations while they were still being considered.  They evaluated the impact on the state licensure schemes in each of the fifty states.  Please note that this survey was performed on the proposed regulations, but most of the provisions survived to the final regulations that were recently published.

What did they find?

“The results of the State-by-State analysis are as follows:

  • the laws of twelve (12) States will, in our opinion, comply with the Proposed Regulation;
  • the laws of six (6) States will, in our opinion, clearly not comply with the Proposed Regulation;
  • the laws of thirty two (32) States will probably not comply with the Proposed Regulation (i.e., it is doubtful that the laws of these States will comply with one or more of the four criteria).”

Again these are results of a survey conducted before the regulations were made final, but it seems apparent that significant work will be needed in many states.  See the full report to determine how your favorite states fared.  Thank you to Barbara Beno of WASC for sharing this information with us.

A new report released earlier this week by the Council for Higher Education Accreditation provides some assistance on these issues.  “State Uses of Accreditation:  Results of a Fifty-State Inventory” provides an updated look state approval processes, but, understandably, does so from the accrediting agencies point-of-view.  The report is helpful in updating state requirements and the list of licensure/approval agencies for each state.

While states can address these regulations individually, another option is for the creation of reciprocal agreements among states to ease the approval process.  For example, the Southern Regional Education Board’s Academic Common Market/Electronic Campus might provide some relief for Southern states. Conversations about how to create more interstate compacts have just begun and WCET is participating in these discussions or trying to follow them.

Impact on Institutions

Each state uses its own laws to determine whether an institution is legally operating within a state.  In the  2006 survey “A Survey and Report on the Bases for the Assertion of State Authority to Regulate Distance Education” by the Dow Lohnes law firm, they asked several questions about which activities would trigger each state’s licensure laws.  Thank you to Mike Goldstein and Ken Salomon for sharing this report with us.

As can be seen by the following results, the regulations and notion of ‘physical presence’ across the states is quite variable.  Again, these results are old, but contain the best evidence on this issue that I have seen to date.

  • “Would enrolling state residents in a strictly online class, considered alone, constitute a presence sufficient to require some type of licensure?”  To this questions, 23% of the states said that this would be enough to exercise jurisdiction.
  • “Assuming an intent to enroll students from the state, would television, radio or print advertising in local medias, considered alone, constitute a presence sufficient to require some type of licensure?” To this question, 51% of the states said that this would be enough to exercise jurisdiction.
  • “Assuming an intent to enroll students from the state, would requiring students to take examinations at a location within the state, considered alone, constitute a presence sufficient to require some type of licensure?” To this question, 80% of the states said this would be enough to exercise jurisdiction.  This could be a problem for some distance courses that use local proctors to administer tests.
  • “Assuming an intent to enroll students from the state, would participating in college fairs, considered alone, constitute a presence sufficient to require some type of licensure?” To this question, 33% of the states said that this would be enough to exercise jurisdiction.  This is my favorite result.  It has nothing to do with distance education, but do you really think any state is checking on which institutions participate in college fairs?

So, What Should We Do?

First, we will learn many more details in the December 7 free WCET webcast: “Clarifying Federal Regulations on State Approval for Distance Education.” Fred Sellers, U.S. Department of Education, wrote the new regulations.  He will us understand what is intended and will answer questions.

Next, I think that the states (both individually and in partnerships) will need to figure out how they will address the regulations.  Different groups are having discussions on this including The State Higher Education Executive Officers, The Presidents’ Forum of Excelsior College, SREB, and WICHE.  As plans get more concrete (or even less murky), I’ll let you know.

Meanwhile, institutions should be reviewing where they are enrolling students who obtain financial aid and what state approvals they may currently have in pocket.

Finally, while these regulations go into effect June 30, 2011, we should be glad that there are opportunities for institutions to request extensions to this deadline in states where authorization cannot be granted on time.  I think we’ll be using those extensions.

Photo credit:  NoncommercialNo Derivative Works Some rights reserved by Dave Kliman

7 replies on “What Do We Know about State Approval of Distance Ed?”

I think the eventual resolution for this muddled situation lies in state reciprocity. However, we are a long way from that. The template should be the same from state to state. It would be more fair for students; make Federal financial systems more functional, solve a lot of issues for institutions; be more equitable for the country as a whole. Any attempt at piece meal approaches will further erode the situation. Is there leadership strong enough to force first steps in this direction?

Fran –
Thank you for your comment. On reciprocity, there are several conversations going on around this issue.

The Presidents’ Forum of Excelsior College has a grant from Lumina Foundation for Education to work on standard templates for states to adopt as part of an interstate compact. I have a query in to them about the latest steps on this.

SREB and WICHE (including WCET) have had some initial talks on this.

I understand that the State Higher Education Executive Officers is talking about how it should get involved and I’ve had conversations with them.

…and I know there are lots of other conversations occurring. There is much interest on creating resolutions to this issue, but it’s too early predict what that will look like.

I watched the archive and it seemed to me that there will be no extensions for the Distance Learning compliance component. The only extensions possible are to meet the requirements for states where the institution has a physical presence. Am I wrong?

That does appear to be the case. But…as you heard on the webcast, the extension component is the part that was most confusing to me.


Firstly I’d like to thank WCET for the great resource they provide to all of us in the education community. I’ve shared information about WCET with my colleagues in Distance learning and they are all extremely impressed.

I’d like present my take on Fred Sellers’ webcast and would appreciate your feedback.

1. The USDOE wants to ensure that federal funds are not used in a manner that would violate any State Law. It’s not that they want approval from multiple states; they just don’t want State Laws broken. Whether the State Law in question is logical, constitutional or fair is of no concern to the Department. They just don’t want the laws broken, period.

2. As we know, very few states have laws that SPECIFICALLY say that an institution that does nothing more than provide postsecondary education over the Internet requires State approval. Therefore, if that is ALL an institution is doing (all the advertising is online, no local testing centers etc.) than no State law is being violated in the vast majority of cases.

3. An institution does not need to prove to the Department that they are approved in a particular State. All the institution needs to do is prove that they are not in violation of State law. If a State does not have a specific law on their books, regardless of a particular State Bureaucrat’s interpretation, the institution is not in violation of State Law, and does not need to prove anything more to the Department.

Of course this sets up a precedent and may provoke some States into writing laws that they perceive would protect their local institutions. This would not be in the interest of students as their educational choices would become limited. Just because a student happens to reside in a particular State, they will be unable to attend the same institution as their peers in a different State. How unfair! I think what needs to be addressed is the constitutionality of certain States’ laws in regard to the Commerce Clause.

Avi –
Thank you for the nice words. We’ll continue providing good information.

1. State Law. Yes, the USDOE is asking institutions to follow state law. They do want institutions to gain approval if that is what state law requires.

2. internet only. We think there are several states that do not require approval if all activity is online. A large number of institutions do use local proctors and that may trigger approval requirements in some states. This may vary by institution-type (profit/state/for-profit). Rules vary by state. We are working with other groups in trying to create a list (or lists) of requirements by state.

3. Demonstrating approvals. In states in which approval for your institution is required, the USDOE will ask for proof or your being approved.

The specter of states using these regulations for “turf-protection” purposes has been raised. I’m optimistic enough that I don’t think that will happen. I think this for no other reason than it may entice other states to retaliate. I’m hearing more about states seeking reciprocity rather than raising new barriers.

Comments are closed.


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