Memorandum

To: U.S. Department of Education and Negotiated Rulemaking Committee

From: Carolyn Fast, Barmak Nassirian

Date: March 16, 2022

Re: Preserving the Department’s language on state consumer protection laws

In Issue Paper 6: Certification Procedures - Session 3, the Department proposed new 

language requiring schools to comply with consumer protection laws in all states where they 

operate, with an exception for “State requirements for obtaining authorization” that are 

inapplicable pursuant to a reciprocity agreement.1

 NC-SARA concedes that the Department’s 

proposal would preserve member schools’ ability to submit “a single institution application and a 

single fee” to operate in multiple states, thus preserving the key function of the reciprocity 

agreement. But NC-SARA still objects, asserting in their March 11 letter to the Committee that 

participating schools should be exempted from state laws beyond those related to obtaining 

authorization. 

The Department’s proposed language should be retained. The extension of reciprocity to 

consumer protections beyond institutional authorization is unnecessary and inappropriate: 

reciprocity should provide a higher, not lower, level of consumer protection. 

Currently, NC-SARA’s policies require states to waive consumer protections specific to 

higher education. NC-SARA’s rule, together with NC-SARA’s lack of strong consumer 

protections, creates a two-tiered system in which online students have significantly fewer 

protections than in-person students in some states. 

NC-SARA’s insistence that reciprocity should exempt schools from other laws goes too 

far. Many entities must comply with state law in every state in which they do business (for 

example, student loan servicers, automakers, and financial product providers must comply with 

state laws in each state where they do business). It is reasonable to expect schools to do the same. 

Consumers certainly would not expect that some schools are exempt from consumer protection 

laws. 

1 § 668.14(a)(32)(iii) would require participating schools to comply with “all state consumer protection laws, 

including both generally applicable State laws and those specific to educational institutions” in each state where the 

school offers programs, “except where State requirements for obtaining authorization are inapplicable pursuant to a 

State authorization reciprocity agreement.”
2

NC-SARA’s recent letter to negotiators asserts that forcing states to waive enforcement 

of state consumer protection laws isn’t a problem because NC-SARA itself imposes consumer 

protection requirements on participating schools. However, NC-SARA imposes extremely weak 

requirements that are no substitute for state consumer protection laws. NC-SARA has few 

substantive consumer protection requirements at all, beyond those already required by federal 

regulations. For example, NC-SARA highlights in its letter that NC-SARA requires 

participating schools to be accredited. However, schools must be accredited to obtain Title IV 

funding, so this requirement adds little in the way of consumer protections for most students. 

Moreover, NC-SARA does not have the kinds of protections found in many state consumer 

protection laws, such as minimum cancellation periods, non-federal funds refund requirements, 

and contract requirements. The lack of strong consumer protection standards in NC-SARA’s 

policies leaves students vulnerable and ties states’ hands. 

NC-SARA’s broad waiver requirement incentivizes online schools to locate their home 

base in states with the least protections, creating a “race to the bottom” for student protections. 

State attorneys general and representatives of state agencies share this concern: a bipartisan 

group of 25 State AGs highlighted this concern in a recent letter to NC-SARA.

The Department’s proposal preserves the reciprocity benefits of NC-SARA by ensuring

that schools can continue to obtain authorization to operate in multiple states through one 

application and fee. The Department’s proposal would also ensure that states have the ability to 

protect online students and that online students have the same protections as in-person students. 

We strongly support the Department’s proposed language and object to modifications, such as 

the modification proposed by NC-SARA, which would unnecessarily and inappropriately 

exempt NC-SARA schools from complying with consumer protection laws in each state where 

they operate.