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Focus on Regulation

Pursue Innovation or Maintain Eligibility? A Unique Faculty Model Could Cost an Institution $713 Million and its Future Participation in Title IV Programs

Instructor. Regular. Substantive. Those three words, as defined by the U.S. Department of Education (“ED”) Office of Inspector General (“OIG”), resulted in OIG’s recent recommendation that Western Governors University (“WGU”) repay to ED approximately $713 million in federal funds.

An otherwise eligible institution loses its ability to participate in federal student financial aid programs under Title IV of the Higher Education Act if, for the previous award year, more than half of the institution’s courses were correspondence courses or half or more of the institution’s students were enrolled in such courses (the so-called “50% rules”). In its audit of WGU, ED OIG reviewed 102 accreditor-approved online courses and determined that, largely because of WGU’s “unbundled faculty composition model,” 69 of those courses were “correspondence courses” rather than “distance education.” More than half of WGU’s students (over 60% of them) were enrolled in one or more of those 69 courses during the 2013–2014 award year, resulting in a violation of the 50% rules. OIG recommended that ED hold WGU liable for repayment of all federal funds disbursed to it since July 1, 2014 (the beginning of the next award year) because as of that date, WGU was no longer eligible to participate in Title IV programs.

Federal regulations describe the difference between distance education and correspondence courses:

  • Distance education is “education that uses [certain] technologies [including the Internet] to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between the students and the instructor, either synchronously or asynchronously.”
  • Correspondence courses are “course[s] provided by an institution under which the institution provides instructional materials, by mail or electronic transmission, including examinations on the materials, to students who are separated from the instructor. Interaction between the instructor and student is limited, is not regular and substantive, and is primarily initiated by the student. Correspondence courses are typically self-paced.”

Not described in the regulations, however, is what constitutes an “instructor” or what interaction is “regular and substantive.” To assess whether a course qualified as distance education, OIG ascribed to these terms its own definitions based on “ordinary meaning” and looked for “evidence of interaction that was not primarily initiated by the student and was (1) with someone who instructs or provides knowledge about the subject matter of the course (instructor), (2) relevant to the subject matter (substantive), and (3) occurring with some reasonable frequency considering the school-suggested length of the course (regular).”

OIG concluded that the courses did not meet these criteria. According to OIG, WGU’s “unbundled faculty composition model . . . divided the roles of meeting with and advising students, course or curriculum design, learning resource selection, instruction, and assessment among student mentors, course mentors, evaluators, product managers, and council members.” OIG concluded that only the course mentors and evaluators “could reasonably be considered instructors.” The design of the courses failed to satisfy the requirement that “the regular and substantive interaction in a distance education course . . . be between the student and an instructor, not just any member of a school’s faculty.” OIG considered interaction to be “substantive” if “the course design materials described student interaction with a course mentor or required an individual submission of a performance task for which an evaluator provided the student feedback.” OIG thus disregarded computer-generated feedback on objective assessments and recorded materials that were not designed to result in interaction between the student and instructor. OIG also concluded that “the course design materials did not describe regular interaction between the students and course mentors and evaluators” (i.e., the instructors).

As expected, WGU “strongly disagrees” with OIG’s determination, which it says “challenges [WGU’s] innovative, results-proven faculty model.” OIG’s recommendation that ED require WGU to return at least $713 million in Title IV funds disbursed in the years after the audited period is just that—a recommendation. ED has not yet indicated officially how it will proceed, but an ED spokesperson noted that “the innovative student-first model used by this school and others like it has garnered bipartisan support over the last decade.” The final audit report highlights the importance of the application of Title IV and ED regulations in an educational environment that has become increasingly innovative and technology-centered.