PEER Project examines states’ role as consumer protectors in higher education and how federal regulations impact state oversight of distance education

January 23, 2024

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PEER Project examines states’ role as consumer protectors in higher education and how federal regulations impact state oversight of distance education 

Federal regulations intended to streamline the authorization process for distance education institutions may be weakening state-level accountability standards and leaving online students vulnerable to predatory behavior, according to a new two-part report from the Postsecondary Equity & Economics Research (PEER) Project.

The report — co-authored by Robyn Smith of the National Consumer Law Center and PEER Project Co-Director Libby DeBlasio Webster — examines states’ consumer protection role in higher education oversight and their various higher education-specific laws. The report also uncovers how the Unified State Authorization Reciprocity Agreement (SARA) – the only state authorization reciprocity agreement currently in existence – has reduced state oversight of the riskiest higher education institutions.

The report details the so-called regulatory “oversight triad” where the federal government, states, and accreditors maintain distinct and complementary roles to protect the integrity of federal student aid programs and shield students and taxpayers from fraud. But federal policy allows interstate reciprocity agreements that prohibit member states from enforcing their education-specific laws against out-of-state institutions that enroll students in online education.

While SARA replaces these laws with a set of policies to guide states and institutions, the report explains how these regulations are primarily accreditation standards that contain few strong consumer protection requirements. In comparison to state higher education specific consumer protection laws, SARA’s consumer protection standards are either non-existent or far weaker than many states’ laws.

“By agreeing to state authorization reciprocity, states are allowing colleges and universities enrolling online students to evade critical state-level consumer protections,” said PEER Project Co-Director Libby DeBlasio Webster. “The online higher education landscape is treacherous, particularly for low-income students. Letting schools bypass these crucial regulations when it comes to online students is wrong. The Department of Education has an obligation to shield students from fraud and abuse, as well as protect taxpayers, and we hope the agency works swiftly to enact meaningful reforms.”

As explained in the report, even on the triad’s worst days leading up to the 1992 HEA reauthorization, when Congress expressed deep concerns regarding the level of fraud among institutions, lawmakers called the triad concept a ‘sound one,’ recognizing that state governments were uniquely suited to protect consumers and taxpayers from abusive and unscrupulous schools. The Department has an opportunity to consider and potentially strengthen oversight of distance education institutions that pose the greatest risk to students and taxpayers by reconsidering the state authorization regulations in the current negotiated rulemaking proceeding.

A full copy of the two-part report can be found on the PEER Project website.