State authorization, gainful employment and the credit hour; these three regulatory areas are the focus of the Department of Education’s so-called “Program Integrity” regulations.
Issued together in 2010, these three rules have had a major negative impact on colleges and universities. While intended to focus on the Title IV and federal financial aid eligibility, the consequences have gone well beyond.
Of the three new regulations, State authorization has created the most immediate pain. It requires educational institutions to obtain “authorization” to operate within a state other than its own if it’s serving another state’s citizens. Compliance is a condition of extending federal aid under Title IV (i.e. Pell grants, Stafford loans) to students across state lines. Thus, an online college now faces the possibility of needing authorization in 53 jurisdictions (49 states other than their own, 3 territories and the District of Columbia) in order to operate. As a result, colleges are finding that some states — regardless of the fact that there’s no “physical presence” by the institution (the former standard for seeking state approval) — are now requiring “registration” (a separate process) as well.