Introduction
The purpose of this paper is to advocate for the State of California to participate in the state authorization reciprocity agreement overseen by the National Council for State Authorization Reciprocity Agreements (NC-SARA). In 2010 the Obama Administration created a consumer protection regulation that required higher education institutions who offer distance learning programs to be authorized to operate in each State where their students reside. As stated in the State Authorization Federal Regulation Chapter 34, § 600.9(c) released in 2010,"if an institution is offering postsecondary education through distance or
correspondence education to students in a State in which it is not physically located or in which it is otherwise subject to State jurisdiction as determined by the State, the institution must meet any State requirements for it to be legally offering distance or correspondence education in that State. An institution must be able to document to the Secretary the State's approval upon request" (2019). To make it easier for institutions to be compliant with this regulation, NC-SARA, which began in 2013 as a voluntary initiative funded by the Lumina Foundation, created a reciprocity agreement for member states to participate. According to the Online Learning Consortium, "SARA is an agreement among member states that establishes comparable national standards for interstate offering of postsecondary distance education courses and programs. SARA only applies to distance education, not on ground or group activities (NCS 3(4), and only focuses on U.S. distance education that crosses state lines" (Coswatte, 2014). An institution that is not authorized but is delivering services to students from that State could be in jeopardy of losing access to Title IV funding. Currently, all 49 states in the United States are member states of NC-SARA. The one exception is California.
California's refusal to participate in NC-SARA is hurting students who reside in the State and study at institutions located across state lines via distance education programs by potentially preventing them from access to Title IV funding for their education. It is difficult to determine exactly how many students are currently affected by this. However, according to NC-SARA, "our analysis of enrollment information provided by SARA participating institutions in spring 2018 indicates that there could be as many as 80,000 California students enrolled in out-of-state public and non-profit SARA institutions studying via distance education. Those students are at risk of losing Title IV student assistance funds, along with an untold number who are studying at out-of-state public and non-profit institutions that do not participate in SARA or for-profit institutions not registered with BPPE" (2019). The BPPE (The Bureau for Private Postsecondary Education) is California's consumer protection agency that has the oversight of California's private postsecondary institutions.
In the 1980s, California earned the reputation as the "diploma mill capital of the world." As a result, the public's trust in the integrity of the State's private education institutions and the value of their degrees diminished. In response, the state regulatory programs were overhauled and a new, 20-member Council was created to oversee the private institutions. Concurrently, the Maxine Waters School Reform and Student Protection Act was adopted.
The Waters Act and the laws governing the Council merged and caused numerous conflicting provisions and general confusion. On January 1, 2007, the law was allowed to sunset which left the State without a regulatory body to oversee the private postsecondary sector. "In 2009, the Legislature and the Governor reached agreement on AB 48 (Portantino, Chapter 310, Statutes of 2009). AB 48 established a new Private Postsecondary Education Act and created a new oversight Bureau within DCA for the purpose of regulating private postsecondary educational institutions that provide educational services in California" (California, 2019). Currently, the Bureau provides consumer protection against fraud and develops best practices for fiscal responsibility, health and safety, and ethical business practices for its institutions.
Additionally, California's nonparticipation in NC-SARA is hurting institutions located in the State who have to secure state authorization from each State to enroll that State's residents as students into their distance learning programs. This process can be extremely costly and time-intensive. Smaller private institutions who do not have the funds necessary to secure individual state authorizations and/or the human resources to do so are at an extreme disadvantage.
As an example, in 2018, John Paul the Great Catholic University had to cease operation of its M.A. program online to students outside of California; "Effective July 1, 2018, we must obtain authorization from the individual states in which we operate — the states where you, our online students, reside. The regulatory costs of obtaining authorization from each State are an insurmountable financial obligation for JPCatholic, and therefore we will not be able to offer the M.A. program online to students who reside outside the State of California (where we are authorized to operate). This regulatory challenge may change if the State of California joins NC-SARA before July 1, 2018. However, we have to plan as if the regulations will go into effect as currently written. JPCatholic will continue to advocate for California to join NC-SARA, both through our own efforts and the work of the Association for Independent California Colleges and Universities (AICCU), of which we are a member" (2019). Often these institutions are fiscally dependent on distance learning programs for new and significant revenue streams. Distance learning programs can be cheaper to run than traditional on-campus programs because they do not require additional facilities to operate. They allow the college to attract a broader student population comprised of international students and non-traditional first-time freshmen such as adult learners.
