Proposal Regarding Direct State Authorization Triggers 

from Jillian Klein (Proprietary IHEs), and Erika Linden and Scott Dolan (Private Non-Profit IHEs)

Submitted March 5, 2024

The language below includes proposed modifications and additions (blue text) to the Department’s 

proposed modifications (red text) pertaining to triggering events that would require an institution to 

seek direct state authorization. As explained in more detail below, the proposed modifications are 

intended to tether direct state authorization to specific risk factors as opposed to more arbitrary factors 

such as total enrollment in each state. The proposal also replaces the requirement to obtain direct 

authorization within one year with a requirement to apply for direct authorization within six months, 

which is intended to address the fact that an institution has little control over how quickly a state’s 

direct authorization process operates.

Proposed Language:

§ 600.9 State authorization.

(d) If an institution is authorized to offer distance education in another State 

under a State authorization reciprocity agreement, as defined in § 600.2:

. . .

(4) As a condition of participation, in each participating State in which 

the institution enrolls students, the institution must: obtain within one 

year direct authorization from any participating State where it enrolls 

more than 500 students.

(i) Notify the State within 21 days after—

(A) The institution’s accrediting agency determines that 

institution has experienced significant enrollment 

growth in the State, in accordance with 34 CFR 

§ 602.19; or

(B) The institution is provisionally certified by the 

Department, in accordance with 34 CFR § 668.13(c)(1); 

and

(ii) Apply for direct authorization from any participating State 

that requests the institution to do so within six months after 

receiving such request.

Rationale:

This proposal replaces the 500-student enrollment threshold with two risk-based triggers for requiring 

direct authorization in a state notwithstanding the state’s participation in a reciprocity agreement: 
• The first trigger, an accreditor’s determination that the institution has experienced significant 

enrollment growth, addresses both the accreditor’s role in the triad and the potential risks 

associated with rapid enrollment growth in the state. 

• The second trigger, the Department’s determination that the institution should be provisionally 

certified, addresses both the Department’s role in the triad and indicators that the Department 

has already identified as risk factors, such as failures with respect to financial responsibility, 

administrative capability, and gainful employment standards.

With respect to the first trigger, the Department has identified “significant enrollment growth” as a 

circumstance that accrediting agencies must monitor. Specifically, each accrediting agency “must 

monitor overall growth of the institutions or programs it accredits and, at least annually, collect headcount enrollment data from those institutions or programs,” and the agency also “must monitor the 

growth of programs at institutions experiencing significant enrollment growth.” See 34 C.F.R. 

§ 602.19(c)-(d). Relying on this circumstance as trigger for institutions to provide notification to states, 

which may then choose to require the institution to obtain direct state authorization, serves as a checkand-balance mechanism and helps reinforce the role of the accrediting agency in the triad, while

respecting each state’s role and authority in the triad.

With respect to the second trigger, the Department has identified (and recently expanded) the

circumstances in which a participating institution may become provisionally certified, including when an 

institution does not satisfy financial responsibility or administrative capability standards, when the 

Department determines that the institution is at risk of closure, or when an institution is required to 

post financial protection. The Department has recently provided its rationale for using these 

circumstances as triggering mechanisms for provisional certification and enhanced oversight 

requirements, and the Department should be similarly amenable to adopting that rationale here.

Relying on these circumstances as a trigger for direct state authorization serves as a check-and-balance 

mechanism and helps reinforce the role of the Department in the triad, while respecting each state’s 

role and authority in the triad.

Finally, the proposal replaces the requirement to obtain direct authorization with a requirement to 

apply for direct authorization. Direct state authorization processes can vary significantly by state, and 

the speed of those processes also may vary based on a variety of factors that an institution cannot 

predict, influence, or avoid. In some instances, an institution may expeditiously apply for direct state 

authorization but, through no fault of its own, the institution may not obtain such authorization within a 

one-year timeframe. A requirement to apply for direct state authorization within a shorter 6-month 

timeframe helps alleviate these concerns.