Gerard P. O’Sullivan is provost and vice president of academic affairs at Saint Peter’s University in Jersey City, New Jersey. He served previously as VPAA at Neumann University (2006–2015) and dean of arts and sciences at Felician College (1995–2006). He wishes to thank Russ Poulin of WICHE-WCET’s State Authorization Network and Elizabeth Mullen of Neumann University for their contributions to this article. You may contact him at gosullivan@stpeters.edu.

Under 34 CFR 600.9, all institutions of higher education that seek to recruit and enroll students in states other than those where they are chartered and licensed (their “home states”) must apply — and sometimes annually — for authorization to up to 77 agencies, a number that includes 50 states, nine territories, and the District of Columbia. Sixteen of these states require out-of-state IHEs to register with other offices, like commerce or state departments, and to function as registered foreign agents.

The application process and fees are a significant burden for institutions. To further confuse matters, there are some states where online institutions are subject to different regulations and fees than those adjudged to be “physically present,” while others offer blanket exemptions based upon regional accreditation and longevity of business operations.

Readying for State Authorization: A Toolkit

Here are some field-tested tips for approaching state authorization compliance:

  1. Define your online enrollment reach.
  2. Use market studies to determine where you should market and enroll online learners. Keep in mind that the costs of pursuing authorization in some states may outweigh the benefits.

  3. Study “physical presence” and recruiting triggers for your target states.
  4. Some state educational agencies have low regulatory thresholds for defining “physical presence.” Russ Poulin, deputy director of research and analysis for the Western Interstate Commission for Higher Education Cooperative for Educational Technologies and its State Authorization Network, says: “We normally think of physical presence as having a building in the state, but it goes beyond that to any activity you might do in the state.” Poulin notes, too, that this isn’t just about distance education: “Authorization is institutionwide, so any activity (even if not related to distance education) must be tracked.” With this in mind, note that “physical presence” of many kinds is enough to require an out-of-state IHE to obtain full authorization to operate in those states. In Georgia, for example, cold-calling prospective students is enough to be considered physically present in that state — but an invitation to an in-state college fair is not. Tennessee, Kentucky and Texas have similar regulations. Always check before you recruit!

  5. Calculate costs.
  6. Some SEAs may charge your institution $5,000 to $10,000 annually to operate in their states. In other cases, you need to contract with and pay a registered agent in addition to receiving approval from the SEA. Is it worth the time as well as the associated costs?

  7. Review your tuition refund policy.
  8. Several states regulate how tuition monies are to be refunded when students withdraw from a program or institution. Some state refund policies are more flexible, and generous, than home state or institutional policies and should be calculated into the overall cost of doing business. Iowa, Oregon, Arkansas and Maryland, among others, require out-of-state IHEs applying to enroll students to abide by their refund policies.

  9. Identify your on-campus state authorization liaison.
  10. Even if your institution offers limited online programs across state lines, you must still identify a point person for state authorization. Ideally this person should report to the chief academic officer (in the event that the officer is not the CAO). Your institution’s state authorization officer should keep apprised of regulatory developments by regularly checking the State Higher Education Executive Officers website, reviewing updates from EDUCAUSE and the WICHE-WCET State Authorization Network, and scanning state legislative bulletins for updates on state-level regulations affecting out-of-state IHEs.

  11. Organize your documentation.
  12. Make certain that copies of the following baseline documents are available, with the understanding that evidentiary requirements will differ from state to state: (a) the IHE’s letter of authority or charter from the SEA in its home state; (b) a copy of your most recent statement of accreditation or letter of reaffirmation of accreditation from your regional accreditor; (c) a copy of the institution’s most recent audited financial statement; (d) the OPE ID Code for your college or university; (e) your institution’s Carnegie classification by size and type; (f) evidence of ongoing accreditation by specialized accreditors for any degree programs that require such; and (g) a copy of your refund policy. Some states, like Montana, also require the institution’s federal Title IV Financial Responsibility Composite Score (on a scale of 0.00 to 3.00).