Policy Background and Explanation
Due to California's reputation as the "diploma mill capital of the world," its government officials have developed a healthy distrust towards the private for-profit education industry. Particularly the private for-profit higher education institutions and their parent companies, many of whom are located in the State. In recent years the California legislature has strengthened its consumer protections for students at for-profit institutions. "The requirements to operate in California are "significant," and should ideally be maintained. For example, for-profit institutions must pay into a State Tuition Recovery Fund, which reimburses tuition money if an institution unexpectedly closes. Institutions are also required to disclose the salaries of their graduates and the rate at which borrowers' default on their loans" (McKenzie, 2018). The Higher Education Act (HEA) requires that all career education programs participating in Title IV prepare its students for gainful employment in their specified field of study. In 2014 the Department of Education adopted the gainful employment (GE) rule providing a clear definition of how programs could demonstrate compliance with this requirement. Although the rule was not popular among institutions who had to participate, it worked to improve the quality of programs, lower cost and save taxpayer money. However, on July 1, 2019 the Trump Administration rescinded the rule and allowed schools to stop complying immediately ("What to know about the Gainful Employment Rule", 2019).
Bob Shireman, a senior fellow at the Century Foundation and an Education Department official who led the Obama administration's aggressive clampdown of the for-profit higher education industry believes California would be signing away its ability to protect its consumers if it joined NC-SARA. He states, "it is highly unlikely that California would join SARA as it is currently designed. Institutions that are hungry for out-of-state enrollments like the idea of joining SARA, but frequently those institutions are blind to the consumer protection needs of Californians. Joining SARA would "completely eliminate" California's ability to enforce these protections, said Shireman, who is concerned that if California joined SARA, it would become much easier for "problem institutions" to expand in the state" (McKenzie, 2018).
California's main opposition to NC-SARA relates to what it believes is insufficient oversight. NC-SARA "shifts principal oversight responsibilities from the state in which the distance education is being received to the "home state" of the institution offering the instruction. The host state (where the student resides) can also work to resolve problems" (2019). Put plainly, if a student who resides in California enrolls in a program offered by Purdue Global, the State of Indiana has oversight of the program. If the student wishes to file a complaint, she must file in Indiana, and the State would follow the policies and procedures established in the reciprocity agreement.
Proposed Change
California's significant interest in the consumer protection of its citizens is both honorable and understandable. However, the State is being short-sided in its desire to have what it believes is adequate consumer protections while hurting the students it serves. California is protecting its students from predatory for-profit institutions. However, the issue with this, according to NC-SARA Executive Director Marshall Hill, is that for-profits "make up about six percent of SARA's 1,750 participating institutions" (Kronk, 2019). If California were to join NC-SARA, students would not be in jeopardy of losing access to Title IV funding. Higher education tuition is already expensive and ever rising, and students must have access to federal financial aid to pay for their postsecondary education. "For-profits are not fraudsters by definition. According to Shireman, many for-profit schools are good, but they can go bad very quickly, and frequently do. That means we need to be careful, especially when for-profit schools are financed with government-backed student loans" (Kronk, 2018). Additionally, California's nonparticipation in NC-SARA is handicapping the institutions located in the State who rely on the revenue streams that distance education produces. "Proponents say that SARA allows for online college programs to more easily reach learners throughout the country without needing to jump through the costly and time-consuming hoops of getting one's institution authorized state by state" (Kronk, 2018).
Conclusion
The debate about whether California should join NC-SARA is long-standing, and what is frustrating for students and institutions alike is that it appears neither side is taking part in the same conversation. "SARA proponents want to expand access to education, full stop. Opponents to the agreement, however, remain concerned only over what it spells for predatory, for-profit educators, which make up a small portion of SARA beneficiaries" (Kronk 2018). It is time for California to join NC-SARA and allow for greater access to higher education and prosperity among the State's higher education institutions. Once an NC-SARA member state, California's legislators can work with NC-SARA and its fellow member states to advocate for increasing consumer protections if it feels it’s necessary. It is essential to understand that the demographics of higher education are changing dramatically.
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