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Financial Aid Fraud Rings

Student Authentication and the Higher Education Opportunity Act

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

Best Practice Strategies to Promote Academic Integrity in Online Education

Broadband Access


Financial Aid Fraud Rings

On February 14, 2014, the Office of the Inspector General for the U.S. Department of Education (OIG) released the report, "Title IV of the Higher Education Act Programs: Additional Safeguards are Needed to Help Mitigate the Risks that are Unique to the Distance Education Environment." In this final report, the OIG requires the Department to develop and implement a “corrective action plan” (CAP) within 30 days (by March 14, 2014) that addresses student financial aid fraud, with a particular focus on distance education.  The CAP must “set forth specific action items, and targeted completion dates, necessary to implement final corrective actions on the findings and recommendations contained in this final audit report.

”This “corrective action plan” (CAP) could recommend costly and unfair regulations on distance education programs at colleges and universities, which the OIG states “is the fastest growing segment of higher education and creates unique oversight challenges and increases the risk of school noncompliance with the law and regulations.  Distance education also creates new opportunities for fraud, abuse, and waste in the Title IV programs.”

The report recommends the Department of Education:

1. “Develop regulations that require schools to verify the identity of all distance education students at the time of enrollment.” Colleges currently only need to authenticate students by ensuring they use a secure login and passcode.  The OIG proposes requiring colleges obtain from students, “proof of name, high school diploma, educational transcripts, or college admission test scores” to “help corroborate identity and ensure the student intends to obtain an education.”

The OIG also proposes having “independent public accountants, not accrediting agencies, to assess the effectiveness of schools’ processes for verifying a student’s identity.”  This would be part of the “annual compliance audit.”

2. “Amend the regulations to require more frequent disbursements of Title IV funds. The disbursements should coincide with the timing of institutional charges and other expenses, such as child or dependent care expenses and monthly Internet fees.”

3. “Amend the regulations expressly to apply the definition of attendance in 34 C.F.R. § 668.22(l)(7) to the regulations for returning Title IV funds for students who do not begin attendance.”

4. “Issue guidance that clearly explains what is considered acceptable evidence of a distance education student’s academic attendance.”

5. “Work with Congress to revise the HEA so that schools are required to develop cost of attendance budgets applicable to the student’s actual educational needs and not include costs that are unnecessary to complete the student’s program of study.”

This last recommendation probably refers to the distance learning student use of student financial aid funds to pay for living expenses, which Congress rejected last year, but it is not clear.

It is unclear whether the Department will adopt any or all of the OIG recommendations, or whether it would have the legal authority to impose any proposed regulations without eliciting public comment or without Congressional authorization, but it is certainly a possibility for which ITC members need to be prepared.  The OIG report is vague in many areas -- we hope the details will be reasonable and manageable.  However, the comments in the Inside Higher Ed article below indicate that officials from the Department of Education and members of Congress could support some of the more onerous OIG recommendations.

ITC and the American Association of Community Colleges have always strongly recommended that colleges implement policies and procedures that prevent, catch, and help local, state and federal government agencies prosecute the perpetrators of these crimes.However, distance educators and students should not have to accept unfair regulations that will not solve the problems outlined in the OIG report.  This is a message we need to convey to Congress as our representatives and senators take steps to reauthorize the Higher Education Act in the upcoming year.We’ll keep you informed about this as it develops!

Here is an article about this issue that appeared yesterday in Inside Higher Ed.

Risk Management
Feb. 26, 2014, Inside Higher Ed

by Carl Straumsheim

“The U.S. Education Department needs to do more to ensure the billions of dollars it offers in financial aid aren’t wasted on students who fraudulently enroll in distance education programs, the department's Office of Inspector General has concluded in a critical new report.”

“Identity verification tops the list of recommendations outlined in the report, which urges institutions to reject the idea that a username and password are enough to guarantee that students are who they claim to be. ‘A login and passcode ensure only that someone logging in to a course is using the same login and passcode assigned to the person who enrolled,’ the report reads. ‘Without effective enrollment processes at a school, a login and passcode do not ensure that the person is enrolling under a valid name and intending to obtain an education.’” . . .


On Oct. 20, 2011, the Department of Education issued a Dear Colleague Letter which offers "an overview of the fraud schemes that the Department’s Inspector General (IG) detected, and recommends immediate steps that institutions can take to detect and prevent fraud."

