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State Authorization 101

Compliance management for out-of-state activities

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How it works

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.

Why Comply?

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. 

 

State Authorization FAQ
What is the history of State Regulations?

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. 

What must institutions do to comply with State regulations?

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.

What is the history of Federal Regulations?

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, 2020, 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)

July 1, 2020, The 2019 Final Federal Regulations for State Authorization including Notifications for Professional Licensure became effective.

What does "operating," "physically located," or "physical presence" in a state mean?

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.

Is there a state-by-state list of regulatory agencies?

 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.

What about SARA and reciprocal agreements between states?

Institutional approval for the institution to offer some distance education related activities may be achieved by the institution participating in reciprocity through the State Authorization Reciprocity Agreements (SARA).  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

What are the Federally required public and individualized notifications for programs leading to professional licensure or certification?

Federal regulations, effective July 1, 2020, require institutions to provide prospective and enrolled students with public and individualized notifications for the institution's programs that lead to professional licensure or certification, regardless of modality. (face-to-face & distance education)  

34 CFR 668.43(a)(5)(v) – Public notifications for programs leading to professional licensure or certification

  • New notification added to the list of notifications required under 34 CFR 668.43 Institutional Information, in order to participate in Title IV HEA programs.
  • Describes the scenario for required notifications for programs leading to professional licensure or certification regardless of modality.
  • Describes how to provide general notification for professional licensure programs. (curriculum meets state requirements, curriculum does not meet state requirements, institution has made no determination)

34 CFR 668.43(c) – Individualized notifications for programs leading to professional licensure

  • New notification added to the list of notifications required under 34 CFR 668.43 Institutional Information, in order to participate in Title IV HEA programs.
  • To prospective students if the curriculum does not meet state requirements or the institution has made no determination where the prospective student is located prior to enrollment in the program.  (Prior to enrollment = Prior to financial commitment)
  • To enrolled student within 14 calendars days of the institution making a determination that the curriculum does not meet state requirements where the student is located.

Also note:  To participate in reciprocity, an institution certifies that it will supply professional licensure information as described in the SARA Manual 5.2 and affirmed by the institution CEO or CAO in the SARA Application item #10.

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