  13. Involve your director of institutional research.
  14. Some states have begun collecting outcomes data on resident students who enroll in out-of-state IHE distance learning programs. Engage your director of institutional research to make certain that she is kept updated on state-level reporting expectations. The Maryland Higher Education Commission, for example, collects annual enrollment, retention and graduation data on Maryland residents who enroll in distance learning or face-to-face programs offered by non-Maryland IHEs.

  15. Contact state educational and other agencies.
  16. After taking the steps outlined above, and achieving some level of clarity about the states where you will recruit and enroll students, you should begin the process of contacting appropriate state agencies. SHEEO maintains a regularly updated survey of state agencies and lead contacts for purposes of making application for state authorization: www.sheeo.org/projects/state-authorization-postsecondary-education. Contact the appropriate higher education and department authorities (the latter as required by individual state laws) for the states where you intend to enroll online learners. Write to the state officer who is responsible for the review and approval of out-of-state applications, or go to the state portal. When writing to state officers, be specific. “And it’s not just writing with open-ended questions,” says Poulin. “You should have reviewed what you can find regarding their regulations well enough that you can ask specific questions. If you ask very general questions, you might not get a response at all, or you may be told to ‘read the regulations.’” Several states will grant authorization exemptions to institutions that meet certain criteria, among them regional accreditation by an agency recognized by the Council for Higher Education Accreditation and longevity (e.g., the institution has been chartered and operating without interruption for 10 or 20 years). However, this might change when new U.S. Department of Education rules are published. The U.S. Department of Education has suggested that it might deny states the right to grant future exemptions, which means that all states might be required by federal law to enact proactive authorization procedures for out-of-state IHEs.

  17. File business paperwork and engage registered agents, where necessary.
  18. In some states, like North Carolina and Alabama, an educational institution that seeks to recruit and enroll students is also regarded as a business entity and must submit the appropriate registered agent paperwork and fees. Some states require out-of-state IHEs to maintain registered foreign agents for purposes of delivering legal paperwork and subpoenas on state soil, in fulfillment of consumer protection and other business laws. This can be costly, but there are a number of national companies that can provide these services at reduced cost. Such companies are vetted, appropriately bonded and insured.

  19. Review and disclose your student complaint processes.
  20. Under 34 CFR 668.43, all institutions of higher education that qualify to receive federal funds under Title IV must publicly disclose information about student complaint processes on their websites, and for all prospective students, not just online learners. Regular updates to 34 CFR 668.43 appear in the Electronic Code of Federal Regulations (www.ecfr.gov/cgi-bin/text-idx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr668_main_02.tpl). A complete checklist of the student complaint process is available on the Wiley Dean & Provost webpage at http://www.deanandprovost.com/Article-Detail/state-authorization-toolkit-supplementary-materials.aspx.

    The ED requires institutions offering degree programs, and not just via distance education, to provide all enrolled and prospective students with contact information for filing complaints with regional accrediting agencies and the appropriate state agency in the state where the student is receiving instruction (34 CFR 668.43(b)). An updated list of relevant SEAs and related agencies can be found on the SHEEO website.

  21. Disclose enrollment and non-enrollment states and territories.
  22. The institution should provide a regularly updated list of all states and territories where it will and will not enroll students. If an institution enrolls students who reside in another state but does not seek authorization in that state, then the IHE may be held liable by the federal government for misrepresentation.

  23. Disclose your institution’s compliance with out-of-state pre-licensure requirements.
  24. If you are offering online nursing, education or other professional pre-licensure degree programs to students in other states, it is critical to disclose whether or not your programs meet the professional licensure requirements in those states where potential or current students reside. The National Council of State Boards of Nursing maintains a state-by-state database that details pre-licensure requirements across the country (www.ncsbn.org/671.htm). Keep in mind that state requirements in professional pre-licensure programs differ from state to state and that these requirements are separate from state authorization requirements — although they are integrally linked. Some SEAs will not authorize a degree program until the state-level professional board approves the program. Clinical experiences and externships may trigger the need for state authorization. Likewise, some states will not accept initial licensure from another state. Some states require national-level programmatic accreditation for program approval (e.g., from CAEP, formerly TEAC and NCATE for teacher preparation).