Millions of college students are enrolled in online college programs, including more than a million who are enrolled in programs offered by schools located outside of their states. Online students expect and deserve the same consumer protections as students enrolled at brick-and-mortar schools. Unfortunately, the current online college oversight system leaves many online students inadequately protected.
Forty-nine states and many online college programs participate in what is known as the national state authorization reciprocity agreement (SARA), which prohibits states with strong consumer protection laws from enforcing many of their own state laws to protect their students enrolled at out-of-state SARA schools. In lieu of those strong state laws, SARA provides low minimum standards that schools must meet to participate, leaving some online students inadequately protected. SARA’s prohibition on member states’ enforcement of state laws also weakens states’ oversight authority.
Last year, the National Council for State Authorization Reciprocity Agreements (NC-SARA), the organization that administers SARA, launched a new internal process for making changes to SARA’s policy. Unfortunately, this internal process yielded very meager results and failed to address the fundamental consumer protection flaws in SARA. The failure of the internal process to address these flaws illustrates the perils of waiting for the organization to course-correct on its own and demonstrates the need for change to come from outside the organization.
The online college oversight system is in dire need of reform.
Since SARA was created nearly a decade ago, a chorus of diverse voices have called for reforms to address the flaws in SAA’s consumer protection standards. These voices have included more than two dozen state attorneys general offices as well as research and advocacy groups focused on protecting veterans and students from abuses by predatory schools. These voices have all called for reforms to SARA’s policy of prohibiting states with strong consumer protection laws from enforcing some of these laws with respect to out-of-state SARA schools operating in their state. SARA’s prohibition on state consumer protection law enforcement undermines states’ ability to protect online students from abusive practices by predatory for-profit institutions.
State attorneys general offices and consumer and veteran groups have also emphasized the need for reforms to ensure that SARA states retain authority to take action to revoke or restrict SARA certification when in-state schools pose a consumer protection risk to students. Without such authority, states cannot adequately protect online students enrolled at schools located within their own states from schools that pose risks to students.
This year, NC-SARA launched a new internal effort to reform SARA policy.
The NC-SARA policy modification process started strong: stakeholders submitted over sixty policy modification proposals for consideration. The proposals came from the regional compacts that represent member states, institutions of higher education, the WICHE Cooperative for Education Technologies (WCET) and the State Authorization Network, NC-SARA staff/Board members, and a group of consumer- and veteran-focused advocates and organizations, led by The Century Foundation, that included the American Federation of Teachers AFL–CIO, Veterans for Education Success, The Institute for College Access & Success, The Project on Predatory Student Lending, Consumer Federation of America, Americans for Financial Reform Education Fund, The Center for American Progress, and others.
NC-SARA’s policy modification process provided opportunities for submitters to present their proposals at public forums and receive and provide public comments about the proposals. Submitters also had an opportunity to amend or withdraw proposals during the process. After the amendment and withdrawal period, the remaining forty-odd proposals were voted on by the four regional compacts representing SARA member states. All four regional compacts must approve a proposal, or the proposal will not advance. Of the forty-three proposals that went to the regional compacts for votes, just six survived. The six surviving proposals will go to the NC-SARA Board for a final vote later this month.
Unfortunately, every last one of the proposals that addressed critical, fundamental consumer protection flaws in SARA failed to survive the process. The six surviving proposals are all constructive policy improvements, but they are slight and often technical. For example, one surviving proposal requires NC-SARA to list a school’s certification status on the NC-SARA website. Another requires NC-SARA to notify states when a school is placed on provisional status. While the surviving proposals are positive, they are essentially bandaids, small tweaks that fail to meaningfully address the deficits in SARA’s consumer protection standards. The disappointing results of the internal policy modification process underscore the need for change to come from outside of the organization.
NC-SARA’s policy modification process failed to address SARA’s significant consumer protection deficits.
Many of the proposals for reform would have addressed SARA’s significant deficits, but not a single one of these proposals survived the process. Several of the regional compacts proposed policy changes aimed at addressing some of the most glaring deficits in SARA’s consumer protection policies. For example, W-SARA submitted a proposal to “add consumer protections” to SARA policy by permitting states to deny an institution’s initial or renewal application where the school did not comply with that state’s authorization requirements; if the institution was subject to adverse action by an oversight entity or court that impacted the school’s ability to maintain ongoing operations; or based on similar circumstances showing significant risks to students. This proposal would have addressed concerns that SARA policy does not give adequate authority to states to deny certification to in-state schools that pose a risk to students. Unfortunately, this critically important proposal was withdrawn by W-SARA prior to the vote by the regional compacts.
The Midwestern Higher Education Compact also submitted a proposal that addressed some of SARA’s fundamental consumer protection deficits. The proposal provided that member states could approve a school provisionally where necessary to protect the public interest. This proposal was also withdrawn prior to the vote by the regional compacts.
W-SARA similarly recognized that current SARA policy hamstrings states from placing troubled schools into provisional status and proposed critical changes to SARA policy to protect students from high-risk schools by enabling states to place them into provisional status. However, the proposal was not approved by the regional compacts, so it will not advance to the NC-SARA Board vote. The consumer and veterans groups submitted a similar proposal aimed at providing states with authority to place problem schools into provisional status, but that version was rejected by all four of the regional compacts, and so will not advance to a vote from the NC-SARA Board.
