Starting a School or College in the US: 10 Key Questions and 10 Mistakes to Avoid

By Dr. Ramin Golbaghi · Updated October 2026

Starting a school or college in the US begins with the state. Every state decides who may run a private college, university or career school within its borders, and that approval comes before the first enrollment, the first tuition payment and any accreditation. Dr. Ramin Golbaghi, who wrote this guide, founded and led a private postsecondary institution in Southern California and obtained all six of its approvals himself.

This guide is for founders and investors planning a private college, university or career school in the US, including founders outside the country. It sets out the requirements in order, answers the 10 questions founders ask first, and lists 10 mistakes to avoid. Private K-12 schools follow different state rules and are not covered here.

Requirements to start a college or career school, in order

The agencies differ by state. The order comes from each approval’s eligibility rules. ACCSC and DEAC, for example, want state approval and a record of operation first, and Title IV certification wants accreditation and, for for-profit schools and postsecondary vocational institutions, two years of operation.

#	Step	Who decides
1	Plan on paper: programs, level, delivery, location, owners, budget	You
2	Legal entity, registered agent, Employer Identification Number (EIN); Form 1023 for a nonprofit	State business filing office; IRS
3	State route: degree or non-degree, exemptions, name limits	State agency rules
4	Choose the accreditor you will apply to later	You
5	Application file: catalog, enrollment agreement, policies, faculty, facilities, finances	You
6	Licensing board approval, if the program leads to a license	State licensing board
7	State approval	State agency; in California, the Bureau for Private Postsecondary Education (BPPE)
8	Enroll, teach, graduate the first class	You
9	Institutional accreditation	Recognized accreditor
10	Title IV certification	US Department of Education

Step 6 comes before step 7 because, in California, BPPE’s application asks for the licensing board’s approval. Some approvals sit beside this sequence and apply only to some schools: SEVP certification, VA education benefits approval and WIOA/ETPL eligibility (the Workforce Innovation and Opportunity Act’s eligible training provider list).

How do I start a school or college in the US?

Starting a school or college means launching a business and a regulated educational institution at the same time. You must:

• Form a legal entity
• Design an academic program
• Prepare a student catalog
• Hire qualified faculty
• Apply for state approval

There is no national approval. Each state names its own agency. In California it is BPPE; elsewhere it may be a higher education commission, a department of education or a workforce agency. Texas, for example, uses separate agencies for degree-granting colleges and career schools. Our page on state approval requirements in all 50 states links to a page for each state.

The agency expects to see a finished school on paper before it approves anything. The full sequence is in the requirements table at the top of this guide.

Do I need state approval before enrolling students?

Yes. Enrolling students or collecting tuition without approval puts the school outside the law in its own state, unless it qualifies for an exemption. This applies whether your school is in-person or online.

In California, a private postsecondary institution that is not exempt cannot open, conduct or do business without a BPPE approval to operate. Federal rules point the same way: to take part in federal student aid, an institution must be legally authorized by the state where it is located.

Certificate and career programs count too. Do not assume a school with no degrees and no federal aid escapes oversight: California’s law, for example, covers non-degree programs as well.

Exemptions are narrow. California exempts some schools owned by nonprofit religious corporations that teach only that organization’s principles, with conditions on the degrees they award. Check your state’s rules before relying on one.

What’s the difference between licensing and accreditation?

State approval, often called a school license, is the state’s legal permission to operate. Accreditation is a voluntary, nongovernmental review of quality that comes after it.

The US Department of Education calls accreditation “a voluntary, nongovernmental process” and “does not accredit individual educational institutions” itself. Accreditors such as the Accrediting Commission of Career Schools and Colleges (ACCSC) and the Distance Education Accrediting Commission (DEAC) require state approval before they review a school.

• State approval: granted by a state agency, such as BPPE in California. Required before the first enrollment, unless the institution is exempt.
• Institutional accreditation: granted by a private accreditor recognized by the US Department of Education, such as ACCSC or DEAC. Voluntary, but needed for Title IV certification and, in California, for degree programs.
• Programmatic accreditation: reviews one program in one field, such as nursing.

Accreditation is one requirement for Title IV certification, not the only one; the others include state approval, eligible programs and, for some schools, two years of operation. In California, an unaccredited institution that wants to offer degrees gets only provisional approval, for no more than two degree programs, and must become accredited under a BPPE-approved plan or its degree programs are suspended. Our guide to the types of accreditation explains the rest.

Can I start an online school?

Yes. State approval still starts in the state where the school is legally located, ven with no campus. The school also needs:

• Build courses specifically for online delivery
• Implement a Learning Management System (LMS)
• Track attendance and assessments securely
• Ensure accessibility for students with disabilities

Students in other states raise a second question. For federal student aid, a distance education provider must meet the requirements of each state where its students are located, or be covered by SARA, the State Authorization Reciprocity Agreement.

