To balance innovation with protecting students, focus on incentives

Online education is growing fast—but it's hampered by clunky regulations and outdated definitions. Modernizing regulation is, in part, about stripping away burdensome regulation, but Congress also must focus on aligning institutional incentives with student outcomes

Online education holds tremendous promise: it has the potential to lower costs, enhance learning outcomes, and make college accessible for students who lack the flexibility or means to attend a traditional program. As a nation, our goal should be to improve and scale the highest quality online programs, thereby reducing costs for students, and making the most of the over $500 billion we collectively spend on higher education each year. We should also do our best to protect students from low quality programs—and we should especially avoid investing federal money in programs that produce poor outcomes.

Unfortunately, federal higher education policy isn’t set up to do any of those things. As we argue in a recent policy brief, Congress can do better. In reauthorizing the Higher Education Act, lawmakers not only should aim to give institutions the flexibility to develop instructional models that take advantage of the potential of technology, but also should focus on incentivizing quality through outcomes-based measures.

Distance vs. correspondence? Where federal policy stands today

Distance education was first defined by the Higher Education Act in 1992. At the time, the primary aim of lawmakers was to address waste, fraud and abuse by “correspondence programs,” which sent course materials mainly through the mail. In the 1980s, these had been responsible for an outsized share of student loan defaults. The language developed in 1992—which permissively noted that transmission by microwave was acceptable—excluded correspondence programs from receiving federal funds, but did not anticipate how online learning would develop, and therefore have proved wholly inadequate to regulate online education.

The key variable separating distance education from correspondence programs was the concept of “regular and substantive interaction” between students and instructors. This has led to a series of Department of Education regulations on what is “regular,” what is “substantive,” and who is an “instructor.” These regulations constrain the ability of online programs to innovate around the instructional model, but they do nothing to ensure strong outcomes for students.

In 1992, online programs were just emerging, but today over 30 percent of students are learning online. Regulations which encourage innovation—while protecting students—have never been more important for online programs.

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