The Recent Notice of Proposed Rule-Making Guts the NC-SARA initiative

When the Department of Education issued its Notice of Proposed Rule-Making (NPRM) on May 17, I assumed that it was largely about the revisions to Gainful Employment. However, a June 2nd article written by Inside Higher Ed’s Katherine Knott exposed that the 1,000 plus pages of proposed regulations has the potential to gut the NC-SARA consortium.

Katherine Knott’s description of the current process for schools offering online courses that out-of-state students take.

“Currently, institutions can join a state authorization reciprocity agreement in order to enroll online students from outside the state where the college or university is located and bypass some state requirements (emphasis is mine). Without the reciprocity agreement, institutions would have to seek authorization from each state in which they want to enroll students and meet a variety of requirements. This new requirement is one of several new conditions that the department is planning to add to institutions’ program participation agreements, which are required to access federal financial aid. Department officials said in the proposed regulations that the new conditions would ‘create a more rigorous process’ and better protect students and taxpayers.”

I sincerely hope that every college in America that offers online programs sends in comments against this proposal by June 20. This is totally ridiculous and does nothing to protect students and taxpayers. Specifically, the individual states should take strong exception to the efforts of the DOE and other agencies of the federal government to undermine their constitutional prerogatives related to state oversight of educational opportunities for their residents. SARA has been a welcomed initiative that provides relief for state agencies challenged with diminishing financial and personnel resources, while ensuring the accessibility and the academic integrity of those opportunities.

Early in my tenure as a university president, I became involved first-hand with the pioneers who worked with states and foundations to resolve the distance education licensure conundrum and the resulting legacy of those pioneers demands that the record be set straight. Ms. Knott’s language that I bolded “bypass some state requirements” sounds like a phrase that she borrowed from the people who are pushing this regulation. In my historical timeline below, I’ll point out how every state other than California joined in and created the reciprocity framework.

When I started at the American Public University System in 2002 as its Chief Financial Officer, we were licensed in Virginia and West Virginia because we had a physical presence in both states. We did not conduct any classes in person anywhere. Our courses were taught 100 percent online. Our outside law firm advised us that if we were licensed in the states where we had a physical presence, our legal standing as a university was fine.

In 2006, after I became president of APUS, I attended a conference in Washington, DC., at which Michael Goldstein, a partner at Dow Lohnes PLLC, presented the results of a survey that his firm had conducted with all 50 states and the District of Columbia. The purpose of the survey was to determine if states’ higher education licensing agencies believed that colleges and universities offering online courses in those states but not physically located in those states should be licensed or registered in those states. Based on the number of states responding and the request from some state agencies to receive information specific to an institution, Mr. Goldstein’s conclusion was that some states believed out-of-state institutions offering online courses should be licensed.

Having spent 18 years in the highly regulated healthcare sector before moving to higher education, I discussed the survey with our outside law firm and inquired as to how we should proceed. Coincidentally, I had attended a Higher Learning Commission (HLC) seminar workshop for peer reviewers and met Dr. Russell Kitchner. Dr. Kitchner had worked with Capella University to obtain state licensure in states where Capella hosted a multi-day in-person convening for its doctoral students. Most of Capella’s students were enrolled in 100 percent online courses like APUS’ students.

Dr. Kitchner was winding down his work with Capella, and I invited him to work as a consultant for APUS to help us build a process to determine which states would require us to become licensed. With the assistance of the education team at Hogan & Hartson (now Hogan Lovells), Dr. Kitchner constructed a letter detailing the relevant facts about APUS. Those facts were that APUS was headquartered in West Virginia and had another office in Manassas, VA and consequently, was licensed in both states. We were accredited by the Higher Learning Commission, and we participated in the Federal Student Aid (FSA) program, the VA funding programs, and the DoD’s Tuition Assistance program. We engaged with faculty members from 42 states and enrolled students residing in all 50 states. Our faculty members taught our students entirely online and did not provide in-person instruction. Lastly, the computer servers on which our online technology depended were physically located in West Virginia. (note: I may have left out a fact or two, but these are the ones that I remember).

