The recent attempts by the United States government to exercise some form of standardized regulation over the recruitment and financial aid practices at for-profit private colleges and universities have created an ongoing struggle between government authorities and the owners of for-profit schools, one that has recently landed in the federal court system. The 2010 Congressional hearings on for-profit education, led by Senator Tom Harkin, chairman of the U.S. Senate’s education panel, revealed that the Government Accountability Office discovered systematic abuses of the student loan application process and in recruitment practices at many for-profit colleges. The hearings, which included testimony from students who attended for-profit colleges, resulted in the creation of new U.S. Department of Education guidelines for for-profit colleges.
The new regulations, which went into effect on July 1, 2011, were designed to curb some of the worst practices at private for-profit colleges, but also included some controversial provisions regarding state authorization that has implications for online programs provided by all colleges, not just for-profit colleges. The most controversial is the “state authorization” clause, which requires that all colleges participating in federal student-aid programs, including federal loans and Pell Grants, apply for and receive authorization to operate from each individual state. The state authorization rule was designed to ensure that individual states had some control over the institutions operating in those states, but many have argued that the rule is obsolete because it does not take into consideration the changes that education has undergone in the era of distance technology. Opponents of the state authorization rule have also pointed to the difficulties of adhering to 50 different state regulation requirements, and that the cost of doing so would force some colleges to stop offering programs in states that have fewer enrolled students. This, they argue, would limit opportunities for students across the country. In a recent letter to Education Secretary Arne Duncan, 60 higher education organizations argued that, “this new rule could force campuses to pull back on legitimate and creative distance education programs, leaving the students most in need behind.” The letter also argued that the new state authorization rule “creates serious concerns for our private, nonprofit institutions—in particular for religiously affiliated and other mission-based institutions—and threatens the ability of both public and private institutions to serve students through effective distance-education programs.” The letter, which you can read here was released to the public by the American Council on Education and was signed by diverse organizations spanning the world of higher education, including the American Association of Community Colleges, American Association of State Colleges and Universities, Association of Jesuit Colleges and Universities, Association of Public and Land-grant Universities, Council for Christian Colleges & Universities, and the Hispanic Association of Colleges and Universities. This shows that the state authorization rule is really not limited to for-profit colleges, even though it was those institutions that spearheaded the opposition against the rule. As soon as the new rules were issued, the Association of Private Sector Colleges and Universities (APSCU) sued the Department of Education on the state authorization rule as well as two other measures of the new regulations. The United States District Court for the District of Columbia has partially agreed with the APSCU. On July 12, 2011, the court struck down the component of the state authorization rule as it applied to distance-education. The reason the court gave was not based on any issue regarding the practices of for-profit distance education programs, but was rooted in legal problems surrounding the process by which the new rule was created. The court argued that the Department of Education did not follow the correct procedures when creating the new rule, because it did not provide opportunities for colleges and institutions to comment on the regulations when they were proposed. This does not mean, however, that the state authorization rule is dead. While the APSCU issued a statement in response to the ruling that described the court’s ruling as "a major victory for innovation in higher education and an important answer to the department's obvious overreach in this area," the U.S. Department of Education pointed out that colleges and universities will still be required to meet state regulations, and that the court did uphold the two regulations regarding recruitment practices. This recent court decision means that students in online programs do not, at this point, need to worry that they will lose the opportunity to take any number of different programs through either public, private, or for-profit colleges. However, it is a good idea to keep an eye on this issue as it develops, because one thing is clear: The development of distance education has made the accreditation, regulation and supervision of colleges and universities a greater challenge than it has been in the past. The struggle between the government and those schools that offer online degrees will likely continue, in both the press and the court system.