Hamstringing Online Colleges

Federal rules for state authorization of online college teaching raise some odd questions. Why is Massachusetts charging $40,000 for an online college to hire a work-from-home professor living on the Vermont-Massachusetts border? Why does North Carolina demand a $37,000 fee before allowing administrators with a distance learning university to meet prospective students face to face? A Norwich University administrator offers a tour of this regulatory jungle gym of federal higher education law, commenting bluntly, “I wish my job didn’t exist.”

In 2010, the Department of Education expanded previous guidelines that required states to “authorize” the colleges and universities operating within their borders, widening the reach to include online colleges that served state residents.  Online colleges and universities that failed to secure “authorization” from each of the states in which students used their materials were threatened with losing the ability to issue federal financial aid to their students.  The regulations differ state by state. Some require minor fees—$100 in Wyoming—and accreditation by one of the accrediting agencies. Others demand regional accreditation and stiff protectionist fees.

The goal of these regulations, according to Fred Sellers, a senior policy analyst at the U.S. Department of Education at the time, was to protect students from fraudulent colleges and to provide them with leverage points to hold online schools accountable. Students studying in Wisconsin using material produced by an institution headquartered in Colorado, for instance, would be empowered with a state agent who could pressure the institution to fulfill its obligations. Colleges that neglected or misled their students would face real damages—the inability to offer federal aid and to sell their courses to students in other states.

Transparency and accountability are laudable goals, especially for online institutions prone to facelessness and, at times, implicated in fraudulent activity.  But transparency needn’t come at such exorbitant costs. Accountability needn’t pressure colleges to lay off staff in fee-heavy locales and redirect significant funds from professors to political agencies. Fees should cover the costs of reasonable regulatory enforcement, but not serve as government money-makers. The federal government should roll back its mandate on state authorization, letting each state determine if separate authorization is necessary. States crafting their policies should consider regulatory processes with lower barriers to entry and stiffer penalties for infractions, preserving online colleges’ incentive to treat students fairly but enabling colleges to expand to markets where users welcome them.

Rachelle Peterson

Rachelle Peterson is a research associate at the National Association of Scholars.

One thought on “Hamstringing Online Colleges”

  1. While it is true that in 2010 the Department of Education did try to mandate state authorization for distance education programs, that rule was vacated by a federal court in 2012. (The Department may bring it back soon in a different iteration). However, the authorization requirements of the individual states in fact predated the rule and continue to be in force. Currently it is the states that are responsible for all the varying and often ridiculous requirements, not the Department.

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