"In this letter, we also describe further actions that institutions can take and that the Federal government is committed to taking, including increasing technical assistance to institutions of higher education, the convening of a Department-wide task force on distance education fraud, and plans for recommending legislative and regulatory changes to address the relevant issues." …

"The Inspector General's Report identified an increasing number of cases involving large, loosely affiliated groups of individuals (fraud rings) who conspire to defraud title IV programs through distance education programs.  These fraud rings generally target institutions with low tuition in the context of distance education programs and involve a ringleader who:

  • Obtains identifying information from straw students – individuals who willingly provide the information – including some who were incarcerated, by promising financial gain.
  • Completes multiple financial aid applications using the information collected (name, Social Security number, date of birth, etc.).
  • Applies for admission under the institution’s open admissions program, where little or no third-party documentation is required.
  • Participates in the amount of on-line interaction necessary to establish participation in the academic program and secure disbursements under an institution’s procedures.

"Once the ringleader has submitted the Federal student financial aid application and completed enrollment at the institution, the institution draws down Federal student aid funds, deducts the institutional charges assessed the straw student, and disburses the credit balances to the straw student by check or debit card.  Straw students then give a portion of the proceeds to the ringleaders while keeping the remaining portion.  If needed to secure disbursements under an institution’s procedures, a ringleader may also participate as the straw student in sufficient academic work to appear to be an eligible student."

…"more needs to be done by all institutions to prevent, identify, and report suspected distance education fraud in the Federal student aid programs and enable the successful prosecution of offenders." …

"Detecting fraud before funds have been disbursed is the best way to combat this crime.  We therefore seek the help of institutions and advise that you take the following additional actions to identify and prevent the kind of student aid fraud identified in the IG’s report:"

  • Implement automated protocols that monitor information in your student information data system to identify instances where a number of students –
    • Use the same Internet Protocol (IP) address to complete and submit an admissions application.
    • Use the same IP address to participate in the on-line academic program.
    • Use the same e-mail address to submit an admissions application.
    • Use the same e-mail address to participate in the on-line academic program
    • Appear to reside in a geographic location that is anomalous to the locations of most students in the program.
  • Modify your disbursement rules for students participating exclusively in distance learning programs, which would immediately reduce the amount that fraud ring participants can receive.  Institutions have the authority to:
    • Delay disbursement of Title IV funds until the student has participated in the distance education program for a longer and more substantiated period of time (e.g., until an exam has been given, completed, and graded or a paper has been submitted).
    • Make more frequent disbursements of Title IV funds so that not all of the payment period’s award is disbursed at the beginning of the period.

…"The Department is taking this issue very seriously and has established a Department-wide anti-fraud ring task force, chaired by Jeff Baker, Director, Policy Liaison and Implementation in Federal Student Aid, to address the issues raised in the IG’s report as well as emerging future threats.  If you have comments and suggestions that you believe will help us address fraud rings or have specific concerns that do not rise to a level that you believe appropriate to refer to the IG, please contact the task force at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 202-377-4340."

"Finally, we have added sessions to the upcoming FSA Conference in Las Vegas scheduled for November 29-December 2, 2011, to more fully discuss the IG report and possible institutional responses.  We plan to release additional guidance after those sessions and will also consider suggestions for additional statutory and regulatory changes to help institutions combat fraud and protect students and taxpayers from fraudulent activity."

Sincerely,

James W. Runcie, Chief Operating Officer, Federal Student Aid, and
Eduardo M. Ochoa, Assistant Secretary for Postsecondary Education
U.S. Department of Education


Investigative Program Advisory Report
Office of the Inspector General, U.S. Department of Education

The Department of Education does need to stop the abuse and fraud that is taking place with respect to the distance education fraud rings.  Community colleges are also concerned about this fraud and, I am sure, will take all of the necessary steps to help reign it in and prevent it from occurring.  However, the Inspector General made the following recommendations to reign in this abuse:

Recommendation 1b. "Collect and retain IP information for such student during application, enrollment and attendance."
  • Where will colleges store this information? How will they maintain student privacy and proper security for this data, should it be collected?
Recommendation 4.  The most troubling recommendation from the Inspector General, is that the Department, "seek statutory changes to the cost of attendance calculation for students enrolled in distance education programs under the HEA to limit the payment for room and board, and other costs that distance education programs do not incur."
  • This proposed regulation would be patently discriminatory toward distance education students, for no good reason other than to reduce the amount of money awarded to needy students.  Most distance learning students take courses at a distance because they need to - because they are working during normal class hours, they live too far from campus, they are taking care of their children or other family members at home, they are disabled, or because the course they need to graduate is offered at a time that conflicts with another class.
  • The fact that these students are learning at a distance does not mean they are any less needy than traditional students - most are working and trying to make ends meet just like any other student.  Traditional face-to-face students could be living with their parents or have their house paid off.  Regardless of the format in which they learn - most community college students are working adults and should have the opportunity to apply for student financial aid.