Letters reflecting these institutional dimensions and other relevant information were sent to the appropriate state licensing body in each of the 50 states and the District of Columbia. Initially, I believe 10 state agencies responded that, based upon the facts that we submitted, we were required to register with them as an out-of-state university. Approximately 28 state agencies asked for more information from APUS before they would provide an answer, and 13 state agencies either did not respond to us or said that we did not have to register with them.

I hired Dr. Kitchner as our Director of Licensure & Regulations, and he began the process of submitting information to all the states. Over time, we provided more information to all the states and were licensed or received a waiver in writing by nearly every state. Several states did not require registration or licensure simply by virtue of being regionally accredited by the HLC. I recall that the annual costs of operating a group of three people to maintain our licensure plus the annual fees for every state ultimately exceeded $2 million. It was a demanding process and fortunately, Dr. Kitchner and his team were very competent.

What I remember most was that the process for licensure (as well as the calculation of annual registration fees) varied widely by state. One state required us to submit binders with the CVs of every faculty member (more than 1,000) in addition to the syllabi from every course we offered (more than 1,500). We had to update those binders annually for changes in faculty as well as changes in courses. I don’t recall that we ever received questions from that state regarding CV’s or syllabi.

Another state licensed us immediately but said that each of our degrees had to go through an approval process. Their approval process required us to present the degrees to a panel of retired college presidents from their state institutions. The panel of presidents convened once each year, and the panel and the agency did not have the ability to review more than three to five degrees per institution per year. Even though we had more than 80 degrees offered online, the state agreed to approve three of them upfront. Provided we were in good standing, they would not question any of the degrees that had not been reviewed but that we needed to continue to submit three-to-five degrees for approval each year until all of them were approved.

There was a state that required all out-of-state universities applying for licensure to submit a substantial document comparable to a regional accreditation self-study as part of the application for licensure. After that document was submitted to the state, a team of up to 20 faculty members from its state flagship university would visit the institution to decide if they would recommend that the university be licensed. Unfortunately, the state was running behind on its scheduled visits and we negotiated licensure without the visit if we agreed not to offer in-person classes in the state including not offering on-ground classes to military students based in nearby military installations.

In one state known for its difficulty in licensing out-of-state colleges and universities hoping to establish a physical presence, we finally reached an agreement where they approved one of our degrees formally and chose to overlook the rest since they did not have the resources to review over 80 online degrees.

The aforementioned dynamics were further exacerbated by staff turnover within state agencies, with resulting changes in policies reflecting the prerogatives of new administrators. In addition, several states had more than one regulatory agency, each of which provided oversight of a specific sector of higher education, i.e., community colleges, vocational institutions, proprietary institutions, and traditional public colleges. These agencies were not always of one mind regarding regulatory licensure requirements. One state required us to register with multiple agencies.

In October of 2010, the Department of Education issued a NPRM. One paragraph in that publication set the distance education world ablaze.

“Clarifying what is required for an institution of higher education, a proprietary institution of higher education, and a postsecondary vocational institution to be considered legally authorized by the State.”

Institutions were required to be compliant with State regulation (whatever that meant) by July 1, 2011. The Department received so many calls and complaints that it issued a Dear Colleague letter in March 2011. The Department reiterated that it was not going to issue a list of which states required licensure of out-of-state institutions that enrolled students from their state in distance education courses. It was up to each institution to have documentation that it was complying if it had to be. WCET covered the proposal from its beginning and mentioned in a blog posted after the Dear Colleague letter issuance that the State Higher Education Executive Officers had said that they would work on a list and that Dow Lohnes, Eduventures, and the Presidents Forum had created lists.

