A New Route to Student Aid

Education Department will open up federal aid to a limited number of partnerships between colleges and boot camps and MOOC providers, with a secondary goal of testing new forms of accreditation.

October 14, 2015

The U.S. Department of Education today announced an experimental pathway to federal aid for partnerships between colleges and nontraditional providers, including ones that run skills boot camps or offer unaccredited online courses.

As part of the long-awaited project, the department will waive a ban on colleges outsourcing more than half of their course content and instruction to a nonaccredited entity. The feds have that authority under the experimental-sites initiative, which allows for flexibility in testing the disbursement of financial aid.

The experiment will be limited in scope, department officials said. They plan to accept fewer than 10 applications from colleges and their partners. But the department said Tuesday that boot camps and MOOC providers are likely candidates for participation, as are short-term certificate programs and forms of corporate training.

“Some of these new models may provide more flexible and more affordable credentials and educational options than those offered by traditional higher [education] institutions, and are showing promise in preparing students with the training and education needed for better, in-demand jobs,” the department said in a written statement.

A key part of the experiment, which is dubbed the Educational Quality through Innovative Partnerships (EQUIP) program, is to try out new ways of ensuring academic quality in these nontraditional programs.

“Since these providers are not within the purview of traditional accrediting agencies,” the department said, “we have no generally accepted means of gauging their quality.”

To apply to the experiment, colleges and their partner organization must bring along a third-party “quality assurance entity." This group in many ways will perform the task of an accreditor, although mostly in an informal, nonbinding manner.

On Tuesday information remained skimpy about the alternative-accreditation piece of the project. The department said it would release a full description today in The Federal Register. But the feds previously have described what they think quality assurance should look like under the experiment, at least in rough terms. And the results of completing a program through one of these partnerships -- meaning student outcomes -- will be part of the mix.

In July the White House held a meeting about the rapidly expanding coding and skills boot camp sector. Federal officials described preferred areas for quality assurance at that meeting, sources said. And they gave similar examples to the news media on Tuesday.

The new quasi accreditors will be required to develop ways to assess programs, the department said, including the claims providers make about student learning, evidence they have to support those claims (including assessments), student outcomes like learning and employment, and the management and stability of the nontraditional providers.

Possible participants on the quality-assurance side, sources have said previously, could include higher education groups like the American Council on Education and the Council for Adult and Experiential Learning, or even companies such as LinkedIn or Parchment. Industry trade groups are also possibilities. So are regional accreditors themselves, perhaps through new subsidiaries.

National accrediting agencies are a possibility as well. For example, the Distance Education Accrediting Commission in April unveiled a quality control process for noninstitutional online course providers. Leah Matthews, the commission's executive director, said her group was interested in applying to the participate in the experiment.

The department said Tuesday that quality-assurance entities should have experience with the nontraditional providers they will scrutinize. And the results of the experiment, said Ted Mitchell, the under secretary of education, in a phone call with reporters, should inform ongoing policy discussions about standards in higher education.

The project is designed to “help us understand whether an outcomes-focused quality-assurance system has legs,” he said.

Role for Regionals

Accreditors shouldn’t be too worried about being replaced, however, at least not in the immediate sense. That’s because they will have the power to review and approve the proposed experimental sites, even after the feds sign off on them.

Several sources said such arrangements almost certainly would trigger a review by accreditors -- under requirements for so-called substantive changes of academic offerings. And just as likely, they said, regional accreditors will approve those applications, given the strong political support for this federal experiment.

Paul Freedman has tangled with an accreditor over a similar partnership. Freedman helped create an unusual partnership between Tiffin University and the Silicon Valley education company he led. Tiffin, which is a small private university located in Ohio, offered online, two-year degrees with Altius under the Ivy Bridge College brand.

The Higher Learning Commission essentially shut down Ivy Bridge in 2013. In making that decision, HLC, which is the largest regional accreditor, cited some of the same regulations the feds are waiving under the newly announced experiment -- including what the accreditor thought was an outsized role by Altius as an outsourced academic content provider.