Community colleges are eager to maintain their reputations as law-abiding, upstanding members of the learning community. They need to maintain their accreditation status and want to do what is right. Most have safeguards to protect against this fraud.  Many community colleges put new procedures and policies in place in response to the Higher Education Opportunities Act of 2008 which drew attention to the issue of student authentication. It is also true that in many ways technology allows institutions to document a student's participation more comprehensively and easily than in a face-to-face setting. These procedures are often lacking in face-to-face settings.

For example:

  • Colleges have instituted various additional “hoops” which most fraudulent students are unwilling to jump through since they could jeopardize their ability to win “easy money” and avoid detection. For example, faculty may be required to report on active student participation for at least 60 percent of the course semester, and withdraw students who do not participate. Other colleges require that students complete an orientation (a step that has also improved completion rates) and exhibit satisfactory academic performance before financial aid is disbursed.
  • Students have to complete 67 percent of the courses in which they enroll to make Satisfactory Academic Progress or SAP. In other words, withdrawing from too many courses will affect their ability to collect financial aid.
  • Face-to-face instructors might take attendance for the first two weeks of class. In an online environment, students must login to the learning management system, post assignments or complete periodic quizzes, and participate in online class discussions. Sometimes colleges ask faculty to increase their level of academic activity early in the semester, to ensure enrolled students are legitimate.
  • Many institutions do not release financial aid funds to students until after their first two weeks of class are completed. Partial payments are disbursed throughout the academic term to limit any losses from fraudulent students.
  • Many online courses require students to show a photo id to take proctored mid-term and final exams, at the discretion of the instructor.  So, for example, instructors might ask students to take written tests and quizzes throughout the year, turn in a written term paper at the end of the semester, or take a multiple choice or math test in a proctored environment.  Faculty must report instances of cheating to the college administration, so it can keep track of repeat or suspicious offences.
  • ITC polled its membersand found that 97.9 percent of students are required to use a login and password to access their course material, in accordance with the regulations the Department of Education imposed with the reauthorization of the Higher Education Opportunities Act in 2008.
  • Colleges have provided enhanced training for financial aid staff, to give them the confidence to turn away threatening students.  Fraudulent “students” are often belligerent and intimidate financial aid staff relentlessly.  For example, they threaten to file Equal Employment Opportunity Commission (EEOC) complaints, notify the college president, and alert their congressman if they do not receive “their” financial aid money immediately.  Staff need to be empowered to deny financial aid to anyone they deem suspicious.
  • Financial aid staff are also trained to look twice at students who list multiple home addresses or groups that use similar IP and home addresses, or exhibit an unusual enrollment cluster.  Staff at Rio Salado College even used Google Earth to verify that homes exist at the given address, rather than a field or office park.

Public Hearings on Financial Aid Fraud and Invitation for Written Comments
Department of Education, May 23 and May 31, 2012

On May 23 and May 31, 2012, the Department of Education held public hearings on student financial aid at South Mountain Community College in Phoenix, Arizona and at the U.S. Department of Education in Washington, DC. respectively.

The U.S. Department of Education "intends to begin talks in September on new federal student-aid regulations, specifically relating to the use of debit cards to disburse financial aid. In a notice set to appear in Tuesday’s Federal Register, the department announced it would accept comments from the public on a new negotiated rule-making committee. The department is forming the panel in response to a report last fall about organized fraud rings that exploit distance-learningprograms to collect student aid. Department officials have been working to crack down on 'Pell runners,' scam artists who bounce from college to college receiving Pell Grant refunds. The department also plans to propose regulations to streamlinecampus-based student-aid programs." See the article in the Chronicle of Higher Education on April 30, 2012.

See the written comments ITC submitted on May 31, 2012 to the U.S. Department of Education on this issue on behalf of its members. 

