State Authorization

This page provides background and links about The State Authorization rule and The National Council for State Authorization Reciprocity Agreements (NC-SARA) for reporters, policymakers, and the general public.

Colleges must be authorized by the states in which they operate in order to receive financial aid under the Higher Education Act of 1965, and the federal State Authorization rule gives states the responsibility and authority to regulate colleges and universities operating within their borders, whether on-the-ground or online.

Especially in the wake of the COVID-19 pandemic, online education has become a central feature of American higher education. While many emphasize that online education has the potential to help more students earn college degrees through its geographic reach, flexible scheduling, and potential to scale, online education also has perils. Ensuring consistent and sufficient academic rigor, providing student support and protections, and assessing student outcomes can be even more challenging for distance education than for traditional programs. Online programs also have a long history of overcharging and providing poor-quality programs, leaving students with debts they cannot afford to repay. Fueled by the availability of federal financial aid, the rapid growth of online education poses a danger to students if not adequately regulated by states and the federal government.

The State Authorization rule allows states to develop agreements for “reciprocal” regulation of online distance education, under which states mutually recognize each other’s authorization of higher education institutions. The goal of such an agreement is to reduce the amount of review and oversight the state in which the student resides must conduct by requiring the state where the institution is physically located to authorize only distance education institutions that meet minimum agreed-upon standards.

The National Council for State Authorization Reciprocity Agreements (NC-SARA) is an example of a reciprocity agreement. It was established in 2013, at a time when states were just beginning to grapple with how to oversee institutions operating online from out-of-state. However, NC-SARA’s terms undermine states’ authority to protect the students within their borders. The NC-SARA agreement requires substantial changes to its structure and governance to ensure that students are sufficiently protected when they enroll in online programs operated out-of-state.

Additional Resources

• Encouraging Innovation & Preventing Abuse in For-Profit Higher Education: A 2018 Toolkit for State Policy Makers
• Kate Tromble Negotiated Rule Making Testimony
• The Risk to Students in the Wake of COVID-19 and Red Flags that Authorizers Should Watch For
• Untangling the Web: How to Monitor the Risks of Online Education
• The Evolution of the For-Profit College Industry: New Challenges for Oversight