What the Department of Education’s Final Distance Learning and Innovation Rules Mean for Quality in Higher Ed

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This summer, the US Department of Education (Department) issued its final rules governing distance learning and innovation after a negotiated rulemaking process that lasted more than a year.1While the new federal regulations won’t officially take effect until July 1, 2021, colleges have the option to start implementing them now. And with schools across the nation relying on online learning as a core component of their response to the COVID-19 pandemic, these changes stand to have important implications for the quality of education students receive. Below are four things to watch for when it comes to quality in higher ed as the new rules start to take effect.

1. How and how often instructors are required to interact with online students.

What the rule does:

The Higher Education Act (HEA) mandates that for colleges to be eligible to accept federal financial aid, they must have “regular and substantive interaction” with online students, theoretically meaning how much contact they have with students in an online setting and what that contact looks like. However, the law doesn’t include a definition for this term, leaving it up to interpretation for schools looking to expand their online offerings. One of the most significant changes in the Department’s new distance learning regulations is to establish requirements for meeting the vague “regular and substantive interaction” standard. The rules dictate that to be considered “regular,” opportunities for interaction must be offered on a predictable schedule; and to be “substantive,” student interaction with instructors who meet accreditor standards must include at least two of the following five elements of teaching and learning:

  • Providing direct instruction,
  • Assessing or giving feedback on student work,
  • Providing information or answering questions about course content,
  • Facilitating group discussion about course content, or
  • Incorporating other instructional activities approved by the school’s accreditor.

How this could play out:

Regular and substantive interaction between instructors and students is key to differentiating distance education programs from correspondence courses—in which students are provided course materials but have little to no contact with an instructor, and on which Congress has placed additional limitations on the use of federal financial aid due to a well-documented history of abuse.2Because of this, a clear, strong definition of regular and substantive interaction is critical in holding institutions accountable for providing their online students with consistent and meaningful engagement related to their course.

But while the Department’s final rules take useful steps to clarify what regular and substantive interaction should look like, they still set a concerningly low bar for educational quality (and open the door for poor-performing accreditors to lower that bar even further). For example, since the new standards require schools to meet only two of five criteria for substantive interaction, bad actors can still opt to fulfill the bare minimum. That could mean that instructors teach class and give out grades but totally ignore student questions about their online course—which wouldn’t make for a great learning experience. How institutions choose to meet the new guidelines and the resulting impacts on quality will be important to keep a close eye on as the standards are rolled out.

2. What online instruction looks like in career training programs.

What the rule does:

Many career training and vocational programs use the clock hour, rather than the better-known credit hour, as the standard unit for measuring learning time and eligibility for federal financial aid. Prior regulation defined a clock hour as a specific period of time in a given learning environment, such as a 50- to 60-minute class, lab, or supervised internship.

Initially, the Department had proposed that online clock-hour programs would have to offer synchronous instruction—like live lectures—in order to maintain federal aid eligibility. But the final rules modify the definition of a clock hour to include asynchronous learning activities—like prerecorded videos—so long as the school employs technology that can track how long students participate in those activities.

How this could play out:

Clock-hour programs are often technical and hands-on in nature—for example, career and occupational training programs for welders, cosmetologists, or medical assistants. It’s easy to see why asynchronous learning may not be as effective (and could even be harmful) in such programs. Would you be concerned to learn that the phlebotomist taking your blood or the welder who repaired the plane you just boarded received their training entirely online, by watching the equivalent of a series of YouTube videos? Plus, because clock-hour programs often align with state minimum standards for the number of hours of training required to work in an occupation, the use of asynchronous learning may make it harder to track whether students have actually completed training requirements—undermining existing restrictions designed to promote quality and safety.

In explaining its decision to allow the use of asynchronous instruction in these programs, the Department noted that “the COVID-19 pandemic has illustrated the need for institutional and student flexibility with regard to the time and place that coursework is completed.”3Of course, it’s true that COVID-19 has thrown the need for greater flexibility in higher education into stark relief. But while there will come a time when the threat of the pandemic has passed, the long-term impacts of permanently relaxing federal guardrails in its name will remain. To ensure good job prospects and a stable economic future, today’s students need their institutions to equip them with thorough, high-quality preparation for their chosen career fields. The Department must hold schools accountable for ensuring that flexibility doesn’t come at the expense of quality—a prospect even more critical for clock-hour programs, which often prepare students for lower-paying or high-turnover jobs like nursing assistants and truck drivers.4

3. Changes to the approval process for new competency-based education programs.

What the rule does:

Competency-based education (CBE) programs—in which students progress through courses at their own pace based on demonstrated skill gains—have picked up steam over the past few years, with vocal support from Secretary of Education Betsy DeVos. Several of the changes in the Department’s final rules on innovation are designed to make it easier for schools to launch and run CBE programs.

One form of CBE is direct assessment programs, which do not rely on credit or clock hour requirements (often thought of as “seat time”) but instead use tests and projects that assess student learning and knowledge as the basis for advancing through a course of study.5Previously, colleges had to obtain Department approval for federal aid eligibility for each new direct assessment program they wanted to introduce. The final rules relax those approval requirements so that institutions only need to receive Department approval for the first direct assessment program they offer at each credential level. That means that once a school has gotten a single direct assessment bachelor’s degree program cleared by the Department, it can effectively launch as many others as it wants—all of which will be eligible to accept taxpayer-funded financial aid—and would only need to seek approval again if it wanted to start its first direct assessment program at, say, the master’s or doctoral level.

