Two weeks ago, the Department of Education’s (ED) Office of Inspector General (OIG) issued a long-awaited financial aid audit of Western Governors University (WGU). Normally, financial aid audits and OIG reports don’t get much attention, but this one has. Why? Because the OIG ruled that WGU, the largest competency-based education (CBE) university in the nation, violated federal financial aid regulations and should repay the Department of Education $713 million in financial aid.

Needless to say, that conclusion has garnered much attention. As more and more members of the higher education community begin to unravel the report and its repercussions, we want to help you understand the major findings of the report, the significance of the report, and what you should be doing about it.

The major findings

The OIG report is based on three major findings that revolve around WGU’s eligibility to participate in federal financial aid programs, as well as the ways that WGU handled financial aid money. The most significant of these findings – and the one most likely to impact other institutions offering online education – is the first finding on WGU’s ineligibility to participate in federal financial aid programs.

At the heart of this finding is a determination that WGU is offering what the Inspector General defines as correspondence education. To understand the difference between correspondence education and distance education, we must go back a couple of decades. During the late 1980s and early 1990s, there was an influx of fraudulent correspondence programs which led Congress to limit the amount of federal aid students could use for correspondence courses. Congress defined correspondence in 81 FR 92262 as (emphasis added):

“A course 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.”

In 2010, distance education was added to the statute in an effort to distinguish it from correspondence and ensure students could use financial aid for those courses and programs. Distance education was defined as instruction that uses technology to (emphasis added): “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.”

Why do these definitions matter? They matter because they are at the heart of the Inspector General’s findings against WGU. The OIG ruled that WGU’s form of competency-based education is correspondence education, and therefore, the institution was ineligible to receive federal financial aid. At the heart of the findings is the question of whether or not students had “regular and substantive” interactions with their instructors. The problem is that although the Inspector General uses “regular and substantive” to determine if courses and programs are correspondence or distance education, there is no legal definition for “regular and substantive.”

The report’s significance

If you aren’t offering competency-based education will this report impact you? Yes.

If you are offering any form of instruction outside of a physical classroom, you should pay attention because it’s clear the OIG is thinking beyond WGU and CBE. Embedded in a footnote at the bottom of page 7 is this: “We have previously identified distance education programs as presenting challenges to the Department and school officials because little or no in-person interaction between school officials and a student presents difficulties in verifying the student’s academic attendance, increasing the risk of the school not complying with Federal law and regulations.” It’s clear the OIG is concerned about all forms of online education.

The issue of “regular and substantive” interaction with instructors could apply to more traditional online programs. Remember, the term appears in the statutory definitions of correspondence and distance education but is never defined. Lacking any legal definition, the OIG applied its own definition, and we should assume that this is the standard they will follow in any subsequent investigations. According to the report (pages 14-16), substantive interaction is “relevant to the subject matter” and involves a “student interaction with a course mentor or required an individual submission of a performance task for which an evaluator provided the student feedback.” Most importantly, though, the OIG defines what is NOT substantive, and here’s where online education programs should especially pay attention. Substantive interaction does NOT include:

  • Computer-generated feedback on objective assessments
  • “Recorded webinars, videos, and reading materials if the course design materials did not require the students to watch the webinars and then interact with an instructor.”
  • Contact with mentoring staff who are not directly providing instruction on the course’s subject matter.

Finally, the OIG tackled regular interaction and defines it as “occurring with some reasonable frequency considering the school-suggested length of the course.”

What does this look like on a practical basis? We find a hint of that on page 5 where the OIG recommends that WGU should: “Ensure that the school-defined academic year will include at least 30 weeks of instructional time and each of the weeks will include at least 1 day of regularly scheduled instruction or an examination” (emphasis added). In this definition of “regular and substantive” there is little room for leveraging technology to provide meaningful interactions (think AI and adaptive learning). There is little room for students to work in a flexibly paced environment. And there is little room for student and instructor interaction if it doesn’t look like a test or graded assignment.  

What you can do

It would be easy to dismiss the WGU ruling as inapplicable if you are not offering CBE. But the OIG’s rationale for its findings against WGU could be applied to any online course. While it’s unlikely that you will be the subject of an OIG audit, the report should be a strong incentive to review your current offerings with several key questions in mind:

  • Does this course include deliberately designed interactions between students and instructors? What do those interactions look like?
  • How often are those interactions expected to take place?
  • Are those interactions initiated by students or initiated by instructors?
  • Is there a mechanism for tracking and reporting on those interactions?

In addition to reviewing courses with the above questions in mind, consider having new conversations with faculty, administrators, and instructional designers about the pedagogy and best practices being deployed in your online courses. What role do instructional designers play in developing high quality and interactive online courses? What sort of development do faculty receive to make them excellent online instructors? Are there adequate human and financial resources to make sure that your courses are deliberately designed to facilitate student and instructor interactions, and best leverage technologies? Do campus stakeholders understand the regulatory as well as the pedagogical issues around “regular and substantive” and financial aid eligibility?

Finally, we have the opportunity as a broader online education community to use this report as an opportunity to work with Congress and the Department of Education to update statutory language that has not kept up with technological and pedagogical changes. Congress needs to act to define “regular and substantive” interaction with an understanding that technology and new pedagogical models are changing the role of instructors. Rather than hiding our heads in the sand, we should use our collective expertise to take the lead in crafting language that reflects these rapid technical and pedagogical changes, and facilitates rather than stifles further innovation.

Long before he authored children’s books, Theodor Giesel, aka Dr. Seuss, was a political cartoonist. A recurring theme in many of his pre-Pearl Harbor cartoons were ostriches with their heads in the sand. In an April 29, 1941 cartoon he depicted a group of Americans lined up waiting for an ostrich bonnet that will, according to the jingle, let them “Forget the terrible/ news you’ve read./ Your mind’s at ease/ in an ostrich head!” Once they don their ostrich bonnets, each one joins a long line of Americans with their heads in the sand, ignoring any global dangers. Now isn’t the time for higher education innovators to don our metaphorical ostrich bonnets; now is the time to lead campus and national conversations about innovation, quality, access, and online education.

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