Untangling federal rules for online learning

Common Misconception:  “The Department’s Dear Colleague Letter (DCL) gave an extension until July 1, 2014, so I don’t have to worry about authorization for my institution’s distance education programs until then.”

Fact:  In 2011, ED issued a DCL granting an extension until July 1, 2013 to institutions making a “good faith” effort to comply with the Distance Education Rule; however, this guidance is no longer in effect because the rule was struck down. That DCL has no impact whatsoever on an institution’s obligation to get authorized under state law. A May 2013 DCL granted a separate extension that only applies to the On-Ground Rule (which is discussed next).

Thus, whether your institution needs to be authorized in a state where it is providing distance education is currently only a matter of state law – and there is no federal extension regarding the need to comply with state law.

Any “good faith” extension is at the discretion of the state regulators. If the Distance Education Rule comes back, the Department will determine a new effective date upon publication of a final rule (which may or may not include a built-in “grace period”).

The on-ground rule

Citation:  34 C.F.R. § 600.9(a) and (b)

Status: The On-Ground Rule rule was unaffected by the federal court ruling that vacated the Distance Education Rule. However, ED, through a DCL in May 2013, delayed implementation until July 1, 2014 to allow states and institutions time to come into compliance with the Rule.

Summary:  The On-Ground Rule requires institutions to hold a sufficient authorization (as defined by ED) in their “home state” and each state where they are physically located. The On-Ground Rule essentially sets up two routes to compliance – an institution is required to satisfy one of two tests to remain compliant with Title IV requirements.

Under the first test, an institution must demonstrate that it has been established “by name” as an educational institution by a state “through a charter, statute, constitutional provision, or other action issued by an appropriate state agency or state entity.” An institution so authorized may be exempt by the state from licensure requirements based on its accreditation status or if it has been in operation for at least 20 years.

Under the second test, an institution that does not meet the first test may still participate in ED’s Title IV programs if it is established by the state “to conduct business or to operate as a nonprofit institution.”

However, the rule provides that institutions so established may not be exempt based on accreditation or years in operation and must demonstrate that they have been authorized to offer postsecondary programs in the state.