Status of State Authorization Reciprocity at Conclusion of 2023-2024 Negotiated Rulemaking Session 3

Members of the Program Integrity and Institutional Quality Negotiated Rulemaking Committee convened by the U.S. Department of Education (ED) did not reach consensus on Issue Paper 2: State Authorization (revised during Session 3). Because the committee did not reach consensus, ED can now propose and ultimately approve their own language, though the proposed regulatory changes will still be subject to public comment. Changes won’t take effect until July 2025 at the earliest. 

Provided below is a brief summary of ED’s proposal that would impact reciprocity:

• 500 Rule - This rule would mandate conditions of reciprocity for SARA-participating institutions. If implemented, institutions would be required to obtain direct authorization from any participating state where the institution enrolls more than 500 students in each of the two most recently completed Title IV award years.
• “Applicable State Laws” Related to Closure - This rule would undermine the benefits of state reciprocity agreements by authorizing a state to enforce its own consumer protection laws related to closure, including record retention, teach-out plans or agreements, and tuition recovery funds or surety bonds.
• NC-SARA Board Membership - This rule would stipulate that any governing body of state reciprocity agreements must be comprised solely of representatives from state regulatory and licensing bodies, enforcement agencies, and attorneys general offices. This is a concern because NC-SARA is a private 501(c)(3) with a diverse makeup of higher education experts. 

The Program Integrity and Institutional Quality Committee also discussed student complaints and proposed changes that would make a reciprocity agreement complaint process more robust. If approved, the new regulations would:

• Require each participating state to implement a process for communicating information about students’ complaints to the organization that administers the reciprocity agreement and to the students’ home state.
• Permit member states to – consistent with their own statutes and regulations – accept, investigate, and resolve complaints about an institution that have not been submitted to and received by the institution.
• Require an organization that administers a reciprocity agreement to publish student complaint data for the public at least yearly.

Throughout the next few months, NC-SARA staff will be working with board members, states, SARA-participating institutions, and other higher education leaders to continue negotiations with ED. We will be gathering input from various stakeholders, including states and institutions, to inform our strategy. We appreciate your commitment to student access and success and your continued engagement in this process.