Hello from Washington, DC and the NACUA (National Association of College and University Attorneys) Annual Conference. As part of my role on a state authorization panel, I was asked to give an overview of the Department of Education’s state authorization regulations. After the U.S. Department of Education’s recent announcement that it expects states and institutions to comply with the “on ground” state authorization rule beginning July 1, I thought this update would be timely for all.

Question:  You are asked to give an update to the Board of Trustees on the Department of Education’s state authorization regulations.  What can you tell them?The words "state authorization surrounded by all the state names.

In response to your question, I’d try to totally baffle and confuse the Board of Trustees by telling them about the five different types of state authorization requirements that an institution could face. While it’s confusing, they need to see the whole picture as a partial answer may lead them to make an incorrect decision.

It’s the proverbial blind men trying to describe the elephant. If you don’t get the whole picture, it’s easy to get it wrong. I’ve heard numerous campus leaders demonstrate their knowledge about one of these sets of requirements while ignoring all the others. If your goal is mitigating risk, you want to inform your Trustees about as many of the regulatory potholes as they are willing to learn about.

  1. State regulations regarding institutional authorization – This is not a federal regulation, but the regulations that each state has constructed. The state authorization regulations in each state have been around for many, many years. If your institution is serving students in another state, the state where that student is located when receiving the bulk of the instruction expects you to follow their state laws and regulations. It’s all about location and not official state of residency. Each state has its own history and politics surrounding the creation and changes to their regulations. Therefore, the criteria regarding if your institution needs to seek approval varies greatly from state to state. All states seem to expect you to be authorized if you are clearly physically located in a state, such as owning or renting a building in their state. Beyond that, the measures of what is termed “physical presence” vary greatly. About a dozen states require you to obtain approval if all you are doing is offering distance education in their state. However, if you are conducting additional activities in that state, you could trigger their “physical presence” definition. Examples of such “physical presence” triggers include holding an internship in a state, direct marketing in a state, requiring students to go to a particular place for a proctored exam, or having an employee in a state. Depending on the state, performing any of those acts may trigger their expectation for you to be approved in their state. You need to check the rules of each state.
  2. State regulations regarding licensure programs – If you have a program that leads to licensure in a profession (such as teaching, nursing, psychology, and a host of medical professions), the boards that oversee each profession may have additional requirements. For some professions they want to approve each and every institution that prepares students who participate in clincals or sit for their licensure exams in the state. Failing to properly notify students about licensure requirements is probably the top risk facing campuses serving students in other states. The U.S. Department of Education added additional notification requirements onto the Gainful Employment regulations and I expect the Department wanting to add these notification requirements to other regulations that may be coming.
  3. U.S. Department of Education regulation for “on ground” programs” (Chapter 34, §600.9 (a) and (b)) After four years of delays, beginning July 1 of this year, the Department will expect you to do two things (see more details in the Federal Student Aid Handbook):
    • Regarding your institution’s “home” state: Be able to identify the state oversight agency that authorizes you to grant postsecondary degrees in your home state. Additionally, you need to identify the complaint process that a student can use to complain to the oversight agency about your institution.  This requirement is for all institutions that grant federal student aid regardless of institution type. Institutions that think they are exempt from state oversight (unless they are authorized by the federal government of an Indian tribe), better look into this one.
    • Regarding face-to-face programs in other states: You should look around your institution to determine if you have any “on ground” programs in another state. Using the financial aid definition of “location,” this is a program in which “at which it offers or will offer 50 percent or more of an educational program if the institution wants to disburse title IV, HEA program funds to students enrolled at that location...” If you have such a program, you will be expected to identify the oversight agency that approved your institution’s ability to offer programs in that state and identify the complaint process for that oversight agency, as well.  This does not apply to programs offered via distance education, unless they have a significant face-to-face component that exceeds the “location” definition. For a more complete discussion of the “on-ground” vs. “distance education” distinction, see the WCET Frontiers blog post by Greg Ferenbach and Matthew Johnson of Cooley, LLP.
  4. U.S. Department of Education regulation for “distance education” programs (Chapter 34, §600.9 (c)) – This one is easy. The regulation was set aside by the federal courts on a technicality. After a failed Negotiated Rulemaking attempt last year (I represented the “distance education” constituency on that Negotiated Rulemaking Committee), the Department has “paused” on reissuing the regulation. To me, it appears increasingly unlikely that they will issue a new regulation this year, but stranger things have happened. To repeat, there is no Department of Education state authorization for distance education regulation currently on the books. UPDATE (06/29/15): At the NACUA meeting on 06/29/15, U.S. Department of Education Under Secretary Ted Mitchell announced that the next steps for their “distance education” regulation is “down the line.” I interpreted that to me not this year and probably past his time in office.
  5. U.S. Department of Defense MOU – Institutions offering Tuition Assistance (that’s a form of collegiate aid to students in the military) had to sign a new Memorandum of Understanding last year. That MOU requires that institutions: “Comply with state authorization requirements consistent with regulations issued by ED, including 34 C.F.R. 600.9. Educational institutions must meet all State laws as they relate to distance education as required.” I attended the Council of College and Military Educators conference earlier this year and colleges attending that meeting were gearing up to be in compliance for fear of losing the ability to offer Tuition Assistance funds.

Remember, regardless of what the federal regulations say, the states still expect you to be in compliance with their laws and regulations.

In talking to your Board of Trustees, you may want to let them know that there are no simple answers to these questions. When I get questions, I always fall back on the truthful (if unsatisfying) phrase “it depends.” The answer to each question lies at the intersection of the following three variables:

  1. What type of institution you are (public, private non-profit, private for-profit)?
  2. What activities does your institution perform the state in question?
  3. Do the regulations for the state in question require you to get approval before you conduct those activities?

Remember that is examining your requirements for just one state.  Once you multiply it times 49 other states, the District of Columbia, other territories, and other countries, it can get a bit complex to understand.

For more information, see WCET’s State Authorization page:  http://wcet.wiche.edu/learn/issues/state-authorization

Photo of Russ Poulin with baseball bat
Ready for baseball and regulatory season.


Russell Poulin
Director, Policy & Analysis
WCET – WICHE Cooperative for Educational Technologies

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1 reply on “Update on the Five Types of State Authorization Regulations”

[…] This is tied to the belief in the first myth that the Department of Education is setting the compliance date. The original Department of Education deadline was July 1, 2011 and that was slipped a year. Due to a court ruling (which was upheld on appeal), there now is NO Department of Education regulation. But there are still deadlines.  Here’s a list of them (based upon a recent blog post on the 5 Types of State Authorization Regulation: […]

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