Once upon a time schools were located in a physical space. The U.S. government, in doling out federal student loans and Pell Grant scholarships, could ask the local or state authorities to keep an eye on schools, sounding the alarm if a school did not have enough teachers to fit the size of the school, an appropriate curriculum, or other requisite supports for students. While problematic schools could leave a state to get out from under the nose of a rigorous regulator, they would have to start over enrolling new students, limiting the magnitude of the harm.
Online education has changed all of that. A consumer can take out thousands of dollars in loans to enroll in an online college, with no sense of the geographic location of the school or of its instructors or management. It doesn’t really matter to the student where an online school is headquartered—until something goes wrong. That’s when students discover that state-to-state variations in consumer protections can be the difference between earning a worthwhile degree from an online college, and getting ripped-off by one. While recruiters for online schools famously advertise that students can attend “in their pajamas and never leave home,” regulators should worry about students in their states being scammed by unscrupulous online schools that are taking advantage of weaker laws in other states.
Because it only takes one lax state regulator to potentially endanger students in many other states, the problem of monitoring online education cries out for a multi-state solution.
Online education turns out to be the perfect place for investors to make a bundle off of taxpayer-backed loans and grants, growing low-quality, high-priced programs by leaps and bounds and cashing out before regulators realize what is going on. Because it only takes one lax state regulator to potentially endanger students in many other states, the problem of monitoring online education cries out for a multi-state solution. The need for interstate coordination to monitor online schools is particularly important while the federal government is abandoning its oversight of online schools in the student loan program.
A new report by The Institute for College Access & Success proposes a student-focused framework for interstate coordination as a path forward for states. The report recommends that states link their efforts to strengthen the use of indicators like loan repayment rates, ensure that all students are protected by tuition recovery funds, take measures to prevent students from enrolling in programs that do not qualify for professional licensure in the state where they live, and establish robust complaint processes that can serve as early warning mechanisms.
Absent stronger interstate coordination, the field of online education—where for-profit colleges already have a large presence—could become increasingly predatory, with companies competing to charge students more while providing them with less. There have already been a few early warning signs that online education could become a federal-aid-fueled race to the bottom. Last year, Ashford University, a for-profit online education provider came under fire from a veterans agency in California for failing to demonstrate that it was able to provide “training of good quality, pursuant to state and federal law.” Moreover, California sued Ashford for defrauding and deceiving students. Rather than improve its practices, Ashford called in a favor in Arizona, where a member of the Governor’s Office of Education emailed Ashford to ask “How can we help?” Unfortunately, that office was not asking about how it could help students.
As states take note of rising student debt defaults, and look for ways to counteract federal policies that promote the growth of predatory colleges, more should ask: How can we help students who are looking to pursue degrees online? For states looking for solutions, the Institute’s new report is a useful starting point.