Rift Over State Reciprocity Rules

Regulating universities that operate across state lines is contentious and complicated. So it was considered a remarkable achievement when a panel of negotiators selected by the U.S. Department of Education reached consensus on new distance education rules earlier this year.

Not everyone is happy with the final regulations, however.

“I am outraged by the final regulations,” Smith wrote in a statement earlier this month. Smith, a lawyer who is counsel to the National Consumer Law Center and a senior attorney for the Legal Aid Foundation of Los Angeles, said the department substantially changed the distance education regulation “without sufficient factual justification.”

The department amended the regulation “to allow schools to offer distance education under reciprocity agreements that prohibit states from enforcing the state laws specifically enacted to prevent for-profit school abuses,” said Smith. “As a result, the department has limited the ability of states to protect millions of students from predatory schools that waste students’ time and money while loading them with unaffordable debt.”

During the negotiated rule-making process, a consensus was reached that the department should largely preserve the state authorization rule developed by the Obama administration in 2016. That rule recognized multistate agreements such as the State Authorization Reciprocity Agreement (SARA), a voluntary regulatory framework that makes it simpler for institutions to gain approvals to operate in every state where they enroll students receiving federal financial aid. Almost all U.S. states currently participate in SARA, with the exception of California.

Under the 2016 definition, a reciprocity agreement does not meet state authorization requirements if it prohibits a state from “enforcing its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions.” Yet leaders of higher education groups such as the Western Interstate Commission for Higher Education have argued that you can’t have true reciprocity without shared standards. In its final rule, the department appeared to side with this view.

Discussing its final rule, the department said it was persuaded by comments that suggested revising the definition of a state authorization reciprocity agreement. The new definition says states can enforce their own “general purpose state laws and regulations outside of the state authorization of distance education.” The language referring to laws “specifically directed at all or a subgroup of educational institutions” was removed.

“A reciprocity agreement may supersede a state’s own requirements related to state authorization of distance education and may prohibit a state voluntarily participating in that agreement from adding additional requirements on institutions that also participate in the agreement,” said the department. “It would not be acceptable, for example, for a state to participate in a reciprocity agreement in order to advantage its own public institutions and yet apply additional or alternate requirements related to state authorization of distance education to institutions that participate in the reciprocity agreement but may be located in a different state.” (continue reading)