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State Authorization for Institutions that Offer Distance Education to Out-of-State Students

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On July 12, 2011, the U.S. District Court for the District of Columbia struck down the Department of Education's Oct. 20, 2010 regulation that higher education institutions must obtain state authorization to legally offer distance or correspondence courses to students in a state in which it is not physically located, i.e. out-of-state students. The ruling came in response to a lawsuit the Association of Private Sector Colleges and Universities filed in January on behalf of the for-profit colleges it represents.

On Sept. 8, 2011, the U.S. Department of Education submitted the necessary paperwork to the U.S. Court of Appeals to petition Judge Collyer's District of Columbia District Circuit Court decision. Since Judge Collyer "vacated" the Department's Oct. 20, 2010 regulation on proceedural grounds, the Department could issue a Notice of Proposed Rulemaking (NPRM) to rectify it. Higher education institutions would be granted the appropriate opportunity to submit their comments on the proposed regulation. Note that Judge Collyer let stand other "program integrity" rules to which the for-profit colleges had objected—"those that effectively bar incentive compensation for recruiters, and that hold colleges accountable if they misrepresent their programs and results."

The Department's proposed Oct. 20, 2010 regulation raised awareness among states about the variety and scope of out-of-state distance education programs and alerted them to the fact that they can legally make higher education institutions obtain authorization to teach the students who reside in their states—online or by any other means.  Many are scrambling to get their regulations for out-of-state distance education institutions in order.

Many states require institutional authorization for each out-of-state college that has a point of presence within its borders.  Unfortunately, most have divergent definitions for what constitutes "presence"—it could be triggered when the out-of-state institution advertises its online courses to its residents, employs instructors, offers online courses to more than one state resident, offers in-state clinical internships, has a recruitment office, or contracts with a local college to provide online students with library access.  State laws and regulations can be confusing.  For example, in which states do military students reside if they are stationed abroad?  What about students who move during the academic year? What happens if the state office ignores an institution’s request? States can act as they see fit, and institutions must, as always, comply with state law.

Many colleges are taking a wait-and-see approach.  If your college decides to pursue state approvals, the State Higher Education Executive Officers (SHEEO) has created several directories they are regularly updating to help institutions.  These include a state-by-state summary of regulations and fees and a state-by-state contact list of state regulators to obtain approval from states in which your out-of-state online students reside.  See below.

ITC is concerned that these restrictions—however well–intentioned they might be to increase state and institutional accountablity to students—could hamper the distance education efforts at legitimate, accredited community colleges.  The result could limit distance education opportunities for students—especially for those students who reside in states that have few distance learners—because instititions determine it is too costly or labor intensive to obtain the necessary state authorizations to teach them online.

The good news is that the Council of State Governments, and various regional groups such as the Southern Regional Education Board, have created working groups to draft reciprocity agreements or inter-state compacts among states—so institutions do not have to apply to 50 different states for approval, and each state doesn't receive approval requests from 3,000 different higher education institutions. Once the compact language is drafted during the 2012 year, state legislatures will be invited to sign onto or adopt the reciprocity agreement which would become effective in that particular state.

ITC will keep you informed about any developments! Thank you goes to David Baime, senior vice president for government relations and research at the American Association of Community Colleges, for helping stay abreast of the twists and turns on this issue!  Stay tuned!

Christine Mullins
Executive Director
Instructional Technology Council


What Should Distance Education Institutions Do?

Institutions should consult legal counsel as to their next steps, in light of the U.S. District Court for the District of Columbia's July 12, 2011 decision.  Should they continue to seek authorization from every state in which they have correspondence or online students?  Should they wait to receive notice from the appropriate state agencies before they take the necessary steps to obtain the proper authorization?  Due to increased awareness about their legal right to demand authorization from out-of-state institutions that teach their constituents, many states will probably require higher education institutions to obtain the proper authorizations even though they haven't required them in the past. Other states could decide they lack the necessary resources to implement any new procedures or follow up with colleges that don't comply.  Every state will be different.

Student Complaint Process: Institutions Must Make Documents Available

The Department of Education imposed a new regulation that came into effect on July 1, 2011 - that affects student financial aid for online and face-to-face learning.  This regulation was not "vacated" or over-ruled by the U.S. District Court's on July 12, 2011.

