In order to be eligible to access federal student aid programs, colleges and universities are required to receive authorization from the state or states within which they operate. The rise in online postsecondary programs over the last decade created increasingly complicated administrative challenges to state authorization: institutions that sought to enroll “out-of-state” students in their online programs needed to seek authorization from every state in which those students resided. To streamline this process, in 2014 higher education leaders formed the National Council for State Authorization Reciprocity Agreements (NC-SARA), creating a broad network of reciprocity agreements between states. Under these agreements, an institution only needs to be authorized in its home state, and approved by NC-SARA, to be eligible to enroll online students from all member states. As of 2021, 49 states (all but California) and the District of Columbia have joined NC-SARA.

With support of the State Higher Education Executive Officers Association and Arnold Ventures, Ithaka S+R examined the relationship between the enrollment of online students and participation in NC-SARA. Below, we provide an overview of our key findings. We also discuss the implications of expanded online options for students. We conclude with recommendations for policymakers to ensure states maintain authorization standards and for researchers to closely examine student outcomes and enrollment patterns.

Findings from Ithaka S+R’s Report

In our report, Breaking Down Barriers: The Impact of State Authorization Reciprocity on Online Enrollment, we use a difference-in-differences strategy to estimate the relationship between an institution’s participation in NC-SARA and their changes in enrollment of fully-online students and student taking a mix of online and in-person classes (i.e., partially online). On average, we estimate that joining NC-SARA results in 50-100 additional fully-online students, nearly a 10 percent increase, and 120-170 additional partially-online students, roughly a 12 percent increase, enrolled each year. These effects appear to grow over time, likely as colleges have an opportunity to set up and build online programs as well as develop a recruiting strategy to enroll students from these new markets. Moreover, early adopters appear to benefit more from NC-SARA participation. While these larger estimates are partly due to the temporal effects of longer participation periods, it is also possible that early adopters had a competitive advantage to setting up multi-state enrollment strategies. Finally, we do not find evidence that for-profit colleges disproportionately benefit from the reciprocity agreements, when compared to their nonprofit counterparts.

Implications for Policy and Research

As described in the report, we observe that some of these enrollments may come from reductions in online enrollments at non-participating institutions, but much of the growth appears to be new online students. NC-SARA has the potential to expand postsecondary access for students with few options. On one hand, rural students may only have a few institutions or academic programs from which to choose. On the other hand, urban students may live in closer proximity to a greater number of colleges, but for some, their prior academic preparation may mean those colleges are out of reach. Students with full-time jobs or children often require flexibility that is not always available through local in-person options. NC-SARA’s expansion of online education markets may provide historically underserved students additional postsecondary options and may help states meet attainment goals and labor market needs.

Expanding access to postsecondary options by offering more online programs, however, does not necessarily mean the programs are high quality. Evidence suggests that online education may be effective in some contexts, but that underprepared students and those attending for-profit institutions may benefit the least from taking classes online. In fact, students completing a credential at a mostly online for-profit earn $5,000 per year less than students graduating from a public college. Additionally, employers appear to value online credentials less than those from traditionally offered programs. As such, the social returns to online education may not be worth the public or private investment by taxpayers or students.

Our report provides some of the first estimates of how NC-SARA participation increases online access. However, we believe there are still important questions for policymakers to consider regarding the quality of these opportunities. One primary concern with NC-SARA is that it limits the control states have over regulating institutions their residents may attend online and could set up perverse incentives that may lower institutional quality. For example, opportunistic colleges may shop around for a state with the weakest authorization standards in order to gain access to this nearly national online market. Similarly, NC-SARA participation may incentivize states to lower their standards to attract tax-paying for-profit colleges. In an effort to combat these potential outcomes, NC-SARA maintains its own set of standards for participating institutions and colleges must apply and be approved by the organization to participate. We believe policymakers should monitor changes to authorization standards and double down on maintaining stringent requirements that ensure only high quality institutions operate within the state.

Future research must continue to inform regulatory policy by exploring the potential unintended consequences noted above. Researchers should also examine student outcomes for those now attending online programs offered through NC-SARA by out-of-state institutions paying special attention to historically underserved students who have not been historically well-served by online education. Although our findings suggest NC-SARA expands the online market, it is important to understand how the agreement may influence the types of institutions students choose and broad enrollment patterns. It is critical we understand the potential benefits and drawbacks for students to ensure the agreement is providing high-quality postsecondary options.