How Do State-Level Actors Respond to Federal Policy on Postsecondary State Authorization?

Written by Rebecca S. Natow, Vikash Reddy, and Victoria Ioannou

Title IV of the Higher Education Act (HEA) requires institutions whose students receive federal financial aid to be authorized by their state to act as postsecondary education providers. This state authorization requirement is meant to serve as a form of accountability — only institutions that meet their state’s minimum quality standards are eligible to receive federal student aid funds. This responsibility gives states a role as one third of the so-called Program Integrity Triad, with accreditors and the U.S. Department of Education (ED) serving as the other two thirds of the triad to uphold the integrity of federal student aid programs under Title IV of the HEA.

The proliferation of distance learning programs has complicated the HEA’s state authorization requirement as a growing number of institutions have enrolled students across state lines. Authorization requirements differ from state to state — with some states having more stringent standards than others — leading to concerns that unscrupulous institutions may forum shop to obtain authorization from a lenient state and then proceed to recruit students from across the country. Therefore, in 2010 and 2016, ED under President Obama issued regulations regarding postsecondary state authorization. Most prominently, these regulations required that institutions enrolling students across state borders must obtain authorization from every state in which a student is enrolled. Other requirements were included in these regulations as well. In 2019, ED under President Trump issued a new state authorization regulation that relaxed some of the Obama-era requirements; however, the rule about obtaining institutional authorization from all states in which students are enrolled remained. Given the many differences in postsecondary authorization requirements across states, these regulations presented a potentially heavy burden on institutions that enrolled students in many different states.

Little is known about how state-level actors respond to federal policy on state authorization. With support from the State Higher Education Executive Officers Association (SHEEO) and Arnold Ventures, we conducted a comparative case study of five states’ experiences implementing federal policy on state authorization.

How States Respond to Federal Policy on State Authorization

In all five case-study states, officials reviewed their existing state authorization processes to ensure they were aligned with federal policy, and if not, they updated those processes. State officials in all five states also informed and trained institutions within their states regarding changes in federal policy. Our interviewees indicated that nonprofit organizations such as the interstate higher education compacts, SHEEO, and others provided information that state officials used to understand and inform institutions about federal policy on state authorization.

Additionally, all states except California joined the State Authorization Reciprocity Agreement (SARA). SARA, an interstate reciprocity contract administered by the National Council for State Authorization Reciprocity Agreements (NC-SARA), enables institutions in signatory states to have their authorization recognized by other signatory states, thereby simplifying the process for an institution in one state to receive authorization elsewhere.

Challenges with Responding to Federal Policy on State Authorization

State-level actors faced challenges when implementing federal policy on state authorization. In all five states, insufficient staff capacity made it difficult for state officials to do everything required to understand and implement the federal policies. Respondents in all five states also said their communications with ED regarding state authorization issues were less clear or less frequent than some state officials would have liked. Respondents in all five states also said federal regulations were so complex that they were challenging to interpret and implement, and that the costs of compliance with federal policies were high.

State officials took a number of actions to address these challenges. Some respondents reported that collaborating with other agencies to understand and implement federal policy helped to address the challenge of insufficient staff capacity. With regard to communications with ED, some state officials found that being proactive about reaching out to ED personnel, particularly through ED’s nearby regional office or via state-level personnel located in Washington, DC, were effective strategies for improving communications with ED. Some state-level actors studied the regulations more closely and turned to nongovernmental organizations for advice and instruction on the new regulations. To address the challenge of high compliance costs, some states charged institutions fees to participate in SARA.

Conclusion and Recommendations

This case study found much consistency regarding the five states’ experiences with responding to federal policy on state authorization. Nongovernmental organizations, such as interstate compacts and NC-SARA, featured prominently as resources for learning about, responding to, and addressing challenges with implementing federal policy on postsecondary state authorization.

To facilitate state-level actors’ implementation of these federal polices, we recommend the following:

· State and federal policymakers should cultivate good working relationships with each other and identify ways of maintaining open and useful communications.

· State and federal policymakers should provide additional resources to state authorizing agencies to develop agencies’ capacity to respond to federal policy effectively.

· Nongovernmental organizations involved with state authorization issues and ED should include institutions as well as state agencies in training and information sessions about federal policy.

· Nongovernmental organizations should increase professional development opportunities for state-level actors to learn and have their questions answered regarding complex federal regulations on postsecondary state authorization.

This blog post is based upon a report that is one in a series coordinated by the State Higher Education Executive Officers Association (SHEEO) and supported by Arnold Ventures. The series is designed to generate innovative empirical research regarding state authorization processes and policies that can serve as a foundation for future research and policy in this understudied area.

You can find our full report here: https://sheeo.org/wp-content/uploads/2021/07/Natow-et-al._SHEEO-Federal_Policy_on_State_Authorization.pdf.