Those of us in WCET’s State Authorization Network (SAN) and in the State Authorization Reciprocity Agreement (NC-SARA) leadership often get asked these questions:

• Does anyone really enforce state authorization in the U.S.?
• Why don’t I read in the higher education news about colleges being fined for state authorization violations?

States are watching, regulating, and taking action. Let’s start with an example. 

University Required to Issue Refund in “Unauthorized” State

A midwestern public university recently discovered what can happen when the institution failed to get authorization.

Institution X enrolled an online student residing in a state in which state authorization is required, but did not get that authorization. The student paid a small part of the tuition due and withdrew late in the term, past the standard withdrawal date. The student owed the institution money, and the institution requested payment. The student did not pay, and the debt was assigned to a collection agency,  as per standard practice. When the student heard from the collection agency, the student wrote to the institution and said, “This debt is uncollectible because you were operating illegally in my state.”

The institution’s compliance officer was served this rat sandwich by the affected department with a request for advice, and called our staff to discuss. In our view, the institution was on shaky ground. We advised the compliance officer to bring in the institution’s legal staff.

When the institution contacted state officials in the student’s state of residence, they indicated that not only was the debt uncollectible, but also any collected tuition must be refunded to avoid formal action. Action could have included a ban on operating in that state.

States really do take action, but it rarely makes the headlines. Would you prefer mayonnaise or mustard with that sandwich? 

What Happens When an Institution Is Found to Be Out of Compliance?

Many states will contact an institution to inquire about an alleged infraction. They usually don’t start with a “cease and desist” letter, but some colleges have been surprised with such a notification. It’s a doubly unhappy day if the letter goes directly to the college’s president, as the damage of bad publicity—even if there is no official action but word leaks out about not following laws—is well understood.

The goal of the state regulatory agency is to protect students in the state by getting the institution into compliance.

Often one of two paths is followed:

• The institution decides to come into compliance, and a process for doing so is negotiated.
• The institution decides to leave the state, and an exit process is negotiated.

Either way, the institution is following state law by either obtaining the correct approval(s) or leaving the state. Fines are a threat, but are rarely part of the final equation, as both sides seek an amicable solution. 

What About Student Actions?

Ah yes. Students can take matters into their own hands and sue the institution. This seems to happen most often in cases involving professional licensure. As you can imagine, students will be quite upset to spend several years studying with you only to learn that their degree will be worthless in the state in which they are residing. For example, two students suddenly found that their program was unrecognized by the board of nursing in their home state. In one case, the institution sought authorization and made things right. In the other case, it was only under the threat of lawsuit from the student that the institution took action.

I heard a sad case last year in which a student moved to another state to attend face-to-face courses after being told that she could perform her practical fieldwork in her home state. She quit her job and moved. Once there, the nonprofit institution falsley told her that a new federal law had been passed and that she could not conduct her fieldwork in her home state. She quit the program before starting it, received a minor refund, and moved back to her home state. She did not wish to go after the institution.That college dodged a bullet.  

Why Don’t I Read about These Actions?

Since everyone is seeking the best possible outcome, there is no reason for the regulator to embarrass the institution. The two parties often reach an understanding not to publicize the details of noncompliance agreements.

This is all very boring to the press. No conflict. No story. 

In Conclusion

It often takes more time and effort to fix an unpleasant situation than to just do it right the first time.

The bigger compliance hammer will come if the Department of Education brings back state authorization regulation for distance education. The signs point to it planning to do so. Meanwhile, states still expect compliance. And finally, life is easier if you treat students properly.

(For on state authorization issue, join WCET’s State Authorization Network: http://wcet.wiche.edu/advance/state-authorization-network.) 

Contact Russell Poulin at rpoulin@wiche.edu. Follow him on Twitter at @russpoulin. 

A version of this article appeared in Distance Education Report.