I was a member of the Board of the Presidents’ Forum when this regulation was issued. Our president (and founder of the Presidents Forum), the late John Ebersole, had begun a project funded by the Lumina Foundation (from 2009 -2011) to convince states to participate in a state reciprocity agreement that would recognize the home state of an institution as the authoritative licensing agency for that institution.

Lumina and the Presidents Forum worked with the Council of State Governments to build the initial concept of state reciprocity agreements. With the assistance of the four regional higher education compacts (WICHE, SREB, MHEC, and NEBHE), the National Council for State Authorization Reciprocity Agreements was established in December of 2013. Lumina provided funding for national and regional implementation. States began joining SARA in 2014. The United Agreement was adopted by the four regional compacts and affirmed by NC-SARA on December 1, 2015. In 2019, the SARA policy manual formally replaced the United Agreement as the official policy document.

For large online institutions like APUS, Capella, and others, the Department of Education’s Distance Education Compliance with State Regulations requirement had no meaningful impact, since those institutions had taken note of the original Dow Lohnes survey and took the initiative to work with states to obtain licensure or a waiver where applicable. The mission of the Presidents Forum was to advance innovation in higher education and to reduce the regulatory burden of those institutions whose financial constraints limited their ability to retain the regulatory personnel required to maintain licensure in all 50 states and the District of Columbia. The Presidents Forum consisted of presidents from a diverse group of colleges and universities ranging from those serving 10’s of thousands of online students to those serving a few hundred online students. The majority of the presidents who served as board members were presidents of state colleges and universities.

Ultimately, after the state of West Virginia adopted and joined NC-SARA, APUS gradually let its licensure lapse in the states that became NC-SARA members. It saved us the annual registration fees and the time of several staff members to submit data that was not very relevant to the quality of our academic programs. And not inconsequentially, as noted previously, it reduced the budgetary requirements at the various state departments of education. NC-SARA keeps track of the average annual savings to institutions. It is currently $69,797. Many states have variable registration fees based on the number of students enrolled. Relatively few institutions enroll as many students as APUS or do so from as many states which is why the average cost per institution is much lower than what we paid.

The process to conceive of state reciprocity agreements as well as the work with all state agencies and state legislatures to adopt reciprocity agreements required many years and the efforts of countless individuals committed to promoting the best interests of students, institutions, and state regulatory agencies. In the end, the underlying spirit of SARA and its subsequent success in fulfilling its mission do not justify the claim by this administration that it is necessary to adopt new regulations as part of a proposed change to the PPA (Federal Student Aid Program Participation Agreement) because of necessary protections for students. The administration has not provided data or hosted hearings to discuss data proving that additional protections are necessary. NC-SARA has a handy graphic that shows what happened before reciprocity agreements and after reciprocity agreements. I’ve appended it below.

NC-SARA initiative

Unlike the regulatory apparatus at the Department of Education, NC-SARA collects data on student complaints quarterly and shares that data.

NC-SARA has provided a briefing for each of its member schools and encouraged them to submit comments by June 20 in order to delay or change this unnecessary requirement. One of the items that they point out is that the Department is trying to squeeze this regulation in without going through deliberation and due process. If that happened, the vast sums of data maintained by NC-SARA would be able to be provided through written comments or testimony.

The other point that I make in this summary is that there was a years-long and collaborative process with the state regulatory agencies to build the reciprocity framework. I have not heard that any of them are complaining that there is not a transparent process for students to complain about being misled or any other violations of consumer regulations by institutions.

Accurate and informed comments from colleges and universities are important so that those who have implemented innovative online courses and programs will not have to stop offering them to out-of-state students because of this proposed regulation that guts the framework that institutions and agencies collaborated over many years to protect students and to eliminate the financially and time-consuming burden.

[Author’s note – I want to thank Dr. Russell Kitchner for taking the time to review this article and kindly recommend an adjustment or two to my recollections or add an additional point or two.]

Featured image credit: Tada Images –

Subjects of Interest


Higher Education

Independent Schools


Student Persistence