Emerging Path to Federal Aid

A scenario in which a student can use a Pell Grant to help pay for a bundle of edX courses no longer seems so far-fetched.

Political support is building for a system to encourage and oversee higher education upstarts that don't look or act like colleges, such as online course providers and coding boot camps. And these emerging players soon may have a pathway to accreditation and even federal financial aid eligibility, albeit in limited or experimental form.

There are many differences among this group, which includes Udacity, General Assembly, StraighterLine and other noninstitutional providers. But none of these companies offers degrees or operates within the heavily regulated confines of traditional colleges.

Instead, their students can earn noncredit certificates, badges or credit recommendations by completing individual courses or programs of study. In some cases they offer “microcredentials” that are linked to skills or competencies that employers seek in the hiring or promotion of their workers.

Take Udacity's so-called nanodegrees. The online provider designed the curriculums for those programs in collaboration with companies like Google and AT&T, which recognize Udacity's nanodegrees as genuine credentials that signify what a completer knows and can do. The programs include a portfolio of projects and a few individual courses. They cost $200 per month and take six months to a year to complete.

General Assembly's offerings are a different twist. Its 10-week course on back-end web development, for example, costs $3,500. An instructor who works in the industry teaches a three-hour in-person class three times a week. Students are expected to master core programming fundamentals and web development with Ruby on Rails, an open-source web framework.

This sort of flexible, short-term approach to higher education is attracting students and praise from lawmakers on both sides of the aisle. In particular, noninstitutional providers have won fans for being responsive to the needs of employers. Some faculty members at traditional colleges, however, have been dubious of agreements in which outside entities provide instruction.

Yet this group's inability to accept federal financial aid can keep lower-income students from enrolling. And without access to federal funding, the companies at some point will reach a limit for growth and revenue in the U.S.

Accreditation, from either a regional or national accrediting agency that the U.S. Department of Education recognizes, is a requirement for federal aid eligibility. Several prominent politicians have expressed interest in creating alternative pathways to accreditation, including President Obama and Senator Lamar Alexander, the Tennessee Republican who heads the Senate's education committee.

“While these new entrants to higher education may offer students low-cost and high-quality learning options, they generally don’t fit the mold of traditional accreditation,” Alexander's staff said in a white paper that his office released in March. “They aren’t aligned with the current accreditation regime’s requirements of tenured faculties, award of formal degrees or certificates, campus facilities, or typical governance structures.”

Alexander's 17-page paper is one of three documents his staff produced on reform ideas for the reauthorization of the Higher Education Act, the law that governs federal financial aid. A spokeswoman for the committee said the papers are designed to spark a conversation, and that the senator is seeking feedback from the academy on the ideas he floated.

The accreditation document gives some clues about changes to accreditation that could occur even without legislation or congressional action. And some of the language echoes that of department officials, such as Under Secretary Ted Mitchell, who have said they want to encourage the development of high-quality, low-cost providers -- including those that lack accreditation.

The department recently brought in Paul LeBlanc, president of Southern New Hampshire University, for an unpaid three-month stint as an adviser. One task the department said LeBlanc is helping tackle is working with officials there to explore different accreditation pathways.

Judith Eaton, president of the Council for Higher Education Accreditation (CHEA), said there is more energy in Washington around encouraging innovation through accreditation than she has seen previously. There is a “willingness to change the fundamentals,” Eaton said.

“The Alexander paper certainly leaves the door open,” she said. “That to me is a signal that they're ready to consider different forms of quality review.”

Legislation or Experimentation?

Senator Alexander describes three ways for nontraditional providers to receive the sort of confidence-inspiring “quality review” that the current accreditation process is supposed to give students and regulators about college programs.

One approach would be to authorize a willing regional, national or specialized accrediting agency to take on the job, the paper said. Several sources said the WASC Senior College and University Commission, a regional accreditor, could be a possibility.

Another alternative would be for the U.S. secretary of education to broker agreements with states to create their own accreditors. Senator Mike Lee, a Utah Republican, last year introduced a bill backing this idea.

Finally, Alexander's paper said the feds could support the creation of a new accreditor to focus on approving innovative providers. The federal government could provide seed money for such an effort. And after two years, the new accrediting agency could pursue a stamp of approval from the Education Department and the National Advisory Committee on Institutional Quality and Integrity (NACIQI), which advises the secretary of education on accreditation.

“These entities may have a set of broad recognition guidelines to reflect the diversity and uniqueness of knowledge providers and could eventually seek recognition from the Department of Education for federal student aid eligibility,” Alexander said.

That means a new accreditor would become a gatekeeper to federal aid, as are currently approved accreditors.

Many questions remain about how any of these options would work. For example, as Alexander's paper said, would an accreditor review individual courses from a nontraditional provider or focus on the provider itself?

Likewise, it's unclear if any of these statutory changes have the political support to become law in a reauthorized Higher Education Act, which could be years away.

But the department could move sooner through its Experimental Sites Initiative. It appears to be seriously considering this approach. Under this program, the feds can loosen regulations for participating institutions so they can experiment while still being eligible for federal aid.

One possible idea, said several experts, would be for the department to allow accredited colleges to partner with coding academies or MOOC providers on programs of study. That way, those noninstitutional providers could plug into the host institution's existing federal aid-eligible system. Students then could use federal aid to pay for some, or all, of the price of a bundle of courses from edX or a certificate from a coding academy.

Currently, many colleges contract with outside providers for portions of degree programs -- sometimes with online enablers like 2U. But federal regulations require that less than 50 percent of academic programs be outsourced to nonaccredited, noninstitutional providers. As a result, many enablers focus on marketing and technology rather than course preparation or grading.

