Missing Perspectives in the State Authorization Conversation

I am compelled this morning to write on a topic that I am having an incredibly hard time with, both personally and professionally. This is the topic of state authorization from the way that I see it and understand it based on my research and reading. Aside from being a student in a PhD hybrid program at an institution located in Ohio, I work at a small college in NY in the area of online learning. The institution that I work for has 11 online programs that I have helped to support over the past 7 years. Recently, states have moved to create a system of authorization, generally called ‘state authorization’, that authorizes colleges in other states to enroll students in their state. State authorization includes:

  • Being established in order to protect citizens in the state from “predatory online education companies based in other states” [2].
  • Online programs, only. It does not address students who enroll in a college in another state, but then move to the state temporarily to attend a program.
  • Reciprocity agreements, sometimes for a cost and a process, that allow colleges to enroll students in other states in their online programs.
  • An office established at the state level to process the submitted reciprocity requests.
  • Compacts across state lines that include SARA, the State Authorization Reciprocity Agreement. SARA is a consortium of states that make it easier for colleges to do business across state lines.

One perspective missing in these many conversations that have emerged over the past few months is that of the costs involved- to small institutions bearing the administrative burden and to taxpayers. Every state has different regulations for how they are handling state authorization. Maryland, for example, has a $1000 yearly application fee and a bond at five times the average cost of tuition for each online program. Institutions get the ‘bond’ back once each student successfully graduates. This is only Maryland. Each state is different. Some have chosen to create strict regulations and financial requirements, others simply want a generic letter submitted as reciprocity, and other states have chosen not to do a thing, possibly because of the costs involved. Every state that opts into regulating online education needs an administrative body to process the applications. This can cost the taxpayers around $500K a year. Each institution has to stay up to date on the ever-changing set of requirements for every state. They also have to comply with application fees and are responsible for placing the money in bonds for every program. While large institutions have the resources to task one or more individuals with this new full-time job, small institutions generally don’t have the resources. As I mentioned, my institution has 11 online programs with students registered in a variety of states for each program. So, there is a possibility, at some point, that I will need to track and register 550 cases (bonds, registration, etc.) each year, at least. That is insane. This is why some institutions are opting not to accept applications from states, like Maryland, because of their strict and complicated reciprocity processes.

Not only are states charging their taxpayers for the administration of such a program, they are also impacting their choice and opportunity for education. Some states are moving to join compacts, like SARA, to make the administrative burden less complex and costly for individual institutions to handle the registration in each state. NY is aiming to join SARA. In NY, a few groups are calling on our education commissioner NOT to sign the SARA agreement because they believe that it would “put poor students at serious risk from for-profit schools” [1]. These groups include the New York Public Interest Research Group, the Institute for College Access and Success, the Consumers Union, and the National Consumer Law Center. This is ironic because, while these groups are trying to protect consumers, they are also blocking them from options to education in programs not offered in their area or that fit their schedule. I can sympathize. The Interdisciplinary PhD program that I am enrolled in is offered through Union Institute & University in Ohio. I did my research to find this program- weeks worth. Not only would I have not been able to attend such a program in my area due to my traditional work schedule, I also would have had a hard time finding such a program in all of NY. NY is a hard-ass when it comes to state authorization- almost as bad as Maryland. I am lucky that my institution even wants to do business in NY. As a consumer, I am pissed that my state is making it hard for me to gain access to education options.

Sorry Maryland residents, your state is just trying to “protect” you, too….

As a college employee working in the area of online education in NY, I am annoyed by this whole ordeal. At the same time, these groups are also blocking colleges from expanding their online programs. The reason why this is so unfortunate in NY is that youth population is down all across the North East. Many small colleges have closed over the past few years. Limiting institutions to their traditional marketing radius only cripples them and puts them at risk. Should small colleges close in NY, this will only limit the options to state consumers more so.

All for what? For-profit schools like the University of Pheonix and Kaplan University are already enrolling NY residents….Welcome to 2016.

The actual letter composed to the education commissioner is filled with a bunch of ‘this could happen’ scenarios not based in research or data. For example, the authors state the SARA agreement would “enshrine a two-tiered system in which New Yorkers attending in-state online schools would be subject to one set of marketing and operating standards, while students attending out-of-state online schools would be subject to another, likely lower set of standards” [2]. (Enshrine? …) A little bit of fact checking here: All higher education institutions across the United States must meet a list of standard regulations (this site breaks it down) at the federal level. One of the points is the State Authorization Rule: 34 C.F.R. 600.9, which is part of the Higher Education Act 20 U.S.C. 1001, 1002. It specifically addresses eligibility for Title IX financial aid and providing information about accreditation and where to direct complaints to accrediting bodies. (More on accrediting bodies later.) There is also an act, Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003 (CAN-SPAM Act) 15 U.S.C. 7701-7713 (16 C.F.R. 316), about consumer rights when it comes to marketing- that institutions cannot continue to directly market to an individual who has requested not to be contacted any longer. This law covers print, email, and “all commercial messages, which it defines as any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service”. Also, there is the Telemarketing 47 U.S.C.  227 act (47 C.F.R. 64.1200) specifically for nonprofits not to call people before 8am and after 9pm. But perhaps the one federal act that directly answers the concerns of this group who wrote the letter to NY is the Misrepresentation 34 C.F.R. 668 point which is part of the Higher Education Act 20 U.S.C. 1094. Specifically, it:

  • “Makes the institution responsible for substantial misrepresentations made by the institution itself, a representative of the institution, or any person or entity with whom the institution has an agreement to provide educational programs, marketing, advertising, and recruiting or admissions services”.

