Online college officials cheer court ruling on controversial federal regulation


Some online colleges said they would withdraw from small states if state authorization rules were implemented.

The U.S. Court of Appeals on June 5 sided with an earlier court ruling that would eliminate a federal regulation that higher-education officials characterized as heavy handed and a potentially devastating blow for online learning.

The court’s decision to “vacate” state authorization rules—which would require colleges with online programs to register courses in every state in which they operate—followed a 2011 U.S. District Court decision to strike down the law.

Eliminating the distance-education portion of the state authorization regulation was based purely on procedural grounds: The appeals court charged that the U.S. Department of Education (ED) did not comply with a federal rulemaking process that would provide the online community the chance to add comments and suggestions before implementation of the regulation.

Failure to abide by state authorization rules would have cut off federal aid to noncompliant colleges.

Michael Goldstein from the Washington, D.C.-based law firm Dow Lohnes, wrote in a blog post that the court ruling does not eliminate states’ existing rules for colleges and universities that operate within their borders.

The ruling does, however, keep the federal government from enforcing state authorization rules and tying compliance of those rules to federal aid for colleges.

“It is … clear that the department did not anticipate such a strong pushback on this rule from across the higher education spectrum: virtually every higher education association joined in support of blocking the distance learning authorization rule,” Goldstein wrote.

The appeals court decision won’t change some schools’ approach to abiding by state rules.

Pamela Shay, vice president of accreditation at Franklin University in Ohio, said her school would continue to comply with sometimes-stringent state rules even after the court’s decision.

“We want to make sure we are in compliance with various states, and we want to be very transparent in what we do,” she said. “We’ve squeezed the toothpaste and now it’s hard to get it back in the tube. States know now that colleges were not following their requirements, so I think [the state authorization rule’s] purpose may have already been served by just bringing awareness to the situation.”

Goldstein said the online education community’s collective resistance showed that the “the hornets’ nest of state regulation has been forcefully kicked.”

Web-based college programs are in the clear, he wrote, but should continue to pursue a reciprocity agreement that would meet state authorization standards without the state-by-state fluctuations in how the complex rules are enforced, and how much money a school must spend to meet those standards for each state.

“Whether or when the several efforts to arrive at common state standards, reciprocity, or some other nonfederal mechanism will bear fruit is unclear, but at least for the time being there is no risk of federal enforcement of state requirements,” Goldstein wrote.

Shay said that when Franklin University launched its first online courses in 2000, many states did not have any rules for how online classes must operate. Complying with the rules as policymakers developed them, she said, has been a focus for Franklin officials.

“There was a panicked frenzy” when ED first proposed state authorization in 2010, Shay said. “So we’re doing our part to share our experience and show other institutions how to navigate that process.”

In May, the Association of Public and Land-Grant Universities (APLU) and the State Higher Education Executive Officers (SHEEO) in May helped form a 20-person national commission to study the immediate and long-term impact of federal regulations on online learning programs.

The commission, scheduled to meet June 12, will include university presidents, executives from the for-profit college industry, a former governor, and state lawmakers. An ED official will serve as an advisor to the commission.

The group will meet a few times throughout 2012, according to APLU’s website.

Marshall Hill, executive director of the Nebraska Coordinating Commission for Postsecondary Education and a commission member, said online-education advocates should seek a compromise that weeds out fraudulent college programs without stunting the massive growth of online courses.

“We clearly need to do better than we now do: better in enabling and supporting much-needed innovation; better in assuring quality across the board; and better in dealing with the bad apple issues that have plagued the expansion of online learning,” Hill said. “We simply cannot accomplish what we need to accomplish without significantly challenging the status quo.”

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