States maintain the authority to regulate out-of-state post-secondary institutions that offer or participate in activities located in their state to protect students as consumers, the general public, and other interests of the state.  Institutions must follow the State laws and regulations of the state where an institution's activity takes place. 

Higher Education Agency Approval:

• These activities could include, but are not limited to; online courses, experiential learning, marketing, recruiting, servers, proctoring, tutoring, face to face meeting, brick and mortar structures, renting a location, or a faculty member teaching a course online from the state.
• Some or all of these activities could cause the institution to be legally required to seek an approval from the higher education agency of the state.
• The states vary as to the regulated activities, application process, renewal process, required surety bonds, annual reporting, and annual fees.
• Institutions must determine what activities occur out-of-state and in which states these activities occur to know which state's laws must be upheld or face consequences.

Consequences for noncompliance may vary per state, but could include fines, accreditation problems, lawsuits, cease and desist letters, barring licensure for regulated professions, and even the concern of bad publicity for the institution.  Note that state higher education agencies have attempted to minimize consequences by assisting institutions to attain compliance in the interest of best serving students.

State Professional Licensure Boards: 

Approvals for programs leading to professional license by the state professional boards are in addition to compliance with the state higher education agency.

Secretary of State, Revenue, or Treasury Registration:

Registration with the state Secretary of State's office may be required by institutions in a few states for the activities that are occur in the state. Registration may be required for an employee working in a state. States vary. This is also separate from the approval by the higher education agency.

Department of Taxation – a withholding account may be needed when the entity pays compensation to an employee in the state to deduct and withhold state income tax from the compensation paid to the employee. (institution employee/faculty working from another state) 

Department of Labor – For students participating in field placements we are only aware of Colorado requiring workers compensation insurance. Student teachers are exempt.  However, for employee/faculty some states may require workers compensation insurance for the employee working in the state – check with the state.

An alternative to obtaining individual state institutional approval and managing the fees, reporting, and applications for each state for many distance education related activities, is to gain institutional approval for activities through reciprocity as a SARA participating institution. The State Authorization Reciprocity Agreements (SARA) provides SARA  participating institutions with the approval by their home state to offer and participate in certain designated activities related to distance education in other SARA states as described in the SARA manual. SARA is a voluntary agreement among states to provide uniform oversight and impose uniform institutional responsibilities in members states for the designated activities.

Compliance for institutions to offer and participate in out-of-state activities under SARA Policy in other SARA states is specified through the acknowledgements of responsibilities affirmed by the chief executive officer (CEO) or chief academic officer (CAO) of the institution at the time of initial application and at each annual renewal to SARA. The SARA Manual is the principal policy and operations document for which institutions should be thoroughly familiar as SARA participating institutions.

SARA does not cover professional licensure board approvals, international compliance, tax implications for employees, workers compensation insurance, or Secretary of State, Treasury, or Revenue registration.

Failure to comply with the Federal regulations may impact participation in Title IV, HEA Programs including: Federal Pell Grant program, the Federal Supplemental Educational Opportunity Grant, the Federal Work-Study program, the Teacher Education Assistance for College and Higher Education (TEACH) Grant program, Federal Family Educational Loan Program, and the
William D. Ford Direct Loan program.

Institutions should consider current enforceable regulations as discussed in the Federal Regulations Topic Area.

The 2019 Final Federal Regulations for State Authorization that were developed from the 2019 Negotiated Rulemaking became effective July 1, 2020.

• 34 CFR 600.2 - Definitions (state authorization reciprocity agreement)
• 34 CFR 600.9(c) - State Authorization (for distance education)
• 34 CFR 668.43(a)(5)(v)- Institutional Information (public notifications for programs leading to professional licensure or certification
• 34 CFR 668.43(c) - Institutional Information (individualized notifications for programs leading to professional licensure or certification

Many resources are available on this website regarding the history and current status of Federal Regulations related to State Authorization of Distance Education. Please view more in the Federal Regulations Topic Area.