Educause's written comments argue that perpetrators will be able to fairly easily modify the technologies they use to enroll as students to obtain financial aid, if the Department makes colleges use a specific technology to combat this fraud. Also, with regard to student authentication, "identity verification standards and processes in the online space continue to take shape, such that effective, affordable solutions have yet to emerge. [Making institutions use specific technologies to authenticate students] may pose particular difficulties for the institutions primarily impacted by financial aid fraud in distance education programs—community colleges and other open enrollment institutions that many times serve economically disadvantaged student populations and thus are often resource-challenged themselves."


Articles in the Press on this Issue

As Online Courses Grow, So Does Financial Aid Fraud - by Tamar Lewin, Oct. 13, 2011, New York Times

Hitting Hard on Fraud - by Paul Fain, Oct. 11, 2011, Inside Higher Ed

Fraud and Online LearningEditorial, Oct. 5, 2011, New York Times

Thieves Scam Aid From Online Education Sitesby Larry Abramson, Oct. 5. 2011, National Public Radio

Lawmakers Call for Crackdown on Student-Aid Fraud in Online Programsby Kelly Field, Sept. 28, 2011, Chronicle of Higher Education

Preventing Abuse in Federal  Student Aid: Community College Practices - by David S. Baime and Christophe Mullin, American Association of Community Colleges.  AACC provides member colleges with some strategies on how to prevent abuse within the federal student aid programs, with a focus on Pell Grants. These recommended strategies derive primarily from a meeting held at AACC’s offices on Jan. 20, 2012.  Findings from this gathering and other developments make it clear that community colleges across the country are working actively to prevent any abuse of student aid. However, because not all campuses may be aware of the full range of activities community colleges are employing to prevent abuse, AACC is providing this material to share practices that colleges have found to be successful in curbing financial aid abuse.

  


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

The Department of education is making the following recommendations following its Notice of Proposed Rulemaking discussions which took place last month on Feb. 19-21, 2014. The committee will begin discussing and debating this proposed language during its meetings next week on March 26-28, 2014.

This proposed language is similar to that which came out in October 2010 and would allow the Department of Education to restrict a college’s ability to offer federal financial aid to the out-of-state students if they lack approval from that state in which the student is located [I was going to write “resides” but the language does not say that!]. The courts "vacated" this regulation in 2011 and 2012 since the Department of Education did not follow the proper procedures by issuing a notice of proposed rulemaking (NPRM), soliciting public comment, etc..  Now they are doing just that.


This language contains two significant additions to the October 2010 proposal: 1. the proposed regulations would require states to have some sort of approval process and, 2. institutions could obtain state approval by being part of a state-by-state approval process or state authorization reciprocity agreement (such as NC-SARA).


ITC has several friends on this committee panel, including representatives from the American Association of Community Colleges, WCET and NC-SARA.

 

We welcome your input!  Please send me any comments and I will forward them to them!

 

 

Here is my summary of the salient points in the Department’s proposal. Note that this proposed language is part of a discussion paper - it is not law (yet?).  We are not sure what regulations the Department could put in place without Congressional approval.

  • Institutions would have to obtain state approval to be able “to disburse Federal student aid to distance or correspondence education students in that state.”
  • Institutions could not be exempted from the state approval process “based on accreditation, years in operation, or other comparable exemption.”An institution is considered “legally authorized” by a state if

1.  “the state has a process to review and appropriately act in a timely manner on complaints about the institution where the final authority to resolve complaints and enforce applicable state law is with the state;” and

2.  “the institution is legally authorized to offer distance or correspondence education in at least one of three ways: state-by-state, under a state-to-state agreement, or under a state authorization reciprocity agreement.”

  • Institutions must “notify students in writing” and display on its Web site the fact that they participate in a state-to-state or a state authorization reciprocity agreement, in addition to the “student complaint process available to the student.”
  • Institutions that only provide distance education courses must also be authorized in their home state.
  • Institutions must provide documentation of state approval to the Department of Education upon request.
  • Institutions must notify the students in that state if they have lost state approval and display this fact on its Web site.

