Examining the States’ Role in Protecting Online College Students from Predatory Practices: Part I
Background and History of the States’ Higher Education Oversight Role in the Federal Regulatory Triad
Higher education oversight and accountability is premised on the Higher Education Act (HEA)’s so-called oversight “triad,” whereby the U.S. Department of Education, state licensing authorities, and private accrediting agencies play distinct roles overseeing institutions of higher education and gatekeeping federal student aid. Historically, accrediting agencies have been tasked with providing educational quality assurance, the Department with administration of the federal student aid system, and the states with consumer protection. Much has been written generally about the triad, its shortcomings and strengths, but less is known about the states as student consumer protectors.
As online education (also referred to as “distance education” in this paper) has grown exponentially over the last several years, so too has policymakers’ focus on the states’ role. According to data collected by the Department, in the fall of 2021, some 4.4 million students, or 28 percent of all undergraduate students, took distance education courses exclusively—a 13 percent increase from pre-pandemic times in 2019. Of the undergraduate students, 1.0 million (23 percent) were enrolled in institutions in a different state. Since 2011, HEA Title IV institutions offering education “to students in a State in which [they are] not physically located . . . must meet any State requirements for [them] to be legally offering postsecondary distance or correspondence education in that state.”
The Department’s regulations permit institutions offering distance education across state lines to satisfy the HEA’s state authorization requirement without obtaining approval from each state in which they offered education if those states participate in a “state authorization reciprocity agreement.” The scope of the Unified State Authorization Reciprocity Agreement (SARA), the current—and only—state authorization reciprocity agreement, has become a touchpoint for debate because it prohibits state members from enforcing their higher education-specific consumer protection laws against out-ofstate member institutions, even when they enroll the state’s residents. Thus, SARA creates a two-tiered system whereby, in many states, residents who attend schools with a physical presence in the state receive more protection than those residents who attend out-of-state online schools.
In this paper, we provide background on the states’ role as student consumer protector and a brief history of the federal government’s fraught efforts to regulate state authorization for distance education. We call on policymakers to keep in mind the states’ role as student consumer protector in state authorization and reciprocity rulemaking, particularly with respect to distance education.
