Skip to main content

Out of State Operations

A university that conducts interstate activities or has operations in other states is subject to the relevant laws and requirements in those out-of-state jurisdictions in addition to the laws of the state where it is physically located. Thus, it is important to understand how state laws differ and when certain activities trigger compliance obligations.

Some common situations in which operations may cross state lines and varying state laws should be considered include fundraising, real property ownership, product sales (either online or on the ground), distance learning, partnerships with out-of-state schools, internships, alumni association activities, bank account holdings, and employment of foreign residents. A school with a business presence in another state may need to register with that state as a corporate entity, pay state taxes, and file state tax returns.

The advent and growth of online education brought about increasing regulation of online education programs and a patchwork of different state laws requiring authorization of programs. Each state has its own laws governing the provision of postsecondary education. Starting in 2011, the federal government issued its own requirements regarding state authorization of distance or correspondence education. Since then, several stakeholders and states, including Hawaii, came together to form the State Authorization Reciprocity Agreement (SARA) to streamline the state authorization process for online education providers.