 

Department of Education Web site for the NPRM 


List of NPRM negotiators

 

"Education Dept. Proposes New Rules on Online Programs and Debit Cardsby Kelly Field, March 21, 2014, Chronicle of Higher Education

  

On June 5, 2012, the U.S. Court of Appeals agreed with a decision the U.S. District Court made a year earlier, on July 12, 2011, to strike down the Department of Education's Oct. 20, 2010 regulation that higher education institutions would suffer consequences if they did not obtain state authorization to offer distance or correspondence courses to students in a state in which it is not physically located, i.e. out-of-state students. On July 27, 2012 the U.S. Department of Education sent higher education insitutions the Dear Colleague letter, Guidance on Program Integrity Regulations Relating to Legal Authorization by a State.

Judge Collyer had "vacated' the proposed regulation on proceedural grounds—the Department of Education did not give higher education institutions the appropriate opportunity to submit their comments on the proposed rule through a Notice of Proposed Rulemaking (NPRM) proceeding.  Although the Department has left the door open for issuing the appropriate NPRM when Congress reauthorizes the Higher Education Act in 2013-14, colleges and universites have won a federal victory on this issue until then.  

Unfortunately colleges and universities are not "out of the woods."  They must still pay attention to, and abide by, any state regulations that exist in the states in which they teach distance learning students.  Regardless of these Court decisions, 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 states have updated their regulations for out-of-state distance education institutions.

Many states require that out-of-state institutions obtain authorization if they have a "point of presence" within their borders.  Unfortunately, the definition for what constitutes "presence" differs for each state.  Presence 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.

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.


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 October 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 Legislatures Invited to Approve the State Authorization Reciprocity Agreement (SARA)

On April 16-17, 2013, teams of three representatives (from state regulatory offices and higher education institutions) from 47 states met in Indianapolis to discuss and rally support behind the newly-proposed State Authorization Reciprocity Agreement (SARA).  The Association of Public and Land-grant Universities, APLU’s, Commission on Regulation of Postsecondary Distance Education had just released its final report and guidelines for SARA.**

Now that the final document is on the table, SARA supporters will begin obtaining buy-in from state legislatures.  Each participating state legislature will need to give authority to their state regulators and regional compacts, to perform the actions and responsibilities outlined in the SARA agreement.  State regulators (who will report to the regional compacts) will be responsible for ensuring the participating higher institutions within their borders are accredited and follow the SARA guidelines.  The complexity of this approval process will vary from state to state.

The four regional compacts include the Western Interstate Commission for Higher Education, WICHE, led by David Longenecker; Midwestern Higher Education Compact, MHEC, led by Larry Isaak; the New England Board of Higher Education, NEBHE, led by Michael Thomas; and the Southern Regional Education Board, SREB, led by David Spence.  These compacts will ensure state regulators in their region have the proper processes in place to monitor compliance.  Since the regional compacts will play this deciding role, SARA would give some regional compacts a new regulatory authority, which could be problematic for some state legislators.

The SARA authors would like to have at least 25 states join SARA by July 2015, and 30 states involved by July 2016.  In the meantime, colleges should continue to identify and take steps to obtain approval from states in which they teach out-of-state students.

Advantages to Colleges

Membership in SARA will mean colleges will not have to learn about, or comply with, 50 different state regulations, fees, or other hurdles to teach out-of-state students.  One participant noted that state oversight for distance education will only increase as more colleges offer online courses.  Administrators will see a steeper regulatory road, receive more phone calls, and be forced to address greater consumer protection issues.

Without SARA, colleges will not only have to monitor where their out-of-state students reside, they will also have to keep track of college activities in states that have obscure triggers for physical presence.  Advertising, recruiting, contractual agreements, faculty residing in the state, field trips, proctored exams, servers, courses for which 25 percent or less of class meetings are in the state, are among the triggers that can prompt regulatory action from a state.  Each state may have different definitions, rules and requirements.  SARA would also provide “greater coherence of academic standards.”  There are now 50 varieties of quality assurance and consumer protection.

Robert Mendenhall from Western Governor’s University (WGU) reported that state authorization has cost WGU close to $1 million.  Many of the state fees need to be renewed annually, and many expenses are unreasonable.  For example, WGU had to pay for travel expenses, and arrange for meeting room facilities, for a visit from five state regulators, even though they were not able to meet face-to-face with WGU faculty or with students who all work and learn online.  Mendenhall protested that none of these expenses enhanced student access to quality education.  Furthermore, stringent or burdensome state rules have prohibited WGU from accepting students from certain states, thus limiting educational access to those who may need it most.