However, the 50-percent requirement could be waived under experimental sites. By lifting the cap, participating colleges could create credentials based on student learning from multiple noninstitutional providers. For its part, the host college could include various forms of supports for students, such as counseling, advising, career support or transcript services.

The feds likely would put certain constraints on such experiments, said Eaton, to keep them from backfiring. That might include performance requirements around student outcomes or limits on aid.

Eaton said an experimental sites project with those general parameters is a possibility, given the broad interest in noninstitutional providers.

Mike Goldstein, a partner with the Cooley law firm and an expert on higher education, agreed. He said, “There's a strong likelihood of an experimental program.” However, he said that effort is more likely within a reauthorized Higher Education Act.

Tying federal aid to noninstitutional programs of study, which do not rely on the credit hour and instead are based on competencies, would be a profound, controversial change for higher education.

“That would be transformative,” said Goldstein. “Competency-based education really is the wedge issue.”

Momentum and Resistance

Not all of the new players are clamoring for federal aid eligibility, which falls under Title IV of the Higher Education Act.

Jake Schwartz, the co-founder and C.E.O. of General Assembly, said Title IV is a big part of the problem with traditional higher education. Federal aid tends to contribute to ballooning costs and the industry's “long-term debt model,” he said. “That's the wrong side of history to be on.”

The third-party-payer approach also leads to what Schwartz said is a lack of accountability. And he said he would worry about what an unlocking of Title IV would do to the emerging segment that General Assembly helped create.

“In a world where that happens, we would have to pursue it because somebody would,” Schwartz said. “Government money is too hard to pass up.”

General Assembly would rather work outside of the bureaucracies of the federal government and traditional higher education. The company this year will roll out its first credential. NPR reported that the test-based microcredential is based on software-related tasks that partner employees, such as GE and PayPal, will review. It will be free and open to anyone, not just General Assembly's students.

Even so, new partnerships between companies like General Assembly and accredited colleges are being forged.

The Fullbridge Program, a noncollege start-up, last year teamed up with Concordia University Chicago to create a 15-credit graduate certificate in business fundamentals, which is aimed at veterans of the U.S. military. And last October, Galvanize, a technology-focused academy with six campuses, announced a partnership with the University of New Haven to offer an accredited master's degree in big data.

If the Education Department does move forward with an accreditation experiment, it could pave the way for more such partnerships, and ones where the outside players have a larger role.

Roadblocks would remain, however. State agencies still have the final say on which institutions get to issue credentials, as coding academies in California have learned. And regional accreditors at times have looked askance at partnerships between colleges and noninstitutional providers.

A specialized accreditor that focuses on course-based providers or other noncollege entities would be a better fit, said several experts. That might even include a new subsidiary of an existing regional accreditor. But any new accreditor would need to be in operation for two years to receive recognition from the federal government -- a dilemma Sylvia Manning, a former leader of the Higher Learning Commission, has called the “chicken or egg problem.”

Upstarts and the Establishment

Other forms of alternative accreditation already exist, at least partially. And current quality review organizations could make the case that they have a track record and could skip the two-year waiting period for federal recognition.

For example, the American Council on Education's credit review service could grow into such a role. A.C.E., the umbrella group for higher education, has shown interest in that possibility. So has CHEA, which has discussed spinning off such a new accreditor.

Digital badging also is part of the discussion. So is LinkedIn, the career-oriented social media site with roughly 350 million users.

In November 2013, LinkedIn created a certification program with a handful of MOOC providers, including Coursera, Lynda.com and Udemy. When students complete one of the courses in the pilot, they receive an email with an automatically populated certification field, which describes the details of the completed course. By clicking “save,” students can add the certification to their LinkedIn profile.

Last fall LinkedIn expanded the program to all of its certification providers, including corporations like Microsoft and Cisco, which have long been in the business of issuing credentials, through programs like the Cisco Networking Academy.

LinkedIn's certification service is a far cry from accreditation. Itamar Orgad, a group product manager for the company, said LinkedIn is “not in the business of verification,” meaning it is not reviewing the learning that occurs in MOOCs.

Yet LinkedIn does have plenty of data about student outcomes, he said, particularly valuable, hard-to-get looks at how students perform in the job market. The company is “actively involved” in conversations in Washington about how to use that information, Orgad said.

Burck Smith, StraighterLine's founder and C.E.O., said he welcomes a serious discussion about new accreditation pathways. Yet he said alternative providers should not be subject to stricter quality reviews than are traditional colleges, which Smith said should be kept out of any new alternative credit pathways.

“If the course isn't perceived to be good enough for the originating college to award credit,” Smith said via email, “why should it go through an alternative credit channel for other colleges to award credit?”

A new form of accreditation or quality review for this emerging space probably would differ from the current system, whether one encouraged by the department or part of a Republican-led rewrite of the Higher Education Act, sources said, in that it would be more focused on competencies and student outcomes, like assessed learning. That would be a function of the employer-facing, competency-based approach of coding academies or some online course providers.

Any federal attempts to open even a limited amount of aid dollars to noninstitutional providers almost certainly would face a major challenge from established colleges and, probably, faculty groups. Yet many well-placed observers predict the feds will try something sooner than later. The rare bipartisan support for new ways of delivering higher education is too strong to be ignored, they said.

A spokeswoman for the department said officials there are enthusiastic about encouraging creative attempts to improve learning and reduce costs.

“The president and our department have been leaders in challenging the field to pursue innovation and flexibility, while assuring quality. The federal government is eager to be a catalyst in exploring how new models, approaches and providers will contribute to advancing our goals of college access, affordability and student outcomes,” she said in a written statement. “We welcome congressional interest in exploring and facilitating these concepts and look forward to working with Congress as it moves to reauthorize the Higher Education Act.”