What’s the fastest way to stifle innovation? Declare a higher education institution ineligible for federal financial aid, recommend it return hundreds of millions of dollars and watch other colleges and universities duck for cover.
Western Governors University, a well-known nonprofit, online education provider, is under pressure to return $713 million in federal financial aid after the U.S. Department of Education’s Office of Inspector General said in an audit report that the university is ineligible to participate in Title IV programs because of not meeting certain standards.
WGU has disputed the findings, and it is yet to be determined whether the Education Department will accept the Office of Inspector General’s recommendation. But beyond the effects such a decision would have on WGU and the thousands of students enrolled there, this situation highlights a larger issue: congressional inaction and overzealous federal agencies can tamp down the very innovation they often champion.
Innovative learning models, like the competency-based and online programs offered at WGU, have grown in popularity among lawmakers over the last several years, with many looking to them as a possible means to expand access, speed time to degree completion and reduce reliance on student loan borrowing. However, the bulk of the federal financial aid system was designed years before these innovative learning models were developed. It’s no surprise then that current rules and regulations governing the Title IV programs don’t play well with such structures. As a result, it has become challenging for colleges and universities to cultivate and implement new or modified learning models within the parameters of the existing federal student aid system.
WGU’s courses were accredited as distance education courses, but the Education Department determined they did not meet one of the conditions to qualify as distance education: that there be “regular and substantive” contact between instructors and students. That definition was designed to distinguish distance education from correspondence study, which had become discredited as a mode of learning.
The Office of Inspector General’s findings largely focus on who, among faculty members contributing to a course, does or doesn’t qualify as an instructor and whether they must have subject-matter expertise. As discussed in “Improving Financial Aid to Meet the Needs of Innovative Learning Models,” a 2015 task force report by my organization, the National Association of Student Financial Aid Administrators, innovative online learning programs often function with a disaggregated faculty model, whereby the traditional roles of faculty members are administered via more than one subject-matter expert and students receive guidance, instructional support and evaluation from various sources. Stepping back, it’s easy to see how the government’s narrowly defined requirements penalize and disincentivize institutions from exploring low-cost, high-impact student support mechanisms and innovative learning models.
As part of the reauthorization process, lawmakers on both sides of the aisle have repeatedly emphasized the need for: (1) more innovation within the nation’s higher education system, (2) improved student outcomes and (3) pathways to support nontraditional students. WGU has achieved all three of those goals. In 2016, its one-year retention rate was 78 percent -- 4 percent higher than the average rate for four-year public institutions. And its six-year graduation rate for undergraduates, at 41 percent, was 5 percent higher than the national average for comparable institutions.
A glance at the makeup of its student body in 2016 shows that 74 percent of enrolled students were also working full-time jobs and that the average age of a WGU student was 37 years old, suggesting that “nontraditional students” are largely the ones taking advantage of the online learning and competency-based model. As for student outcomes, according to WGU’s 2016 annual report, the average time to completion for a bachelor’s degree is just two and a half years.
In short, WGU’s data show that they are doing a lot of things right.
By its very definition, innovation necessitates trying something new, within both statutory and ethical parameters. But the recommended penalties placed on WGU -- regardless of whether the Education Department upholds them -- will most certainly have a dampening effect on any institution that is weighing the risks and rewards of pursuing innovative distance education learning models or student support mechanisms.
This is where Congress comes in.
Congress must carefully consider and address innovative learning models in the next reauthorization of the Higher Education Act and carve out space for colleges and universities to experiment without fear of federal reprisal. It should set parameters around distance education to prevent abuse, and the Education Department should enforce those limitations -- but not to the extent that institutions are scared off from using authorized flexibilities or models that clearly achieve results.
Federal action that stifles innovation and experimentation is something we’ve seen surface many times in the past. For example, colleges and universities are given the authority to make “professional judgments” to alter financial aid awards on a case-by-case basis, but even today, some institutions refuse to consider professional judgments for fear of audit or federal program review findings. Likewise, institutions have authority to limit student borrowing on a case-by-case basis, but most would not restrict individual student borrowing for fear of a federal investigation. When fear of unforeseen consequences from the government inhibits colleges and universities from experimenting with innovative ways to serve and teach students, it’s time to take a closer look at what’s not working.
Between 2002 and 2014, the number of students enrolling in one or more distance education courses jumped from 1.6 to 5.8 million. Enrollment in distance education programs has steadily increased even as other more traditional types of postsecondary education have seen declines. As distance education continues to grow in popularity, it’s imperative that policy makers and higher education stakeholders restrict bad actors but not simultaneously squash innovation that improves student outcomes for underrepresented populations.