HEA talks could involved state authorization rules.

Online education policy analysts say a set of federal regulations aimed at web-based college programs, struck down by a U.S. Court of Appeals, could re-emerge in Congress’s debate over the next Higher Education Act (HEA) renewal.

“State authorization” regulations would have required colleges with online programs to register courses in every state in which they operate—a hugely expensive undertaking for many colleges. Before the court ruling against the rules, many colleges and universities said they no longer would offer online classes in states with the most arduous regulatory standards.

Failure to abide by state authorization rules would have cut off federal aid to non-compliant colleges.

Jarret Cummings, a blogger and analyst for EDUCAUSE, wrote recently that ed-tech advocates who cheered the court’s decision against state authorization regulations should keep an eye on the re-emergence of the regulatory system in the coming year, when Congress is expected to re-authorize the HEA, adjusting federal rules and standards for higher education.

Cummings said this month’s scathing report detailing misdeeds in the for-profit college industry pointed to a lack of state regulations as a reason that for-profit schools have skirted so many established rules and laws.

In the for-profit college report, released by Sen. Tom Harkin (D-Iowa), Cummings said there is a “troubling reference to correspondence courses in conjunction with distance education, which also arose in relation to the proposed distance education Pell Grant provisions included in a bill passed by the Senate Appropriations subcommittee.”

Cummings warned campus officials that “we may hear more about distance education state authorization”

Harkin, the Senate’s foremost critic of the for-profit education industry, said in his most recent report that “many states have taken a passive or minimal role in approving institutions, reviewing and addressing complaints from students and the public, and ensuring that colleges are in compliance with state consumer protection laws,” giving colleges the chance to exploit those lax standards.

Michael Goldstein and Greg Ferenbach of the D.C.-based law firm, Dow Loehnes, both of whom have tracked state authorization rules, wrote that at least some of the regulations could come to the policy forefront in 2013 as lawmakers determine the best rules for the exploding online education industry.

“The [Education] Department continues to remain silent regarding its intentions respecting whether it will re-issue the distance learning authorization rule or some new version of it,” they wrote.

Colleges and universities are still required to comply with existing state regulations related to web-based education programs, Goldstein and Ferenbach wrote, even after the state authorization regulations were struck down in court.

“It is very important to remember that failure to comply with applicable state law can result in enforcement actions at the state level, with potentially serious consequences,” they wrote. “Likewise, failure to comply with state law can violate the expectations of an institution’s accrediting commission.”

Schools have continued the often complex task of complying with dozens—sometimes hundreds—of state rules that existed long before the federal government proposed state authorization.

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.”

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 rule-making process that would provide the online community the chance to add comments and suggestions before implementation of the regulation.

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