As a result, Freedman said, he has a bittersweet reaction to the experiment's creation. He supports the project, but said “it’s basically driving the creation of more Ivy Bridges.” (Earlier this year Ivy Bridge’s owners sued HLC.)

Because current accrediting agencies will be the ultimate overseers of the experiment, Freedman said it will fail to break accreditors’ “monopolistic control” of access to federal financial aid.

“You’re still going through the existing accreditation system,” he said. “That will still remain as a relevant standard.”

Even so, accreditors are likely to sign off on the federally approved partnerships between colleges and MOOC providers and boot camps, which are enjoying lots of bipartisan political support. And the department’s goal is to see how quality assurance might work differently in these spaces, Mitchell said.

Paul LeBlanc agreed. LeBlanc, Southern New Hampshire University’s president, recently completed a three-month stint as an adviser to Mitchell, during which he worked on the experiment’s development.

“EQUIP's secondary goal is to explore new approaches to quality assurance, more focused on outcomes, data driven and transparent,” he said in an email. “The hope, I think, is to develop new and better approaches to program quality, to influence the existing accreditors, and to perhaps lead to the approval of new gateway accreditors.”

The experiment could set the stage for an alternative form of accreditation that includes access to federal aid, said Judith Eaton, president of the Council for Higher Education Accreditation. (The council has written about external quality review for noninstitutional providers.)

Eaton praised the limited scope of the department’s project, calling it prudent.

“The risk taking with regard to taxpayer money is reasonable,” she said.

Lowering Costs

An estimated 16,000 students will complete a skills boot camp program this year. The immersive sessions in coding and other mostly tech-related skills lead to impressive job-placement numbers -- typically over 90 percent for students who complete them.

But boot camps don’t attract many low-income students. They typically cater to college graduates. And with price tags that average around $11,000 for 11 weeks of training, they’re far from low cost.

The experimental sites program will lower those costs, at least for the handful of programs that are selected, as their students could receive federal aid. And access for low-income students will be one criterion the feds use to evaluate applications.

That logic applies to unaccredited online courses, too. The department described a hypothetical student who might benefit from the program -- a single parent who took a set of MOOCs over a three-month period, earning a certificate in data science and 12 college credits that could be transferred to an academic program at the partner college, or elsewhere.

Not everyone is jazzed about the experiment, however, including some people who work for nontraditional providers.

Robert Shireman, a former Education Department official and prominent critic of for-profit higher education, has written that the project could open the floodgates of federal aid to low-quality providers.

Sharing a similar concern this week was Clint Schmidt, the chief operating officer at Bloc, a coding boot camp with a fully online model featuring one faculty member (or mentor) per student.

In an essay, Schmidt said, “Partnering with accredited schools to deliver tech skills for credit is a dangerous back door to access[ing] federal student loans.”

Schmidt said the federal money could encourage some boot camps to churn more students through their real estate-driven business model. A better solution would be to have a rigorous standard of quality in place before aid is targeted to the sector.

“But if accreditation in boot camps is not directly tied to demonstrable skills and significant career outcomes for students,” he said, “then boot camps can chase easy dollars to bump revenue per square foot without being directly accountable for student outcomes.”

Even executives at General Assembly, which is by far the largest of the boot camps, have expressed mixed feelings about federal aid eligibility. Jake Schwartz, the company’s co-founder and CEO, said in April that while federal aid tends to drive up prices, General Assembly likely would participate in such an experiment because others would and “government money is hard to pass up.”

Federal funding could have a positive impact on the corporate training side, said Alan Todd, CEO of CorpU, which specializes in online courses and features a social learning platform. He said federal financial aid could work if it helps companies and their employees -- as well as colleges -- make college-level corporate training more affordable.

However, that benefit would be limited if the experiment comes with too much red tape. And Todd said that’s certainly a possibility.

“I don’t think that the commercial providers like CorpU are going to rush into this,” he said.


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