From: Barmak Nassarian, Negotiator for U.S. Military Service Members, Veterans, or Groups

 Representing Them (Primary)

 Carolyn Fast, Negotiator for Consumer Advocates/Civil Rights (Primary) 

To: Department of Education and Negotiation Committee Members 

Date: February 14, 2024

Re: Session Two Proposals on State Authorization and Reciprocity Agreements

This memorandum is provided in response to the discussion question posed by the Department of 

Education in Issue Paper 2: State Authorization, Session 2, which asked: “Additionally, we are 

interested in feedback on how regulations can better distinguish between State authorization 

requirements for approval and renewal and those related to State oversight.”

Federal regulations could recognize institutional participation in a compliant reciprocity 

agreement as state authorization in participating states where the size of an institution’s 

enrollment is below a student enrollment threshold in the state beyond which it would be 

required to obtain direct authorization. This would relieve institutions that provide distance 

education in multiple states from the administrative and financial burdens of seeking direct 

authorization in every state in which it may have only a small footprint. As an additional benefit, 

participating institutions would also be exempted from strictly academic (i.e., non-licensurerelated) state requirements through reciprocity authorization.

Federal regulations could then require all out-of-state institutions authorized through a compliant 

reciprocity agreement to comply with all state oversight requirements for continuing their 

operation in each state. These would consist of state requirements applicable to institutions 

providing education in the state, such as surety bonds, requirements on advertising, recruitment, 

student disclosures, records and record retention, refunds and tuition recovery funds, and all state 

consumer protection laws. This would level the playing field between in-state and out-of-state 

providers, ensuring that out-of-state providers are not given an unfair regulatory advantage 

relative to in-state providers. This is all the more important given the greater risk of predatory 

conduct in online transactions.

Another concern with state authorization reciprocity agreements is that they siphon off funding 

that would otherwise be paid as fees to support state regulators via direct authorization. To 

address this issue and ensure that state regulators have adequate capacity to meet their oversight 

responsibilities over Title IV institutions, federal regulations should require that reciprocity 

agreements impose an adequate fee on participating institutions. The fee would consist of two 

components: a fee retained by the reciprocity organization for competent administration of the 

terms of its agreement, and a state regulatory fee based on the total number of students enrolled 

in each institution’s distance education programs in all participating states under the agreement. 

The state regulatory fee would be distributed to state regulators in participating states based on 
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their share of students enrolled in participating out-of-state institutions through the reciprocity 

agreement. This would allow state regulators to carry out oversight with regard to participating 

out-of-state institutions providing distance education in their state. The state regulatory fee on 

each institution should be commensurable with average fees charged by participating states on an 

institution with an enrollment equal to the enrollment of each institution’s entire out-of-state 

enrollments it secures through the reciprocity agreement.