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A Response to "State Authorization Will Not Cause the Sky to Fall"

A guest post yesterday to the New America Foundation's Higher Ed Watch blog took non-profit colleges and universities severely to task for opposing the U.S. Department of Education's (ED's) new state authorization regulations, which took effect today with the understanding that active enforcement would be stayed pending good-faith efforts at compliance over the next three years. The following is my response, which I believe fairly describes how ED and those supporting the new regulations can be right on the narrow point, but terribly wrong from an overall policy standpoint:

The author's aggressive assertions that any problems with the U.S. Department of Education's new state authorization regulations are without merit unfortunately overlook some fairly pressing facts. In the ED's original July 2010 statement of proposed rules, the department itself admits that it had to that point considered the state authorization criterion for Title IV eligibility a minimal concern. It then acknowledged that its proposed new regulations, which at that time did not specifically mention online/distance learning, represented a substantial shift, with the criterion to subsequently be considered a "substantive requirement." Even at that, non-profit higher education had no significant quarrel, because the application of the criterion was still based in the shared understanding of what "state authorization" had historically meant:

State Authorization as a Component
of Institutional Eligibility (§§ 600.4(a)(3),
600.5(a)(4), 600.6(a)(3), and 600.9): To
participate in the title IV, HEA student
aid programs, an institution must be
legally authorized to provide a
postsecondary educational program
within the State in which it is located.
(Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules)

With the understanding that "state authorization" meant "being authorized in the state in which the institution is located"--an understanding that until recently higher education institutions, the states, and ED shared--non-profit colleges and universities around the country have invested significant resources in developing, delivering, and maintaining online/distance learning courses and programs, thinking that their long-standing state authorizations in their home states, many pre-dating the department and its federal financial aid programs, provided all the basis for meeting that aspect of Title IV eligibility.

Should the institutions have looked past the concern about Title IV eligibility to how delivering online courses and programs to out-of-state students might create new responsibilities for meeting the state authorization requirements of other states? Yes, no question--but ED and the states themselves also overlooked this consideration until very recently, as the common stakeholders in the development and delivery of online learning collectively failed to explore and plan for how online learning changes the regulatory game.

Does that excuse colleges and universities from their individual responsibility to follow the law in the areas in which they operate? Certainly not--but there's a broad systemic issue that requires a broad systemic response that can only be fairly and effectively addressed by collaboration among the major stakeholders involved. Without a shared response that accounts for the diversity of both institutions and state requirements--including the wide disparity in states' capacity to shoulder a broader regulatory burden than most realized they had--the resource burden on individual institutions to identify, interpret, and meet the requirements of any state in which a student MAY take one of their online courses is likely to be quite substantial as compared to the revenue those courses generate to support their maintenance and delivery. This, in turn, may lead many non-profit institutions to withdraw their online offerings from students outside of the states in which the institutions are located, ceding the broad national market to the very for-profit institutions about which the author is concerned.

Through its program integrity rule-making process, ED brought to light a problem that does need to be solved. However, the solution is much more complex than the author states IF one wants to preserve a diverse national marketplace for online learning WITH non-profit institutions--the institutions the author identifies as largely having the integrity she would like to see emerge across the full higher education space--as active participants. The current rule is counter-productive to that effort--the possible loss of Title IV eligibility along with the potential for other adverse enforcement actions, however unlikely and/or delayed--simply creates an adversarial environment that overrides the shared interests of higher education institutions, the states, and the federal government in securing and advancing the integrity of postsecondary education.

ED may best serve those shared interests by removing the sword hanging over colleges and universities, which pursued the development and delivery of online learning based on a mistaken assumption shared until recently by ALL of the relevant stakeholders. Instead, the department should actively support and facilitate voluntary, collaborative efforts to develop an authorization schema for online learning across the country that recognizes the substantial differences between online postsecondary education and the place-based delivery of higher education the current federal and state regulatory frameworks were designed to address. The now widely understood potential for liability at the state level is more than sufficient to ensure the active, sustained participation of the higher education community in such efforts. But until a speeding ticket goes back to being a speeding ticket, as opposed to a potential federal prison sentence, it is hard to have a constructive discussion about the most effective way to discourage speeding nationwide.