  1. Institutions must make their accreditation status, and documents that demonstrate their state, federal or tribal approval or licensing, available to students on request.
  2. Institutions must also "provide its students or prospective students with contact information for filing complaints with its accreditor and with its State approval or licensing entity and any other relevant State official or agency that would appropriately handle a student’s complaint."
Institutions must make these documents available to current and prospective students, whether they are taking -- or plan to take -- courses that are offered face-to-face or at a distance.  This is particularly relevant to distance educators since they likely offer courses online to students located in many different states.  Since it also applies to prospective students, you should probably list the Web sites in all 50 states.

§ 668.43 (b) Institutional Information

(b) The institution must make available for review to any enrolled or prospective student upon request, a copy of the documents describing the institution’s accreditation and its State, Federal, or tribal approval or licensing. The institution must also provide its students or prospective students with contact information for filing complaints with its accreditor and with its State approval or licensing entity and any other relevant State official or agency that would appropriately handle a student’s complaint. - Electronic Code of Federal Regulations

SHEEO Link to State-by-State Directory of Web sites for Student Complaint Processes - updated on July 12, 2011.  The U.S. Department of Education has stated that linking to the entire SHEEO list is not acceptable.  Each institution needs to provide the information directly to current and prospective students.  (SHEEO warns that their state-by-state list is provided for advisory purposes and that each institution is responsible for verifying their information.)

Examples of College and University Web sites:
Loraine County Community College
Oregon State University Extended Campus

State Authorization Resources

On May 19, 2011, the State Higher Education Executive Officers (SHEEO) released its updated state-by-state summary of regulations and fees, and a state-by-state contact list of state regulators to obtain approval from states in which your out-of-state online students reside.

Here are the links on the SHEEO Web site:

State Authorization Resources and Directory

State Authorization - State Agency Responses - Version 1.0 Released Sept. 2, 2011

Distance Education and State Regulation - Fees Summary, by State (.pdf)
Updated June 9, 2011

Links to Student Complaint Process, by State (.pdf)
Updated May 24, 2011

Preliminary Contact List of State Regulators (.pdf)
Updated June 9, 2011 

Several states (and statewide distance learning organizations) are looking to establish reciprocity agreements – so each will recognize the distance educational courses/programs in each other’s states.  In October 2010, the Lumina Foundation awarded a $300,000 grant to the President's Forum, which based at Excelsior College in Albany, NY, to lead a task force of regulators and regionally accredited institutions offering online degree programs to explore the potential for reciprocal agreements that lead to greater acceptance of other states’ regulatory decisions.  The terms of the grant are through September 2012.  See the press release.


Additional Resources

State Authorization for Institutions Offering Distance Education to Out-of-State Students
Jan. 25, 2011, Overview Article by Christine Mullins, executive director, Instructional Technology Council

ACE, Other Groups Ask Department of Education to Rescind State Authorization Rule
March 2, 2011, American Council on Education

ACE and 59 higher education and accrediting organizations sent a letter Wednesday to the Department of Education asking Sec. Arne Duncan to rescind the so-called state authorization regulation released in October as part of the final package of program integrity rules.

'Breathing Room' on State Authorization
April 21, 2011, Article by Doug Lederman, Inside Higher Ed.  “The Education Department did not go nearly as far as college leaders would have liked in backing away from a new rule requiring colleges to get approval from every state in which they operate distance education programs. But in announcing Tuesday that, for the next three years, the agency would not meaningfully punish institutions that have shown "good faith" efforts to get such approval, the federal government sought to provide some additional latitude, its officials say.”

Clarifying New Federal Regulations on State Authorization of Distance Education
Dec. 7, 2010.  Webinar in which presenter Fred Sellers, Senior Policy Analyst, U.S. Department of Education, explains the background and provides an overview of this new regulation.  Sponsored by WCET.

See Fred Sellers' Presentation Slides

Educause –  Information Web site

Electronic Campus - Southern Regional Educational Board –  Information Web site

Information/Questions Institutions Should Seek from States Regarding Approval to Deliver Distance Education Into a State

Sample Overview Information Sheet. Sue Day‐Perroots from West Virginia University shared a document that SREB believes is a good idea for colleges to create when it applies for out-of-state authorization.  It essentially creates an information sheet about the institution and its online programming with specific information on the format of the programs. WVU intends to share this with states in which it is enrolling students when it contacts them for approval.