The consumer and veteran groups also sought to address another of the fundamental consumer protection flaws in SARA—the lack of adequate protection for students whose schools close abruptly, disrupting their education. The groups proposed SARA policy changes to ensure that harmed students had access to a tuition reimbursement fund. This proposal also failed to survive the policy modification process.
The consumer and veteran groups also submitted proposals to address one of the biggest consumer protection flaws in SARA: the prohibition on enforcement of many state consumer protection laws against out-of-state member schools. The prohibition prevents SARA states from enforcing a variety of laws, including education-specific or sector-specific prohibitions on deceptive recruiting; cancellation and refund requirements; disclosure requirements; laws that create a private cause of action for the violation of education-specific consumer protection laws to ensure that students are able to seek redress for harm; laws creating criminal liability for violations of education-specific or sector-specific state laws; laws related to originating, servicing, or collecting on debt; laws related to school ownership; record retention laws; financial responsibility requirements; minimum outcome requirements; and other protections. SARA states should be permitted to enforce all state consumer protection laws that do not directly relate to the procedures for institutional authorization, such as application or fee requirements.
The prohibition on state law enforcement undermines the ability of states with strong consumer protection laws to offer the same protections to all online students in their state. The consumer and veteran groups proposed changing SARA policy to permit states to enforce all state consumer protection laws, with the exception of laws directly related to authorization (like paying individual fees to each state). As a compromise measure to boost the chances of success, a subset of the consumer groups endorsed a more limited amended proposal. The amended proposal would have left the baseline prohibition on enforcement of education-specific state consumer protection laws against out-of-state schools in place, but would have permitted states to request authority from their regional compact to enforce specific consumer protection laws against out-of-state schools operating in their state. This more modest proposal also failed to advance to a NC-SARA Board vote.
The consumer and veterans groups also proposed changing a particularly troubling SARA policy that prohibits state regulators from even taking the basic step of requesting documentation from schools in their state to substantiate compliance with state and SARA standards prior to authorizing the school. Common sense dictates that a state agency tasked with determining whether a school meets state and SARA standards should be able to request evidence of a school’s compliance with these standards, rather than having to rely solely on the school’s self-attestation that it is complying with all requirements. Unfortunately, even this modest but important proposal failed to survive the NC-SARA policy modification process.
The consumer groups also submitted a policy modification proposal aimed at addressing concerns that member states, not regulated institutions, should be the decision-makers when setting consumer protection standards and policies for schools. The proposal would have changed SARA’s policy to require that states, not regulated institutions or others, control NC-SARA’s Board. This is especially important because NC-SARA’s Board retains veto power over any proposed changes to SARA policy. Currently, NC-SARA’s Board includes a number of representatives of regulated institutions, representatives of accreditors, and various other individuals—effectively opening the door for online colleges to regulate themselves, which is a huge conflict of interest when it comes to protecting students. Without a policy that ensures that the NC-SARA Board is controlled by representatives of the states that make up the agreement, there is a risk that nonstate actors, including regulated institutions, could impede member states’ efforts to improve consumer protections for SARA students. The consumer groups’ proposal addressed this by requiring that NC-SARA Board positions be reserved for representatives of member states, including regional compacts. NC-SARA decided that this proposal would not be submitted to the regional compacts for a vote. Instead, it was submitted to a subcommittee of the NC-SARA Board, and to date there has been no public decision on the fate of this proposal.
Overall, the meager results of the internal process failed to meaningfully address the consumer protection deficits in SARA. The failure of the process to lead to substantial changes demonstrates the limitation of the process as a mechanism for strengthening consumer protections for online students and highlights the need for change to come from the U.S. Department of Education.
The U.S. Department of Education should address SARA’s consumer protection failings.
In the absence of meaningful reforms from within, even after a lengthy internal process, it is critically important for the Department of Education to take action. The department’s proposed rule on certification procedures, which is expected to be published by November 1,, included a provision that would at least partially address the concerns that current SARA policy undermines states’ ability to protect students in their state. The proposed rule would require schools offering programs in multiple states to comply with state consumer protection laws related to closures, recruitment, and misrepresentations for the state in which the program is based, regardless of whether the school was authorized pursuant to a reciprocity agreement. If this provision is retained in the final rule, it will go a long way toward addressing the problem of state oversight in the reciprocity agreement—though it would certainly not solve all of the flaws in the current system.
In addition, the Department of Education has indicated that it plans to hold a rulemaking that may include potential changes to the regulations governing state authorization. The department should use this rulemaking to address the consumer protection flaws in SARA policy by revising the state authorization rule to further clarify that states retain the ability to enforce consumer protection laws. To do this, the department should revive language included in the Obama administration’s 2016 state authorization rule, which was later removed under the Trump administration, that provided that reciprocity agreements must permit states to enforce both generally applicable and education-specific consumer protection laws. Revisions to the definition of reciprocity provision could also address other deficiencies in SARA. For example, the rule’s provision on reciprocity could include a requirement that states retain authority to deny authorization to schools that pose a risk to consumers, and that reciprocity agreements be governed by states, not by colleges themselves.
While NC-SARA’s internal process will repeat again each year, the failure of the process to yield meaningful results this year suggests that waiting for the organization to “self correct” could be a lengthy, and likely futile, exercise. Outside action is needed, or students will continue to pay the price.
The author thanks Clare McCann, higher education fellow at Arnold Ventures, for her thoughtful feedback. The opinions expressed in this commentary are solely the opinions of the author.