Concerns for Colleges

On the other hand, some college administrators are concerned that since SARA will not likely receive approval in all 50 states, colleges will still have to hire staff who can obtain authorization from states that are not members of SARA, even if the college has paid the $2,000-6,000 SARA membership fee and is located in a SARA member state.  The SARA authors said SARA-member colleges should anticipate a two-tiered state approval system: one approach for states that are SARA members (automatic), and another approach for those that are not, in which colleges must undergo the usual state approval process.

The SARA agreement allows states to impose additional fees on their in-state SARA member institutions, to help recoup the costs for monitoring them.  During the meeting, Marshall Hill, who was the executive director for the Nebraska Coordinating Commission on Postsecondary Education at the time, said the Nebraska legislature is considering a bill to approve SARA that would impose a $300 annual fee on each participating institution.

Hill said SARA also allows states to also impose “light and necessary” regulations on their in-state SARA member institutions.  The aforementioned Nebraska bill will require institutions to comply with a regulatory checklist, in addition to undergoing a regional accreditation review.  He said the regulations are “not exhaustive” and “reinforce current standards.”

Russ Poulin, deputy director for WCET, stated that it might be less costly for some smaller colleges, that do not have a lot of out-of-state students, to opt out of SARA and simply obtain permissions from the states in which their students reside.

Advantages for State Regulators

Participation in SARA will allow state regulators to refocus their efforts on what is going on within their own state.  They will not have to police higher education institutions in 50 other states.  In another change, one meeting participant welcomed, they also will not have to spend valuable time monitoring what other state regulators are doing in this area.  SARA offers a national standard that is not a federal mandate, and gives states that have not focused on this issue a baseline to use for monitoring distance education.

Marshall Hill noted that, in the past, states have gotten into trouble when they let their rules and regulations lapse.  Diploma mills sprang up in Louisiana, Wyoming and California due to lax oversight.  At the meeting, several state regulators expressed a deep fear of being called out as “that state.”

SARA offers institutions and state regulators a single definition for physical presence.  To be members of SARA, institutions will only have to seek authorization from their one home state of legal domicile—the state in which they are physically present with “ongoing occupation of physical location for instructional purposes” or “maintenance of an administrative office to facilitate instruction.”  Concurrently, state regulators will only be required to monitor these institutions.

States will respond to abuses or problems, resolve consumer complaints, and approve institutions that wish to participate in SARA.  Accreditation agencies need to notify the state of any adverse actions it takes against any institutions.  SARA will require these agencies to open their lines of communication and encourage them to work together.

Concerns of State Regulators

During the April 2013 meeting in Indianapolis, several state regulators expressed apprehension about agreeing to the SARA guidelines.  They may not trust regional accreditors to properly regulate academic quality at out-of-state institutions.  They also harbor doubts about the likelihood of other state regulators rigorously policing their in-state SARA institutions.  One state regulator from Ohio is concerned that SARA will create a regulatory loophole, so out-of-state institutions will not have to follow the high standards, laws and regulations the Ohio legislature has imposed on Ohio institutions.

State regulators expressed concern that new low-quality online institutions (i.e. diploma mills) will shop around for the state that has the least stringent regulations and incorporate into that state.  Since the home state approves the in-state institutions, other states that are members of SARA will be forced to accept the courses these organizations offer.  Participation in SARA will require states to accept for-profit institutions, forgo any fees they generated from state authorization process, and will reduce their need to hire additional regulators to regulate out-of-state distance education institutions.

Participation in SARA will be free to the 47 states that are members of a regional compact.  The three states that do not belong to a regional compact (New Jersey, New York and Pennsylvania) and the District of Columbia will be able to choose a compact to join for $50,000 a year, in order for their colleges to participate in SARA.

Advantages for Students

Students in all of the participating states will gain increased access to quality out-of-state online postsecondary opportunities.  Students can still complain to the out-of-state institution in which they are enrolled, but they will also be able to complain to the state government agency in which the institution resides.  In response, states would have the authority to bar offending institutions from participating in SARA.

Many higher education institutions put out-of-state students at risk of wasting their time and resources, by not notifying them about the college’s state authorization status.  Many colleges lack this information or do not find out whether they are authorized to teach in certain states until after students are enrolled.  Sylvia Manning, from the Higher Learning Commission, asked, “How does a college remove an enrolled student who is progressing in a course of study?  How are we protecting students?”