A new school cannot use SARA at first. Under the SARA Policy Manual, only degree-granting institutions in a member state, accredited by a recognized accreditor, can take part; candidates for accreditation are not eligible. California does not participate, and SARA has no effect on professional licensing requirements.

A fully online school also cannot practically enroll F-1 or M-1 students because of federal limits on online classes, and its accreditor has to fit the model: DEAC, for example, accredits institutions that teach mainly at a distance.

How much money do I need to launch?

There is no honest single figure. It depends on the state, the programs, how they are delivered and how long the school runs before tuition covers its costs. You must prove capacity. In California, BPPE grants an approval to operate only after verifying that the applicant “has the capacity to satisfy the minimum operating standards.”

What gets checked, in writing:

• Financial statements. California’s application asks for reviewed statements, and ACCSC asks for two years of them when a school applies for accreditation.
• An operating budget and enrollment projections that still work if enrollment comes in low.
• A financial guarantee in some states, such as Tennessee’s continuous surety bond (a letter of credit or cash deposit can replace it) and Virginia’s surety instrument for certified schools.

Budget for the costs founders miss (mistakes 3 and 5 below), plus state and accreditation fees and curriculum development; our guide to what curriculum development costs breaks down that line.

What type of school should I open?

Start from the credential your students need for the job they want, then check what that credential triggers. Degree programs carry more requirements than certificate programs, and in California an unaccredited school can offer degrees only under provisional approval. Four choices shape what follows:

• Degree or non-degree. A degree changes even the name. In California, an institution generally may not call itself a “university” unless it awards master’s or doctoral degrees. New York bars the names “college” and “university” without degree-conferring powers unless the Board of Regents permits it in writing.
• Programs that lead to a license. The licensing board approves the program too; California’s Board of Registered Nursing approves pre-licensure nursing programs. See our guide to starting an allied health school.
• For-profit or nonprofit. A nonprofit school files the full IRS Form 1023, since schools cannot use Form 1023-EZ. Only public and nonprofit institutions can use preaccreditation toward Title IV certification.
• Program length. ACCSC, for example, requires at least one program of 300 clock hours or more.

Some founders start with a certificate program and add degrees later. For trade programs, see how to start a vocational school.

Can non-US citizens open a school?

Yes. What changes for a founder outside the US is mostly the company set-up, which comes before the state application:

• A US legal entity, formed with the state’s business filing office (the Secretary of State in California).
• A registered agent for service of process. In California, the agent must live in the state or be a registered corporate agent.
• An EIN from the IRS. The online application needs the responsible party’s Social Security number (SSN) or individual taxpayer identification number (ITIN). A responsible party with neither files Form SS-4 by fax or mail.
• Owner and officer disclosures. State applications ask who owns and controls the school and who will run it.

Two points founders mix up: owning a US school does not give the owner a visa (ask an immigration attorney), and enrolling international students takes SEVP certification, a separate approval for the school.

Do I need a physical location?

For hands-on programs, yes, and the space has to match what the catalog promises. For fully online programs, it depends on the state.

If the catalog promises practical labs, the school needs a real lab; a video call does not count. Facilities and equipment appear in 80 of the 205 denials on BPPE’s public Denied Schools list (AEC’s count, October 2026), and our article on why BPPE denies applications breaks down the rest.

An online school still needs a legal address in its approving state and a place for records; California requires its schools to keep records in California. A school that wants F-1 or M-1 students needs in-person instruction: federal rules count at most one online class or three credits per term toward an F-1 student’s full course of study, and none for M-1 students.

How long does it take to get approved?

Plan without a fixed decision date. California’s law sets processing targets for BPPE but lets the bureau set an appropriate timeline instead, and other states have their own rules. What you control is a complete, consistent file, because every deficiency letter adds a round of review.

The longer clocks start after state approval. They are eligibility periods, not processing times:

• ACCSC requires two consecutive years of continuous operation under state approval, a graduating class from the longest program, and two years of financial statements.
• DEAC requires 12 consecutive months of enrolling students and two consecutive years under the current ownership and legal status. DEAC has no preaccreditation status.
• Title IV certification requires a for-profit school or postsecondary vocational institution to have been legally authorized and giving the same instruction for at least two consecutive years, on top of accreditation.

In practice, a new for-profit college runs on tuition, savings and private financing for at least two years. Our page on the initial accreditation process covers what happens once a school is eligible.

What’s the first step I should take?

Write the plan before you file anything. Settle four things on paper: what you will teach and at what level, where the school will be legally located, who will own and run it, and which accreditor you will eventually apply to.

The fourth one surprises founders. An accreditor’s eligibility rules, such as program length, delivery mode and years of operation, shape the programs you submit for state approval. Choosing the accreditor before the catalog is written costs less than rewriting the catalog later.

