State Authorization 101
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Institutions must follow the state laws of the state where an institution's activity takes place.
Before an institution offers any out-of-state activities such as: online courses; field experiences; faculty teaching online courses out of state; and recruiting or marketing, an institution is legally mandated to follow the other state’s laws and must obtain any necessary authorization to operate in that jurisdiction prior to conducting the activity.
Compliance is not a choice. A recent interaction with an institution legal counsel provided the following quote, "it's the law and it must be followed, regardless of whether you agree with the law."
Out-of-state activities of an institution can meet state compliance regulations either through individual authorization by the states where activities occur or by institutional participation in a reciprocity agreement for many distance education related activities.
Regulation of activities of out-of-state institutions varies per state. Some compliance staff members currently or in the past sought individual authorization per state. The requirements include differing application & renewal processes, surety bonds, annual reporting, and annual fees.
Reciprocity provides uniformity of responsibilities to offer certain activities in the states. NC-SARA coordinates reciprocity for participating institutions in SARA member states. Institutions that participate in NC-SARA through their state, choose to accept the responsibility to comply with the fourteen acknowledgements initialed by the CEO or CAO of the institution in order to offer and participate in specific out-of state activities of the institution as described in the SARA Manual.
Federal regulations to participate in Title IV, HEA Programs. Failure to comply with Federal regulations could have the effect of fines or withholding of title IV funds from institutions.
States have long had the authority to regulate institutions offering education within the state’s boundaries, regardless of the modality (face-to-face, distance) being used. The approval process is part of consumer protection for learners in the state.
States’ regulations vary from having no regulation to having very strict requirements. Even if an institution teaches only at a distance in a state, many still expect the state process to be followed.
In 2010, the U.S. Department of Education (USED) issued a regulation tying an institution's ability to offer federal financial aid in a state to the institution being authorized in the student's state. The regulation, 34 CFR 600.9 (c), was subsequently "vacated" by federal court ruling and therefore unenforceable.
December 2016, USED released the new federal regulations for State Authorization of Post-secondary Distance Education, Foreign Locations. Effective date: July 1, 2018.
July 2018, A two year delay of the effective date of the regulation was announced. The Department proposes to amend through negotiated rulemaking. Institutions must remain compliant with state laws and regulations, SARA Requirements, and other effective Federal regulations for out-of-state activities of the institution.
April 2019, Federal negotiators reached consensus on a new set of State Authorization regulations to be prepared for spring/summer 2019 release of proposed regulations for public comment.
April 26, 2019, The U.S. District Court Judge orders vacatur of the delay of the 2016 Federal Regulations for State Authorization. Order delayed for 30 days.
May 26, 2019, 2016 Federal Regulations for State Authorization become effective due to U.S. District Court order.
November 1, 2019, The 2019 Final Federal Regulations for State Authorization were released. Effective date July 1, 2019, but are subject to immediate certain regulations are subject to immediate implementation upon the discretion of the institution. (600.2; 600.9(c); 668.43; 668.50)
The words, "operating", "physically located", or "physical presence" are used by a state to indicate an institution is subject to regulatory oversight by the state because of the activity which occurs in the state. States vary as to which activities will cause regulatory oversight by the state. To determine if the activity causes the institution to be regulated in the state, the institution must review the regulations of the state where the institution offers the activity.
In 2011, the State Higher Education Executive Officers Association (SHEEO) created a state survey of higher education agencies in each state. These SHEEO Surveys became web based and available online. State regulators were provided the ability to update their state's regulations and processes.
In 2019, state surveys of the higher education agencies in each state were updated and available on The State Authorization Guide (The Guide) hosted on the NC-SARA website.
The State Authorization Reciprocity Agreements (SARA) is a voluntary agreement among states to provide consistent oversight over specific out-of-state activities of a SARA participating institution that offers these activities in another SARA member state. These activities include online courses, recruiting, marketing, and experiential learning of no more than 10 students per program per site at one time. Please review the SARA Manual.
As part of the currently effective 2016 Federal Regulations: 34 CFR 668.50 requires that institutions that offer educational programs by distance education or correspondence courses must provide enrolled and prospective students with certain public and individualized disclosures.
Public disclosures include: authorizations where activity is offered; student complaint processes, adverse actions by a state or accrediting agency against the institution; refund policies, licensure and certification requirements.
Individualized disclosures: when the institution's program does not meet licensure and certification requirements where the student resides, a new adverse action, when a program ceases to meet licensure or certification requirements.
However, these disclosure regulations will be replaced on July 1, 2020 with the effective date of the new 2019 Federal Regulations and are subject to immediate implementation at the discretion of the institution. 34 CFR 668.43 Institutional Information: list of required information to made available to prospective and enrolled students regardless of modality. Note the important change is that professional licensure information will be required for face to face programs and distance education.
Also note: To participate in reciprocity, an institution certifies that it will supply professional licensure information in writing to all students, applicants and potential students. (SARA Manual 5.2 and Application item #10)