Concern for Students

Since licensing issues are not part of the SARA agreement, students could easily be enrolled in courses offered by out-of-state institutions and not realize that the course material will not help them pass the associated in-state licensing exams.  Colleges need to be explicit when advertising courses to out-of-state students.  For example, Marshall Hill noted that the National Council of State Boards of Nursing has clear guidelines for what students need to know to pass their in-state licensure exams on its Web site.  What about other areas?  Colleges and accreditors need to work on this issue–with or without SARA.

National Council for State Authorization Reciprocity Agreements—NC-SARA

In August 2013, the Lumina Foundation gave WICHE a $2.5 million, three-year, start-up grant to get the National Council for State Authorization Reciprocity Agreements (NC-SARA) organization up and running to spearhead and organize the SARA state approval process and ultimately become a self-sustaining organization. Marshall Hill, formerly the executive director for Nebraska’s Coordinating Commission for Postsecondary Education, was hired to serve as the executive director for NC-SARA.  Housed in the WICHE offices in Boulder, Colorado, NC-SARA has named the 21 members of its Advisory Council.

 The NC-SARA administrators will develop a status tool that will reside on the NC-SARA Web site to:

  • show the progress of their discussions
  • identify problematic issues and offer solutions
  • list the states that join SARA
  • list the higher education institutions that join SARA

The NC-SARA administrators anticipate many institutions will sign up as members of SARA.  Their to-do list includes:

  1. Working with the regional compacts to implement plans that are comparable, uniform and similar
  2. Working with the regional compacts to devise ways to invite states to join SARA, and
  3. Working with Wiche to offer a regional forum to educate state regulators and higher education administrators on the benefits of joining SARA

The CEOs from the regional compacts have offered to help state regulators move through the political process.  Peter McPherson from APLU said colleges should also help the state regulators obtain approval for SARA from their state legislatures.  The Councils of State Governments will be available to help answer questions, provide guidance, and report on state approval progress.


What Should Higher Education Institutions Do Until SARA Receives Widespread Approval?

Since the State Authorization Reciprocity Agreement will take two to three years to get up and running, ITC recommends colleges keep working to obtain authorization from the states in which they teach out-of state students.  Although the U.S. Court of Appeals and the U.S. District Court actions in 2012 and 2011 prohibited the Department of Education from being able to withhold federal student financial aid dollars to colleges that do not comply, institutions must still abide by state laws.

 
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.  Should colleges 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?  Institutions should consult legal counsel if they have particular questions or concerns.

Here is a process for action which an ITC member recommended:

1. Create a process to identify out-of-state students enrolled at the institution. One might limit the search to students who:

a. have a permanent out-of-state address,
b. pay out-of-state tuition,
c. are only enrolled in fully-online courses, and
d. have been allocated financial aid.

2. Create an application process to obtain state authorization from those states in which students reside.

3. Contact the states in which those out-of-state students reside to obtain state authorization.  Use this SHEEO Report.

Here are the links on the SHEEO Web site:

Directory of State Authorization Agencies and Lead Contacts (PDF)Directory of State Authorization Agencies and Lead Contacts

Compendium of State Laws and Regulatory Practices

Articles and 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

Backing Off on State Authorization - July 31, 2012, Article by Libby A. Nelson, Inside Higher Ed. “In a reversal of one of the most sweeping and controversial portions of its program integrity rules, the Education Department said Friday that it will no longer enforce a requirement that distance education programs obtain permission to operate in every state in which they enroll at least one student.”

'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.”

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

'State Authorization' Struck Down - July 13, 2011, Article by Doug Lederman, Inside 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." . . .

State Authorization Reciprocity Agreement April, 2012 -- Working Draft

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

University of Massachusetts - Information Web Site

University System of Georgia - Information Web Site

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. Department of Education - Third Dear Colleage Letter - July 27, 2012

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

 


Student Authentication and the Higher Education Opportunity Act

The Higher Education Opportunity Act (Public Law 110-315) (HEOA) was enacted on August 14, 2008, and reauthorizes the Higher Education Act of 1965.  ITC informed members about the language in the Act which addressed the issue of how institutions authenticate their distance learning students.  The legislation could have imposed costly and unwieldy regulations on the distance learning operations at community colleges.  AACC and ITC were able to convince the negotiated rule-making committee to approve language that gives colleges the authority to choose the best process or technology for authenticating distance learning students.  The rules give colleges a safe harbor – institutions can safely use a secure login and pass code to authenticate students, a method most colleges already use.  In October 2009 the Department of Education released its final regulations which addressed this issue. 

