As regulations loom, a call for cooperation between states

A federal rule might force colleges to withdraw from states with small populations.

Members of an influential online-learning task force said states should create uniform standards for online colleges and universities, making it easier for institutions to comply with a federal rule that will prove costly and confusing to web-based schools.

The Education Department’s (ED) state authorization rule, scheduled to take effect July 1, would force online colleges to seek authorization from agencies in every state where their students are enrolled.

Higher-education officials have said this requirement wouldn’t just be cumbersome for online schools; it could encourage colleges to withdraw from many states, especially states with small populations.

Funded by a $300,000 grant from the Lumina Foundation for Education, officials from Excelsior College and the Council of State Governments released a white paper May 16 endorsing an “interstate reciprocity compact” that would streamline the process of getting state-by-state approval.

Agreeing to the national compact would mean a participating state agency “must be open to consider acceptance of programs in other member states, as well as having other members accept its programs,” according to the white paper.

Registering online educational programs one by one, state by state, would force institutions to hire full-time employees to research regulations and submit proper paperwork. Excelsior College President John Ebersole said college staffers recently spent about 400 hours completing applications for two programs in one state.

Among the most pressing issues about state authorization is the financial impact on out-of-state students, according to the white paper.

The online-learning task force found one state – which wasn’t named in the white paper – where tuition compensation would only go to in-state students.

“In that situation, students in other states taking online classes would have no remedy should the college or university close,” the paper said, adding that “unplanned closures are very rare at degree-granting colleges.”

The task force warned of state agencies charging exorbitant fees for colleges and universities to register their programs in that state.

Raising authorization fees could be especially tempting in tough economic times, said Paul Shiffman, assistant vice president for strategic and governmental relations and executive director of the Presidents’ Forum, a group that provides annual assessments of online learning.

“When the states are strapped for finances, and they recognize they have a brand new revenue stream available, they’re going to jump on the bandwagon, and we’re fearful of that,” Shiffman said.

Repeating concerns expressed at a March meeting with online officials in Washington, D.C., Shiffman said onerous state rules could be an incentive for online schools to leave states with small populations, where only a handful of students might be enrolled.

“Why would a college, for one student, want to pay fees and go through the whole review process” if those fees will be equal to or more than the student’s tuition, he said. “[Online programs] will only go to the places where they have the best chance to recoup their investment.”

Surveys conducted by the task force show that states interested in entering the proposed compact assume there will be a “base” state “responsible for conducting a complete evaluation of participating colleges.”

Having a home state for state authorization rules would simplify the complex process, “rather than having twenty states engage in a game of ‘who’s on first’ trying to figure out where the full-scale review was done,” according to the white paper.

ED officials have backed off strict interpretation of the state authorization rule since it was first made public last October. When a group of 60 higher-education organizations sent a letter to ED asking the department to rescind the rule, ED responded with a rebuke, but added that federal officials would be satisfied with a “good-faith effort” from colleges and universities by the July 1 deadline.

ED said in its letter that online colleges must prove they are working toward certification in every state in which they operate by July.

“Indeed, it is a delay in the enforcement and lessens the burden on [ED] over the coming … year,” said Russell Poulin, deputy director of WICHE Cooperative for Educational Technologies (WCET), an organization that advocates for online instruction. “For the institutions, it is not a delay.”

Eduardo Ochoa, ED’s assistant secretary for postsecondary education, told online college decision makers that the department doesn’t “intend to penalize institutions if they haven’t received” authorization from every state by July 1.

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