Federal Rules Aimed at For-Profit Colleges Affect All Out of State Schools

New federal rules being implemented by the U.S. Department of Education could have a far-reaching impact beyond the for-profit colleges they were aimed at, according to Inside Higher Ed. One provision of the new federal rules requires colleges and universities to obtain state authorization, or essentially permission, to operate in every state where they have students or employ people, the article explained. That means if a college in one state has just one student online in another state, they will have to go through the approval process for that other state.

While it is still unclear how this rule will impact the for-profit higher education sector, which includes schools such as the University of Phoenix and Kaplan University, it is starting to become clear that the rule could heavily impact community colleges and nonprofit colleges offering online degree programs across state lines.

At first the rule seems pretty cut-and-dry, but on closer examination, it becomes clear that each state has vastly different rules for colleges to obtain state authorization, the article pointed out. Some states merely require the school to be accredited, while others require exorbitant fees, extensive paperwork, and other bureaucratic rigmarole, the article explained. A recent survey released by the University Professional and Continuing Education Association showed that some colleges might entirely abandon offering degree programs in certain states because of the rule. The survey showed that 59 percent of respondents would stop enrolling students from at least some states rather than go through the arduous and often expensive process of obtaining state authorization, the article noted. And ceasing enrollment in other states means loss of overall enrollment at that particular school.

The cost issue is of particular concern to public community colleges, which have had to cope with funding cuts and rising costs in the midst of a recession. For many colleges struggling to stay afloat financially, the $10,000 fee that a state like Massachusetts charges to apply for state authorization just isn’t feasible, the article indicated.

While some colleges have made efforts to obtain state authorization, others are biding their time, hoping the rule will be permanently struck down. The rule, which along with the others associated with it is slated to go into effect in 2014, has already been struck down by a U.S. district court back in July, noted Inside Higher Ed last month. But the judge left the rule open to be re-written in a different manner, the July article indicated.

Whether the rule remains or is struck down, the damage is apparently done. Each state does indeed have regulations in place that govern what schools are legally allowed to operate there. However, almost none of those state regulations were enforced before the federal government shone a light on them in its recent crack-down on for-profit colleges. As 2014 draws closer, more developments on this rule and its impact on online higher education across state lines are expected.

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