How this could play out:

The new rules make it significantly easier for institutions to add direct assessment programs without the signoff of the Secretary of Education. The amended language means that additional programs at a given credential level will only be subject to accreditor review for academic quality—a process we already know is rife with inconsistencies due to the lack of shared or high-quality standards across accrediting bodies. Yet while direct assessment has shown promise, it is still a relatively new form of instructional delivery: only about a dozen schools currently offer direct assessment programs, meaning that the vast majority of colleges are inexperienced at providing them and at meeting the distinct federal aid requirements for direct assessment.6And since different programs, even those at the same credential level, can serve students to varying degrees regardless of how they are delivered, rolling back the individual approval requirements for direct assessment programs introduces significant risk for students and taxpayers. Because of this, it will be important to monitor whether the new changes encourage substantial growth in direct assessment programs and continually evaluate whether additional quality controls are needed in this space.

4. Potential expansion of subscription-based pricing models.

What the rule does:

Some CBE programs make use of subscription-based pricing models. In subscription-based programs, students move at their own pace and are charged a flat rate (rather than per-credit tuition pricing) based on the number of courses they expect to take in a given term. The new regulations address the use of subscription pricing in several ways, including codifying for the first time a federal definition of “subscription-based programs” for financial aid purposes, amending the definition of “full-time student” to clarify how schools can structure subscription-based programs so students are eligible to receive aid, and altering the aid disbursement system for those students. While the Department’s initial proposal would have limited these changes to subscription-based direct assessment programs (the only type of CBE program with a definition in federal law), the final rules expand them to apply to any type of program using a subscription-based pricing model at any institution that accepts federal aid.

How this could play out:

Subscription-based pricing highlights some of the biggest potential benefits touted by advocates of competency-based education. For certain students, subscription pricing could reduce the time it takes them to earn a degree or credential, the costs they incur, and the amount of debt they take on. But paradoxically, the “all you can eat” model also risks increasing costs, especially for the most vulnerable students. Since student charges are tied to the number of courses they expected to complete at the start of a term, any change in their circumstances that alters that plan could mean they’re paying for more than they receive. That makes it imperative to have strong protections in place to ensure that these programs are actually helping students reach their goals, and not just sinking costs without offering a return on that investment. And while direct assessment programs are subject to accreditor and Department review and have to meet certain requirements to enroll students and access federal aid, other subscription-based CBE programs that fall outside the direct assessment umbrella are not held to such standards.

As the Department noted in its final rules, there are some consumer and taxpayer protections built into the regulations. Notably, the definition of subscription-based programs stipulates that students must demonstrate progress by meeting a given number of credit hours during or after a term before they can receive subsequent aid disbursements. That’s designed to limit the risk of abuse by bad actors by capping the financial aid funds schools can access. But the Department also acknowledges that expanding subscription-based pricing beyond direct assessment programs introduces a new potential risk: the chance that students take on debt upfront to finance a given number of courses under a subscription model but then fall behind, leaving them on the hook for loans that paid for classes they didn’t take, or even forced to drop out if their school continues to charge them for the next term despite their inability to access more federal aid. Given the still-uncertain nature of this landscape, it will be critical to watch for whether colleges make greater use of subscription-based pricing models in response to the new rules and what outcomes look like for students in those programs.


The Department’s final rules on distance education and innovation come at a pivotal moment. With distance learning and competency-based programs on the rise for years and COVID-19 permanently impacting how institutions deliver online education, the stakes have been raised even higher for ensuring that students in these programs receive high-quality instruction and see a positive return on their educational investment. As schools begin applying the new rules in the leadup to their official implementation next summer, the effects they have on quality, accountability, and student outcomes across the higher education system will provide meaningful lessons for future rulemaking and legislation.

  • Higher Education461


  1. “Distance Education and Innovation; Final regulations,” 85 Federal Register 54742 (2 Sep. 2020), pp. 54742-54818.  

  2. Whitman, David. “The Cautionary Tale of Correspondence Schools.” New America, 11 Dec. 2018, www.newamerica.org/education-policy/reports/cautionary-tale-correspondence-schools/. Accessed 16 Sep. 2020.

  3. “Distance Education and Innovation; Final regulations,” 85 Federal Register 54742 (2 Sep. 2020), pp. 54742-54818. 

  4. Mukamel, Dana B., et al. “The costs of turnover in nursing homes.” Medical Care, vol. 47, no. 10, 2009, pp. 1039-1045, doi: 10.1097/MLR.0b013e3181a3cc62; “Turnover Rate at Large Truckload Carriers Rises in First Quarter.” Press Release, American Trucking Associations, 6 Jun. 2018, www.trucking.org/news-insights/turnover-rate-large-truckload-carriers-rises-first-quarter. Accessed 16 Sep. 2020.

  5. Direct assessment programs, 34 CFR § 668.10 (2007).

  6. “Competency-Based Education and Direct Assessment,” New America, 2019, s3.amazonaws.com/newamericadotorg/documents/CBE_Issue_Paper.pdf.