While most in the academic community know about the attempt to rein in the for-profits, few are aware of its collateral damage. In October, the Department of Education issued its Program Integrity Rules, intended to protect federal funds especially from those for-profit institutions with high student loan default rates. Well-intentioned though this was, the DOE dropped an inadvertent bombshell: All online programs without state-by-state approval to operate would risk losing their Title IV funds. The DOE had assumed that distance-learning programs routinely obtain state licensure in order to enroll students in that state. In fact, few institutions pay much attention to the home states of their online students—the very ubiquity of distance learning makes location irrelevant.
This set off a barrage of national meetings and attempts to lobby the DOE to retract this ruling. But the DOE, assuming that this rule merely reinforced the status quo, had boxed itself in, and couldn’t now suggest state approval should not be required. For the first time, the federal government would be enforcing state higher education licensure—the equivalent of making jaywalking a federal offense. While the risks might be low, the stakes were high; no institution would ever want to jeopardize title IV funds. Thus, schools have begun to inquire of each state (and territory) what would be necessary to be certified so that local residents might be able to enroll online. Only a very few institutions (and these are mainly large for-profits) ever considered that they might need each state’s approval in advance should someone from that state happened to join their online program.
Likewise, few states had thought much about out-of-state distance-learning programs, and few now have the resources or capacity to take on so many applications. Many state regulations were devised pre-Internet, and intended to protect their citizens from unscrupulous propriety schools or franchise campuses disconnected from their mother ship. The Internet can bring home campus faculty from leading institutions everywhere through online programs that are truly reflective of the academic standards of their institution.
While a small fraction of the states explicitly mandate that out-of-state distance learning must be licensed, a comparably small number explicitly exempt purely online programs. The majority are ambiguous: Their guidelines either ignore distance learning altogether or suggest that some sort of physical presence triggers state oversight. These triggers might include the presence of local student recruiting or advertising, in-state faculty teaching online that term, proctored exams, student field experiences, or even an institutional office or program completely unrelated to distance learning. Without numerical thresholds, one student or online professor moving to that state might suddenly trigger the need for licensure. A subtle change in a state’s regulations could also trigger the need for an institution to seek licensure.
To attempt to clarify the regulations, the DOE issued two “dear colleague” letters. The first reinforced the need for state approval, while the second postponed the day of reckoning for three years for institutions to pursue state-by-state approval in good faith.
How will the states now respond? The signs thus far seem to suggest that some will shift towards exempting online programs to avoid how taxing this will be on their dwindling resources. Some states might band together to arrange reciprocity or regional approval processes. Other states could see this as a revenue-generating opportunity or a protectionist means of keeping out competing, carpetbagger academic programs.
How will academic institutions respond? Those already invested in distance learning have little choice: They must pay to play. They have no recourse but to commit whatever it takes to stay in distance learning. Depending on a school’s number of online programs, this can cost perhaps a million dollars initially—with some annual expenses continuing in perpetuity—along with countless hours of staff time. Some online programs are so predominately in-state that their schools might need to restrict future enrollment only to local students. The schools hurt most will be those with small numbers of online students distributed nationally across many online programs: Their costs to participate will be high and their revenues low.
The institutional winners will be those with the largest numbers of distance learning enrollments and the deepest pockets to pay whatever it takes to stay in business. The ultimate winner? In many cases, the very for-profits that the Department of Education was targeting in the first place. Why? This ruling effectively shuts the door on new entrants into the otherwise exploding world of e-learning.
The barrier to entry has just been raised if not locked. This ruling potentially solidifies the market share of the big players and unleashes them to grow significantly – at the expense of potential competition. These state-by-state upfront costs just to launch an online program will be stifling if not prohibitive. New, innovative online programs from high-quality institutions are far less likely to emerge. The public will continue to be wary of the integrity of distance education if America’s top institutions opt not to participate. Despite presidential rhetoric for increasing college completion rates, the administration has just made student access to quality higher learning all the more difficult and constrained the overall capacity of the nation’s institutions.
Distance learning most benefits the consumer, especially working students seeking part-time education. Online learning provides choices and educational opportunity never previously apparent to those who cannot relocate for their education. Distance learning brings e-commerce to higher education, with the adult learner as its greatest beneficiary. Distance learning had begun to make New England’s premier institutions available nationally and even globally. But, instead, we are now at risk that educational inequality based solely on where you happen to live will continue to prevail.
Jay A. Halfond is dean of Metropolitan College and Extended Education at Boston University.