Education Dept. OKs Federal Funds for Western Governors U., Suggesting Rule Changes for Online Programs

For Western Governors University and the U.S. Department of Education, what amounts to “regular and substantive interaction” between a professor and students was a $713-million question. Now, as the department begins the negotiated rulemaking process to reach agreement on proposed changes in regulations for higher education, that question is on the table again.

Last week the department restored its approval for Western Governors, a nonprofit online institution that uses competency-based education, to receive federal financial aid for its students.

This was after a blistering 2017 audit by the department’s inspector general, requiring the university to return $713 million in aid. It was deemed not eligible for that aid because students lacked the necessary level of interaction with instructors.

The department now says Western Governors does not have to pay back the money.

Federal regulators have yet to come up with a clear definition for what constitutes as a “regular and substantive interaction.” As more colleges use online courses, that definition is increasingly important.

Competency-based education courses have become increasingly popular among a variety of institutions, from online institutions to digital learning programs crafted by research universities.

A major challenge facing policy makers is to ensure that the new regulations will offer a good education for students, in addition to providing them with significant protection from predatory programs, said Van L. Davis, who is with Foghlam Consulting, a higher-education advisory firm.

“They’re trying to have enough parameters for protection, but not enough to prevent higher education from being innovative and developing programs that will make it more accessible and affordable for students and taxpayers,” he said. “That’s probably why the language isn’t there yet, because it’s really hard to do.”

Some experts want more flexibility in rules outlining student-instructor interaction, while others believe there should be stronger oversight, to protect students from fraud.

Innovative teaching methods in online classes, like a faculty model with multiple instructors in one course, could potentially put some institutions at risk of losing federal financial student aid policies under current law, especially for those that offer competency-based education, Davis said.

“There still is not any legal definition of competency-based education,” he said. “There is really no regulatory guidance.”

Competency-based programs allow students to learn course materials at their own pace, as opposed to to a traditional learning environment with scheduled classroom time. Whether these online programs can receive federal student funds largely depends on a clause in the Higher Education Act that requires “regular and substantive interaction” between instructors and students.

And how that clause is interpreted got more complicated with Western Governors’ audit.

Western Governors ran into trouble when its accrediting agency found that it did meet the “regular and substantive” standard, but the Education Department’s inspector general determined that it did not. The department proposes reducing accreditation oversight as part of negotiated rulemaking, to encourage more affordable and innovative learning models.

“When we get these programs, like competency-based education, that look very different than traditional higher education, you’ve got a team of teachers rather than a single instructor,” Davis said. “You run into a lot of problems with this, and we get that in WGU’s original audit, where the inspector general actually creates her own definitions of regular and substantive interaction.”

‘Gigantic Trade-Off’

Many competency-based education programs rely on a network of instructors and mentors to craft curricula and assessments and to communicate with students. Accrediting agencies require these programs to have instructors with subject-matter expertise to fulfill the interaction requirement.

Some critics are wary of giving accreditors more leeway and believe that federal regulations for online education should be more specific.

“I think that’s certainly the gigantic trade-off,” said Jason Delisle, a fellow at the American Enterprise Institute who studies higher-education financing and student- loan programs. “I really think the best way to deal with [accreditors] is instead of accounting by counting time and checking how many times are [students] are meeting [with instructors], … is to ask questions about outcomes. If the outcomes are satisfactory, those programs should be eligible.”

Both Davis and Delisle said the “regular and substantive interaction” clause was initially too vague and ambiguous — a conclusion that the department agreed with in its final audit of Western Governors last week. There was no clear legal definition of student-instructor interaction and what constitutes “regular and substantive,” it said.

Kelvin Bentley, a digital-learning consultant with experience at the University of West Florida, wants the rulemaking process to comprehensively address the clause.

“My hope is that through negotiated rulemaking, there will be a path forward where accreditors will have much more flexibility to define what regular interaction looks like,” he said, “or [for the department] to provide definitions that are flexible for schools to show how they are meeting the standards as higher education gradually evolves.”

Follow Terry Nguyen on Twitter at @terrygtnguyen, or email her at terry.nguyen@chronicle.com.