The primary objective of this study is to aid policy makers - state and federal officials, accreditation officials, and university administrators - in making decisions concerning the regulation of postsecondary external degree programs. The purpose of this project is to identify the legal and regulatory issues that the operation of these programs create and to recommend alternatives for the design of a regulatory framework that will permit experimentation and growth. The methodology employed consisted primarily of analysis of primary legal sources (statutory analysis; case law analysis; and the use of secondary materials such as law review activities) as well as books and studies on the external degree movement. The study is organized into seven sections: (1) a description of what is happening to traditional, accredited institutions of higher education; (2) definitions; (3) case of quality control of external degree programs and nontraditional study; (4) assessment of state legislation that might have an impact on external degree programs; (5) description of the role that the accreditation associations play in controlling the quality of postsecondary education, with an assessment of their capability to respond to external programs; (6) description of the present federal roles regulating external degrees; and (7) a summary. Supporting appendixes include a summary of the laws that govern out-of-state accredited institutions, and analysis of each state's incorporation requirements, accreditation association guidelines, and a resource bibliography. (Author/PG)