Higher Education Opportunities Act Final Regulations

602.17 Application of standards in reaching an accreditation decision.

(g) Requires institutions that offer distance education or correspondence education to have processes in place through which the institution establishes that the student who registers in a distance education or correspondence education course or program is the same student who participates in and completes the course or program and receives the academic credit. The agency meets this requirement if it—

 (1) Requires institutions to verify the identity of a student who participates in class or coursework by using, at the option of the institution, methods such as—

 (i) A secure login and pass code;
(ii) proctored examinations; and
(iii) New or other technologies and practices that are effective in verifying student identification;

 (2) Makes clear in writing that institutions must use processes that protect student privacy and notify students of projected additional student charges associated with verification of student identity, if any, at the time of registration or enrollment.

 


Best Practice Strategies to Promote Academic Integrity in Online Education

This list of best practice strategies is based on “Institutional Policies/Practices and Course Design Strategies to Promote Academic Integrity in Online Education,” produced by WCET in February 2009 and updated in April 2009. In May 2009, the Instructional Technology Council (ITC) surveyed its membership to invite feedback and additional strategies to enhance the WCET work. This June 2009 document reflects the combined contributions of WCET, the UT TeleCampus of the University of Texas System, and ITC. This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States license.

 


Broadband Access

ITC is a member of the Schools, Health and Libraries Broadband Coalition whose mission is to improve the broadband capabilities of schools, libraries and health care providers so that they can enhance the quality and availability of the essential services they provide to the public and serve underserved and unserved populations more effectively. Connecting these anchor institutions with high-capacity broadband will generally provide the greatest benefits to those people who need it most – rural, low-income, disabled, elderly, societally and economically disadvantaged, and other unserved and underserved segments of the population. Building high-capacity broadband to these anchor institutions will also create jobs. Whether it is laying fiber optic cable or constructing antennas to provide high-bandwidth wireless capabilities, these investments in our future will provide thousands of American workers with high-tech employment.

On Jan. 27, 2010, ITC submitted comments to the Federal Communications Commission (FCC) stating that community colleges and universities need high-speed, high-capacity access to the Internet. The FCC sought public comment for its soon-to-be-released National Broadband Plan "that seeks to ensure that every American has access to broadband capability and establishes clear benchmarks for meeting that goal."  ITC wrote, "higher education institutions need bandwidth that is far greater than the bandwidth needed by individual households; they need high-speed, high-capacity broadband capabilities to provide robust, quality, instructional programming, in an online environment, to their students who might be located in rural areas, working adults, caregivers, disabled, returning veterans, or simply students who want to earn their educational credentials to expand their job skills, educational and career opportunities."

On July 13, 2011, ITC submitted comments to the FCC regarding the proposed Connect America Fund.  The National Broadband plan recommends the FCC "replace all of the legacy High-Cost programs with a new program that preserves the connectivity that Americans have today and advances universal broadband in the 21st century. CAF will enable all U.S. households to access a network that is capable of providing both high-quality voice-grade service and broadband that satisfies the National Broadband Availability Target."  ITC asked the FCC to consider broadening its focus beyond providing broadband services to residential consumers to include affordable, high-capacity broadband for community colleges and universities, libraries and other anchor institutions.

US UCAN - In July 2010, the NTIA’s BTOP grant program awarded US UCAN $62.5 million to create a national advanced network infrastructure to help connect “America's community anchor institutions − schools, libraries, community colleges, health centers and public safety organizations − to support advanced applications not possible with today's typical Internet service."  The grant recipients have a short timeframe (one to three years) to show Congress that broadband networks and individual connections at anchor institutions can enhance opportunities for student learning, workforce development and other community initiatives.

The leaders of the US UCAN project invite community colleges to get involved in this ambitious undertaking. David Lambert, executive director, said US UCAN is looking to support local and regional broadband projects that are “technically coherent, offer cost-effective business models, work with regional networks, and are executable, seamless, and sustainable.”  He has quoted Blair Levin, author of the FCC’s Broadband Plan, in saying that US UCAN aims to foster, “a community of sophisticated buyers” for broadband services.

Broadband Technology Opportunities Program (BTOP)