Then talk to people who have done it: the state agency (California’s BPPE publishes an application workshop guide), a school owner in your field, or a consultant. To compare regulators state by state, see the best states to open a university.

10 mistakes founders make when starting a private college or university

Ten mistakes that set new private institutions back, and what to do instead.

1. A business plan with no regulatory chapter

A real plan covers the market, the approval route, the money and the first programs. The regulatory part is the one founders tend to overlook, yet it sets the order of every step in the requirements table. Settle it before the name or the logo.

2. Opening before the systems exist

Academic policies, HR procedures, curriculum tracking, the student platform and transcripts all need to work on day one; in California, transcripts are kept permanently. A policy written after students arrive can contradict the catalog they enrolled under.

3. Budgeting for opening day instead of the first two years

Founders price furniture and laptops, then discover months of payroll before tuition arrives. Tuition from the first ten students will not keep a school afloat. A for-profit school should budget for at least two years without federal student aid.

4. Saving money on faculty and curriculum

Instructors, curriculum and the learning environment are what students notice and talk about. Cut there, and retention and referrals fall. Dr. Golbaghi reviews every curriculum AEC develops himself; see our curriculum development services.

5. Leaving recurring costs out of the budget

The costs that get missed: the learning platform and its upkeep, IT support, software licenses, benefits, payroll taxes, insurance, utilities, repairs and marketing. All of them recur. Ask people who have run a school what surprised them.

6. Expecting students to find the school

A social media post is not an enrollment plan. Build a pipeline, track every campaign and know your conversion rates, on the channel your students already use.

7. Letting one side of the house run the school

When finance decides alone, quality suffers. When the academic side spends without limits, the money runs out. Both need a seat where decisions are made; our page on higher education board governance explains how a board divides that work.

8. No plan for the week things break

The risks are ordinary: a week without internet, a data breach, a storm that closes the campus. Write down the backup systems and how classes continue. As Dr. Golbaghi often says, “no plan for a crisis is a crisis waiting to happen.” Our risk management page covers crisis planning.

9. Promising 300 students in year one

A target like that makes a school feel like a failure before it starts. Plan for small first cohorts and grow one cohort at a time.

10. Operating without state approval

It is the most dangerous mistake on the list. A school that is neither approved nor exempt is not legally operating, whatever its website says.

Starting a school: frequently asked questions

Prefer to listen? Three podcast episodes on starting a school

Dr. Golbaghi and Sam Askari talk through these questions and mistakes in three episodes of Accreditation and Beyond, AEC’s podcast. Spotify links are in the sources.

Episode 10: your FAQ deep dive (12 minutes)

The ten questions founders ask first: the launch process, state approval, money, online schools and the first step, among others.

Episode 2: 10 mistakes to avoid, part 1 (8 minutes)

Mistakes one to five: no real business plan, no systems before the first day of class, underestimating what it costs to stay open, cutting corners on faculty and curriculum, and leaving recurring costs such as technology, benefits and repairs out of the budget.

Episode 3: 10 mistakes to avoid, part 2 (6 minutes)

Mistakes six to ten: no marketing system, decisions left to either the business side or the academic side, no crisis plan, enrollment goals the school cannot support, and operating without state approval, which the hosts call the most dangerous of the ten.

Start with the route and the order

Bring the programs you want to offer, the state you are considering and how you plan to deliver them. You’ll leave knowing which agency reviews your school first and where our accreditation consulting fits. Founders in California can also see how our BPPE consulting works.

About the author

Dr. Ramin Golbaghi is the Founder and CEO of Accreditation Expert Consulting. He founded and led a private postsecondary institution in Southern California and, as its owner, personally obtained its six approvals: BPPE approval to operate, ACCSC institutional accreditation, Title IV certification, VA education benefits approval, WIOA/I-TRAIN workforce eligibility and SEVP certification.

source

• U.S. Department of Education, Accreditation in the U.S.
• Federal Student Aid, FSA Handbook 2026–27, Institutional Eligibility, and the federal regulations on institutional eligibility and on F-1 and M-1 students.
• Accrediting Commission of Career Schools and Colleges, Standards of Accreditation (July 2026), and Distance Education Accrediting Commission, Accreditation Handbook (32nd edition).
• National Council for State Authorization Reciprocity Agreements, SARA Policy Manual, and the California Assembly Committee on Higher Education analysis of SB 790 (June 2025).
• California Private Postsecondary Education Act and BPPE regulations (2026 editions), and BPPE’s Denied Schools list.
• Internal Revenue Service; California Secretary of State; California Board of Registered Nursing; Tennessee Higher Education Commission; Virginia Administrative Code (SCHEV); New York Education Law.