So, while some states have their own standards, every institution has to follow the standard federal regulations when it comes to marketing.

The letter also states, “New York-based schools will likely use the competition from less-regulated out-of-state competitors as a reason that New York should weaken its own oversight, to the further detriment of consumers”. So, because NY MIGHT weaken its own oversight at the *sudden* request of institutions, NY should not sign SARA? Secondly, I hope that NY does weaken their oversight because it is costly to the taxpayers of NY, like myself. Don’t worry about the institutions, worry about us taxpayers not being happy that we have to foot the bill of this state administrative office that has to handle all of the many college requests being submitted to the state– every college in the US and every online program with a student in NY enrolled. How much are we paying for that office again??Do I not understand the perspective that my state is trying to protect me?

Do I not understand the perspective that my state is trying to protect me? Of course, I do and I appreciate the intention… to the point where my choice is impacted. Thank you, John F. Kennedy, for passing the Consumer Bill of Rights. One of the points in the Consumer Bill of Rights is the right to choose, “access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and Government regulation is substituted, an assurance of satisfactory quality and service at fair prices” [3]. My state is impacting my right to enroll in a program of my choice because it is charging institutions to do business in my state. What my state is telling me is that it can do a better job of choosing the schools I should enroll in. Should I feel confident that a small state office handling thousands of applications can make that choice for me? Should I be ok that I know this decision is largely based on the institutions that can afford to apply- probably raising tuition in the process to pay for it? So, I have to pay for the office and they are raising my tuition, too? No, I am not comfortable with that.

Another law that should protect institutions from having to pay states to do business is interstate commerce. In 2014, MIT asked this same question to a U.S. Department of Education subcommittee for State Authorization. Specifically,

  • “What is the effect of the Dormant Commerce Clause (which is a restriction prohibiting a state from passing legislation that improperly burdens or discriminates against interstate commerce) on state authorization for distance education? MIT reminds us that the Supreme Court has held that “Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc, 397 U.S. 137, 143 (1970), citing Huron Cement Co. v. Detroit, 362 U.S. 440, 443 (1960). If state authorization were to be considered an improper burden on interstate commerce, then the Department’s regulations should not rely on an illegal process.” [4]

Lastly, higher education institutions and some individual programs have to go through rigorous accreditation processes. Accrediting bodies were established to assure quality of services and operations. Accrediting bodies, such as Middle States, create a series of standards that institutions have to prove they are meeting. Not only are the processes costly, they also require quite a bit of administrative manpower. Two years ago, my institution started its recent 9 month Middle States accreditation report process. This happens every 10 years. Around 90 people were involved in composing parts of the report. For the five or so individuals responsible for assembling the final report, they spent countless hours contacting people for more info, double checking all of the numbers, and making sure the story flowed. A five-person Middle States committee then came on campus and met with individuals every half hour across the institution over a period of a few days. After their recommendation that the institution be re-accredited, the report then went to another Middle States committee for final approval. If you work at a higher education institution, this is a familiar scenario. The accreditation process is time-consuming, but it is also a process with many checks and balances. It is also only one form of accreditation. My small institution is accredited by at least four different bodies. State authorization adds another layer to not one, but two, accreditation processes. Let’s not forget that institutions have to register programs and certificates at the state level, including online programs and certificates. Getting a program approved at the state level in NY is also an extremely rigorous process. As MIT alludes to, why should institutions be forced to seek accreditation from more than its home state?

  • “What is the legal basis for the Department of Education requiring that an institution seek authorization from more than its home state? MIT cited the Higher Education Act in which 20 U.S.C. § 1002 (emphasis added) defines “institution of higher education,” to mean “educational institution in any State that . . . is legally authorized within such State to provide a program of education beyond secondary education.”  Is an institution actually “in” a state if it is offering distance or correspondence courses to students in that state?”  [4]

Perhaps I am wishing for a best case scenario where states quit this funny business and let the consumers do their research and select from the options available to them without interference. For the time being, states signing on with a compact makes my job, as an employee, at a small institution a little easier and allows me, as a consumer, to have access to options outside of my state. I am with Phil Hill and Russ Poulin in their recent Inside Highed Ed article, “states systematically working in concert through SARA will more quickly find and deal with institutions that treat students poorly. This is far better than hypothetical, unfunded regulatory oversight by New York trying to operate independently from any other state.” [5]

References

  1. Critics Assail Potential New York Move on Regulating Online Colleges, NYT: http://www.nytimes.com/2016/03/17/nyregion/critics-assail-potential-new-york-move-on-regulating-online-colleges.html?_r=0

  2. Open Letter to New York State Education Commissioner MaryEllen Elia, The Century Foundation: https://tcf.org/content/commentary/open-letter-to-new-york-state-education-commissioner-maryellen-elia/ 

  3. 93 – Special Message to the Congress on Protecting the Consumer Interest: http://www.presidency.ucsb.edu/ws/?pid=9108
  4. U.S. Department of Education Program Integrity Negotiated Rulemaking
    Distance Education Subcommittee Discussion Drafts for April 2, 2014 https://www2.ed.gov/policy/highered/reg/hearulemaking/2014/pii3-poulin-stateauth-040214.doc
  5. Reciprocity and Online Education: https://www.insidehighered.com/views/2016/03/29/essay-value-states-banding-together-stronger-more-clear-regulation-online-education?utm_source=Inside+Higher+Ed&utm_campaign=609747461c-DNU20160329&utm_medium=email&utm_term=0_1fcbc04421-609747461c-197503805

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