International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Tuesday, August 9, 2016

Dept of Education Proposes Rule On State Authorization Of Postsecondary Distance Education And Foreign Locations

CHEA reprts that on July 25, 2016, the USDE published a Notice of Proposed Rulemaking in the Federal Register clarifying the state authorization requirements for postsecondary distance education. Currently, the law requires institutions to have state authorization where they are physically located but does not require authorization in states where the institution has no physical presence. These rules would supplement the state authorization rules negotiated in 2010 and implemented last year.   Download DOE proposal

The HEA (Higher Education Act 1965) established what is commonly known as the program integrity ‘‘triad’’ under which States, accrediting agencies, and the Department act jointly as gatekeepers for the Federal CHEA logostudent aid programs.  Many States and stakeholders have expressed concerns with these unique challenges, especially those related to ensuring adequate consumer protections for students as well as compliance by institutions participating in this sector. For example, some States have  expressed concerns over their ability to identify what out of State providers are operating in their States, whether those programs prepare their students for employment, including meeting licensure requirements in those States, the academic quality of programs offered by those providers, as well as the ability to receive, investigate and address student complaints about out-of- State institutions.

While the regulations established in 2010 made clear that all eligible institutions must have State authorization in the States in which they are physically located, the U.S. Court of Appeals for the District of Columbia set aside the Department’s regulations regarding authorization of distance education programs or correspondence courses, and the regulations did not address additional locations or branch campuses located in foreign locations. As such, these proposed regulations would clarify the State authorization requirements an institution must comply with in order to be eligible to participate in title IV programs, ending uncertainty with respect to State authorization and closing any gaps in State oversight to ensure students, families and taxpayers are protected.


Summary of the Major Provisions of This Regulatory Action

  • Require an institution offering distance education or correspondence courses to be authorized by each State in which the institution enrolls students, if such authorization is required by the State, in order to link State authorization of institutions offering distance education to institutional eligibility to participate in title IV programs, including through a State authorization reciprocity agreement.
  • Define the term “State authorization reciprocity agreement” to be 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 in other States covered by the agreement.
  • Require an institution to document the State process for resolving complaints from students enrolled in programs offered through distance education or correspondence courses.
  • Require that an additional location or branch campus located in a foreign location be authorized by an appropriate government agency of the country where the additional location or branch campus is located and, if at least half of an educational program can be completed at the location or branch campus, be approved by the institution's accrediting agency and be reported to the State where the institution's main campus is located.
  • Require that an institution provide public and individualized disclosures to enrolled and prospective students regarding its programs offered solely through distance education or correspondence courses.

Costs and Benefits

The proposed regulations support States in their efforts to develop standards and increase State accountability for a significant sector of higher education—the distance education sector. In 2014, over 2,800,000 students were enrolled in over 23,000 separate distance education programs. The potential primary benefits of the proposed regulations are:

(1) Increased transparency and access to institutional/program information through additional disclosures,

(2) updated and clarified requirements for State authorization of distance education and foreign additional locations, and

(3) a process for students to access complaint resolution in either the State in which the institution is authorized or the State in which they reside.

The clarified requirements related to State authorization also support the integrity of the title IV, HEA programs by permitting the Department to withhold title IV funds from institutions that are not authorized to operate in a given State. Institutions that choose to offer distance education will incur costs in complying with State authorization requirements as well as costs associated with the disclosures that would be required by the proposed regulations.

Public comments may be submitted by email until August 24, 2016. After reviewing comments received, USDE will work to publish a final regulation by November 1, 2016, to take effect on July 1, 2017.

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