SREB has submitted a proposed 16-state reciprocal 'free trade zone' arrangement to the Department of Education for review.  "No action has been taken and likely won’t while legal actions are underway (not by us) challenging the new regulations.  We believe the ‘free trade zone’ meets the spirit of the new regulations. But until we have that approval from federal representatives, we believe institutions need to prepare to satisfy the new requirements," Bruce Chaloux, director of the Electronic Campus of the Southern Regional Education Board.

H.R. 2117, the Protecting Academic Freedom in Higher Education Act.
On June 15, 2011, the House Committee on Education and the Workforce passed H.R. 2117, a bill Congresswoman Virginia Foxx (NC-05) sponsored to bar the Department of Education from implementing this regulation that requires institutions to obtain state authorization to offer distance education courses to out-of-state students. The full House will vote on this legislation next, followed by the relevant committees in the U.S. Senate.

The American Council on Education, American Association of Community Colleges, and other educational associations, thanked Ms. Fox on Friday, June 10, 2011 for introducing this legislation.

Possible Setback for Program Integrity Rules by Libby A. Nelson, June 16, 2011, Inside Higher Ed

Notes from the House Education and the Workforce Committee Mark-Up, June 15, 2011

House Panel Votes to Repeal 'Credit Hour' and 'State Authorization' Rules, June 15, 2011, by Ar­man­do Montaño, Chronicle of Higher Ed.

No Going Back, June 24, 2011, by Libby A. Nelson, Inside Higher Ed

National Association of College and University Business Officers – Information Web site

Ohio Learning Network – Information Web site

Online Learning Across State Borders
January 2011. For a free copy of this Eduventures report contact Blair Maloney at  This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 617-532-6063.

Oregon State University Information Web site
"In an effort to address compliance with the US Department of Education’s Program Integrity rules pursuant to the revised Higher Education Act, OSU has prepared state-by-state documents summarizing information we have gathered regarding individual state’s regulatory environments."

SHEEO - State Authorization Resources and Directory

Distance Education and State Regulation - Fees Summary, by State (.pdf)
Updated June 9, 2011

Links to Student Complaint Process, by State (.pdf)
Updated May 24, 2011

Preliminary Contact List of State Regulators (.pdf)
Updated June 9, 2011

State Authorization Resources and Directory - April 21, 2011 Press Release

The Federalization of Higher Education?
March 28, 2011, Comments by Paul Lingenfelter, President, State Higher Education Executive Officers

The State of State Regulation of Cross-Border Postsecondary Education: A Survey and Report on the Bases for the Assertion of State Authority to Regulate Distance Learning 
2006 by Michael B. Goldstein, Aaron D. Lacey and Nicholas S. Janiga, Dow, Lohnes and Albertson

'State Authorization' Struck Down
July 13, 2011, Article by Doug Lederman, IInside Higher Ed
"Late Tuesday colleges and universities got at least a temporary reprieve from the part of the rule to which they most object—its application to online programs in which even one student from a state enrolls. A federal judge voided that part of the regulation in a ruling that otherwise upheld rules the department crafted over the past 18 months to try to protect the integrity of federal financial aid programs." . . .

The States of Online Regulation
Jan. 21, 2011, Article by Steve Kolowich, Inside Higher Ed

University of Massachusetts - Information Web Site
UMassOnline has compiled a list of contacts for state agencies that regulate higher education. This is the list that UMassOnline used while sending the official inquiry letter.

University System of Georgia Alert to Members

Sample Authorization Request Letter – from Dr. Lynda Noble, Associate Vice Chancellor for Faculty Affairs, Board of Regents, University System of Georgia

U.S. Department of Education Regulation
Oct. 29, 2010 “If an institution is offering postsecondary education through distance or correspondence education to students in a State in which it is not physically located, the institution must meet any State requirements for it to be legally offering postsecondary distance or correspondence education in that State.  We are further providing that an institution must be able to document upon request by the Department that it has the applicable State approval.”  Amendments to the Higher Education Act, Program Integrity Issues, State Authorization, Section §600.9

U.S. Department of Education’s – First Dear Colleague Letter
May 17, 2011

U.S. Department of Education – Second Dear Colleague Letter
April 20, 2011

U.S. District Court for the District of Columbia
July 12, 2011. Decision to strike down the regulation that higher education institutions must obtain state authorization to legally offer distance or correspondence courses to students in a state in which it is not physically located, i.e. out-of-state students.  

WCET Web Site for Additional Resources

WCET Blog