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Swimming in Murky Waters (State Authorization, Yet Again)

Swimming in murky waters is generally not what one likes to experience.  Much preferred for swimming is the crystal clear water in a newly cleaned pool, a mountain spring-fed lake, or in the waters near a coral reef off a south Pacific island.  Murky waters leave much to the imagination as to what may be just beneath the surface, with none too pleasant outcomes envisioned.  Recent news accounts of several shark attacks in shallow waters near the beaches have accentuated the need to be able to see what is in the water around you.  In similar fashion, murkiness seems to be the environment in which schools find themselves when viewing the latest guidance related to the State authorization regulations.

The Murky Waters of State Authorization

State authorization has been a requirement for schools to be considered eligible to participate in Title IV Federal Student Aid programs for years.  But, in 2010, in what has come to be called the Program Integrity Regulations of October 29, 20101, the U.S. Department of Education (ED) gave more specificity to what the minimum standards consisted of in order for a school to be deemed in compliance with the State authorization requirement.  That clarification obliged a school to be specified by name as being authorized to provide postsecondary education in the State in which it is located.  Additionally, State authorization compliance stipulates that a school must be able to identify the State’s student complaint process to their students.  The regulatory effective date was July 1, 2011.

This all sounds fine and good, if we are sitting in a dinghy on top of the water rather than swimming in the murkiness that has developed.  The compliance would be simple were it not for unsettling turbulence in the waters.  It was determined that many States did not have complaint processes developed for students to use when needed.  Therefore, in an effort to extend a hand to the States and schools, ED allowed the deadline to slide.  The original extension of the date for compliance was until July 1, 2013.  Subsequently ED further stretched that date to July 1, 2014.  And, finally, last year ED gave one ultimate extension to July 1, 2015.  But, this extension’s provisions came with specific parameters.  These limitations allowed postponement only in certain circumstances where States were facing challenges in finalizing their complaint process for students.  ED’s guidance required schools who wanted to use the allowed delay to document—based upon information obtained from the State—how the postponement would help the State finalize its procedures for its student complaint process.  (We discussed this previously in the article, “State Authorization…Once More,” in the July, 2014, edition of FAME’s Inside Report.  Please review that article for more details of the exception and its parameters.)

Stirring the Waters of State Authorization

The seemingly straightforward provisions of the regulations were not as simple as it would have appeared.  This remains the case, especially when it comes to determining which States have student complaint processes in place for students’ use.  However, ED, in a spirit of cooperation with schools and States, is still stirring the waters a bit more.  And, it would seem that it is done this time in such a way as to exhibit yet more grace to States and schools as most States appear to be treading water in designing and promulgating their student complaint processes.  In ED’s most recent guidance in Dear Colleague Letter (DCL) GEN-15-102, dated June 19, 2015, schools and States are provided a reminder of the June 30, 2015, expiration of the stay of the enforcement of the State Authorization regulations.  In that DCL schools are also informed that their compliance with this provision of the regulations now will be determined in ED’s review of the school in “the ordinary course of business.”  This phrase, “ordinary course of business” could refer to such times as when:

  • a school is undergoing a routine institutional eligibility recertification review,
  • an application for approval of new locations or programs is submitted, or
  • any other matters are initiated that would generally require a review by ED.

For those schools whose applicable State has not yet finalized its required student complaint process, ED may allow a school to continue its current eligibility status for a reasonable period to allow the State further opportunity to complete its requirements.  ED does not specify what a “reasonable period” may mean.

Although the biggest deterrent to States and schools being in compliance with the State authorization provisions has been in regard to a State’s complaint process, it must be remembered that there is yet the other prong of State authorization briefly mentioned earlier.  The school also must be specified by name as authorized to provide postsecondary education in the State in which it is located and must otherwise have all appropriate State licenses and/or approvals.

Efforts to Clear the Water

As indicated, it is clear that a large portion of the murkiness related to State authorization is specific to the requirement that States have a student complaint process.  And, perhaps the lack of clarity is in reality more the fact that the States do not have such processes defined yet versus an issue with ED and its regulation.  In fact, ED has offered numerous resources on its Program Integrity Questions and Answers – State Authorization Web page.  These include a listing of the various DCLs, a letter to the Governors, and Federal Register notices, in addition to a number of questions and answers (Q&As).  It should be noted that a specific set of Q&As was posted on June 19, 2015, as a stand-alone document that is accessible from the same Web page.  The document is entitled State Authorization Questions and Answers:  June 19, 2015.

However, schools still need to find crystal clear water in regard to this issue.  It is critical to their students being able to receive Title IV funds for attending the school of their choice.  And, although it is acknowledged above that the main issue of difficulty in swimming these waters pertains to the States’ complaint processes, ED has not provided much detailed information to schools, many of which may be at risk.  The peril arises from the fact that ED has not supplied a list of which States have developed an acceptable student complaint process.  Schools are left to fend for themselves in regard to finding out the status of their particular State (or potentially, States, in the case of multi-location schools).  The question could be asked whether ED could provide greater clarity through a format that is easily updated as States finalize their State authorization processes (e.g., via use of a Web page).  Yet, ED’s latest guidance in the Q&As mentioned above simply states—in the response to at least two different questions—that a school should “reach out to their State authorizing agency and FSA to ensure that they are in compliance….”  (Emphasis added.)  It would seem that it would be a simpler task, as well as a more efficient method, for ED to be proactive in this regard rather than waiting for a multitude of schools (hundreds or thousands?) to contact ED with questions about their States’ authorization process having been deemed acceptable.

Still Looking for Translucent Waters

The initiative ED has taken in providing the most recent DCL and Q&As are helpful as reminders.  However, schools are still searching for the clarity necessary to avoid potential dangers lurking in the murkiness that prevails.  There are a number of questions that remain, the answers to which have significant potential for impact on a school from many different facets.  For example:

  • When ED states that schools will be reviewed in the course of ordinary business, will such “ordinary business” also include the upcoming required institutional certification that its gainful employment (GE) programs meet accrediting agency approval, as well as any other Federal and State approvals, including satisfying applicable educational prerequisites for professional licensure or certification requirements in the State?
  • If the State in which a school is located has not had an acceptable State authorization process implemented by June 30, 2015, how long does the “reasonable period” extend during which a school’s Title IV eligibility remains valid?
  • Will ED notify students of a State’s status so that students may make informed decisions as to where they may want to enroll if the lack of approved State authorization for all schools in a State will preclude students from being able to receive Title IV Federal Student Aid in that State?
  • Has ED established requirements that a school must notify its students of the State’s failure to implement an acceptable State authorization process?  If so, at what point must a school notify students when a definition of a “reasonable period” has not been provided?

Thus, we see that perhaps for the first time in the history of Title IV aid that schools and students have potential to be negatively impacted through no fault of their own.  And, there is no definite explanation as to what the impact will be, either short-term or long-term.

As a result of the lack of information being proactively provided, schools may find it to their benefit to follow the advice given in ED’s Q&As:  “reach out to (your) State authorizing agency and FSA (i.e., ED) to ensure that they are in compliance with the regulation.”  Such action, at the very least, will generate significant awareness of the status of the situation nationally, and perhaps will prompt ED and the States to communicate with each other and work toward resolving this issue quickly.  Absent a quick resolution, schools and students will flounder around in relatively shallow water that hides potential danger in its murkiness.



1 The Federal Register, Vol. 75, No. 209; October 29, 2010, pages 66832-66975.
2 Dear Colleague Letter GEN-15-10, June 19, 2015; U.S. Department of Education, Federal Student Aid.

This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.


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