State Licensure for Higher Education – What Does My School Need to Do?

For many just starting out in higher education (and, honestly, for many who have been here for a while), navigating the intricate web of state licensure can feel difficult. It can be kind of like doing a jigsaw puzzle with a toddler, some pieces seem to “hide from you” just when you need them most. But don't worry – our state licensure expert, Andy, knows where the pieces are hidden. Below, he has answered some of the most common questions we get about higher education state licensure.

Question: Why are licensure requirements different for every state?

If something’s good enough for Wyoming, shouldn’t it be good enough for Connecticut?

Answer: Decades ago, Federal legislators decided that states should be the first stop in overseeing the establishment of legitimate higher education institutions (i.e., each state is responsible for protecting its own higher education consumers). Beyond a few specific requirements (like a consumer complaint process), states had the autonomy to structure the state licensure process as they deemed fit.

Each state legislature defined their own expectations, regulations, rules, exemptions, and processes. So, it is understandable that 50 state legislatures with different perspectives, state budgets, and constituent needs would develop varied state licensure requirements. Then, consider the fact that each state agency has since had decades of lessons learned, which has led to the evolution of its processes over time.

Question: What’s NC-SARA and why do we need it?

Answer: The National Council for State Authorization Reciprocity Agreements (NC-SARA), according to their website “is a private nonprofit organization that helps expand students’ access to educational opportunities and ensure more efficient, consistent, and effective regulation of distance education programs.”

Federal legislation explicitly says that distance education must adhere to the licensure requirements of all states where students reside, even if the institution offering the program does not maintain a physical presence in the state. This means that states are not just in charge of overseeing their local schools, but also for overseeing any other higher education institutions offering online programs to their residents.

States had two choices: they could either provide exemptions for institutions without a physical presence in their state (which some did), or they could create a set of regulations for online universities and colleges to follow (which would mean increasing staff to manage the influx of licensure applications from institutions physically located outside of their state). Faced with these options, the higher education community and state regulators went full infomercial and exclaimed “there’s gotta be a better way!”

NC-SARA set minimum standards (like minimum composite score and requirements for accreditation) that each state licensure agency can voluntarily agree to adopt. This means that Montana no longer had to worry about whether an online institution based in Virginia was offering Montana residents programs of dubious quality. Montana knew that if the institution was a member of NC-SARA, it met the established standards for offering quality programs. States then adopted legislation allowing for reciprocal approval for all NC-SARA participating institution to enroll students in their state without additional licensure requirements.

As of the date this blog was written, “more than 2,200 institutions in 49 member states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands all voluntarily participate in SARA” (source).[1]

Question: I want to establish my school in California. How concerned should I be about the fact that California does not participate in NC-SARA?

Answer: California has consistently and repeatedly stated that they have no intention of joining NC-SARA. So, if you are interested in starting a college or university in California that will serve students who reside in other states, you will be responsible for complying with the individual authorization or exemption requirements for each state. Trust me, between sunshine all year and having access to consumers in the fifth largest economy in the world, I get the appeal. But know that the administrative burden of state licensure is significant, between tracking and paying annual licensure fees, maintaining a working knowledge of applicable requirements, and staying current on statutory changes.

Question: What if my school only offers certificates or non-degree programs? Can my school become a member of NC-SARA?

Answer: Unfortunately, institutions that only offer certificate or non-degree programs cannot become a member of NC-SARA and, currently, no reciprocity agreement exists for higher education institutions that only offer certificate or non-degree programs. So, if you are interested in starting a technical, career, or trade school, a bootcamp, or any other non-degree higher education entity that will serve students online outside of your home state, you will be responsible for complying with the individual authorization or exemption requirements for each state.

Question: What if I’m not interested in accreditation or Title IV? Do I still need to worry about state licensure?

Answer: Yes. To operate as a higher education institution in the United States, state licensure is the first stop on that journey. If your planned scope of educational offerings is so narrow that you are wondering if they even count as “higher education”, that is certainly worth looking into. You will need to validate whether state licensure is required by the applicable entity in your state. Or, if you have questions about this or would like some help navigating the requirements that apply to you, feel free to contact your friendly neighborhood consultants at EduCred Services.

Question: If we’re a religious institution, aren’t we exempt from state licensure?

Answer: Some states provide statutory exemptions from licensure requirements for religious institutions, some have exemption application processes, and others choose to regulate religious institutions just as they do with any other college or university. It is always best to verify the applicable state licensure requirements in your state instead of assuming that your institution is exempt from oversight.

Question: So, what do I actually need to do to get my school licensed in a state?

Answer: Each state’s requirements and processes differ. If you do not have the administrative staffing available to conduct the necessary research and navigate this process, seeking the help of a consultant (Hi!) may be the right option for your institution.

Question: Are there different requirements for licensure if an institution is non-profit vs. for-profit?

Answer: There can be. But as a rule of thumb, you should not assume that the burden of licensure is less for non-profit higher education institutions. It is always best to review the applicable state licensure requirements without assuming that its non-profit status alone makes your institution exempt from state oversight.

Question: We have students who live in a state where we don’t have licensure or exemption. (We thought licensure in our home state was all we needed.) What should we do?

Answer: The Federal legislation makes it very clear that higher education institutions must comply with state requirements when offering distance education in a state even where an institution is not physically located. So, your institution should create a list of all the states where your current students reside, conduct a state-by-state analysis of applicable state licensure requirements, and start chipping away at this compliance gap as soon as possible.

We understand that this process can feel opaque and stressful, which is why EduCred Services is passionate about helping institutions navigate this process and return to full compliance as efficiently (and quickly) as possible.

[1] Important Side Note: NC-SARA participation is currently limited to institutions who are accredited and who offer at least one degree program. Non-degree institutions and institutions based in California (see below) are not eligible to take part in this reciprocity agreement.