Rule Change May Spark Online Boom for Colleges.

Dr. Ray Raymond W. Campbell the Director of the Center for Lifelong Learning and Professional Development at Kutztown University sent us this great article about pending changes to federal student aid programs and eligibilty for institutions with more than 50% of the enrollments coming from on-line students. This article originally appeared in The Chronicle of Higher Education.

End of federal restriction on distance education could also aid diploma mills by DAN CARNEVALE.

Congress is poised to remove a controversial restriction on distance education after more than a decade of heated debate. Supporters say the move will spark a boom in online programs at traditional colleges, as well as the creation of for-profit businesses specializing in cybereducation, while critics argue that it will lead to an increase in diploma mills.

Lawmakers originally passed the rule in 1992 to counter a rash of fraud perpetuated by diploma mills and some correspondence programs in the 1980s. Known as the 50-percent rule, the regulation prevents any college that enrolls more than 50 percent of its students at a distance or provides more than half of its courses via distance education from participating in federal student-aid programs.

Back then, before the popularization of the Web, few traditional colleges offered online courses. Now many colleges that never imagined they would enroll many online students are nearing the 50-percent limit. For instance, Bellevue University, a traditional institution based in Nebraska, says it is likely to have more than half of its students taking courses online within the next year or two.

"We are getting to the point that more of our students are choosing online," says Mary B. Hawkins, Bellevue's provost. "It's the direction that the industry is moving." In response to the growing demand for distance courses, and after an eight-year experiment in which a few colleges were given waivers of the rule, Congress is expected to do away with it in the next few weeks.

Congress had planned to take that action as part of the extension of the Higher Education Act this year. But with that legislation stalled, Republicans included an item to end the rule with other higher-education provisions in the Deficit Reduction Act of 2005 (S 1932). That bill has passed the Senate and awaits a vote by the House of Representatives shortly after lawmakers reconvene in late January. Observers expect the distance-education provision to survive and for the bill to be signed into law by President Bush.

The rule will be eliminated only for distance education offered through telecommunications such as the Internet or satellite broadcast. The rule would still apply to correspondence programs. In order for telecommunications programs to provide federal student aid, they would have to be accredited by an organization that, according to the bill, "has evaluation of distance-education programs within the scope of its recognition." That would probably apply to most major accrediting agencies, including all regional accreditors.

With the 50-percent rule on its way out, colleges are likely to ramp up their online offerings, and investors could spend big money creating new for-profit online colleges. Some businesspeople are looking into buying small colleges to expand their online programs, and some investors might put money into new for-profit virtual institutions.

But some critics fear that Congress may be going too far in relaxing the rule and could open the door to more of the fraud and abuse that led to the passing of the regulation in the first place. "Congress has responded more to the needs of trade-school lobbyists than to the needs of its constituents," says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. "I anticipate a financial bonanza for the online companies." 'A Lot of Interest'
Michael B. Goldstein, a higher-education lawyer in Washington, says colleges are anxious to increase their online offerings now that the 50-percent rule is going away.

"There's a lot of interest because the 50-percent rule has been seen as an artificial limitation," Mr. Goldstein says. "A lot of people have felt that their hands were tied." Institutions are likely to either expand their current online offerings significantly or spin off established online programs as independent institutions. He says even large, mainstream universities may want to split with their online programs, so the two separate institutions can concentrate on improving their delivery models.

William J. Husson, vice president and academic dean of the School for Professional Studies at Regis University, says the institution's online program is growing at a rapid rate, and he expects Regis to pass the 50-percent mark within five years. Just a few years ago, about 17 percent of Regis's enrollment was through online education. Now more than 40 percent of its 16,500 students are enrolled online. Regis has just about tapped out its local market, in Denver, for traditional students, Mr. Husson says. The only area for significant growth is to go online, he says.
"Classroom-based numbers are flattening out and in a lot of cases declining, and the online numbers are continuing to grow," Mr. Husson says. "If you aren't involved in the online education, you're going to be hurting."

One institution that may benefit from spinning off its online program is Touro College. Touro operates bricks-and-mortar campuses in New York and California and has an online campus based in California. The online and traditional campuses offer their own separate academic programs and are accredited by different regional agencies, but they are run as one organization, partly to satisfy the 50-percent rule.

Yoram Neumann is chief executive and provost of Touro University International, the online campus. He says there have been preliminary talks about splitting off that campus as a separate institution, although he stresses that the question is far from decided. If the campuses were to split, he says, the online institution could establish its own identity and make its own decisions under a separate board. "Our mission is so much different," Mr. Neumann says. "I am a staunch advocate of the online revolution."

Some Smell Money Business investors are interested in helping start new online institutions to tap into the growing market, says Mr. Goldstein.
"There have been conversations going on for the last several years in preparation of the rule going away," Mr. Goldstein says. "I don't see this as a floodgate being open, but an opportunity for new activity." One businessman enticed by the online-education market is Michael K. Clifford, founder and managing director of Significant Ventures, a business-development consulting firm in California. He recently oversaw a buyout of Grand Canyon University, a for-profit institution in Arizona, after it ran into financial troubles. He is in talks with two other institutions about buying them as well, though he would not disclose which ones, other than to say they were both small colleges with regional accreditation. He added that both have online-education programs, which he says he would like to expand.

"That's why we're buying them," he says. "I am a huge believer in online education." He expects other investors to buy small for-profit colleges and strengthen their online programs. Many small colleges are in financial trouble, and it will be difficult for them to stay afloat without aggressively moving online. Distance education, he says, can give them the money to stay solvent. "We are subsidizing the land-based campuses," Mr. Clifford says. "The land-based campuses would close without the online component." John C. Higgins, a partner at the investment firm Huron Capital Partners, says online education is going to be an inviting market for venture capitalists, although he says his firm has no plans to invest heavily in it. "It's a market that will clearly continue to grow," Mr. Higgins says. "I suspect that you will see more start-ups."

Long Political Battle

The debate over the rule in Congress has largely broken down along party lines. Republicans have been pushing to ease regulations that govern higher education to promote new investment in the field. Many Democrats oppose loosening those rules, including the 50-percent standard. Rep. Howard P. (Buck) McKeon, a California Republican who is chairman of the House of Representatives subcommittee that oversees higher education, says the 50-percent rule is unnecessary because accrediting agencies are capable of controlling fraud.

"The accreditors have the main responsibility to make sure that they don't have any bad apples out there," Mr. McKeon says. "There's always going to be some people, whether we have the 50-percent rule or not, to get around things." With the cost of college continuing to spiral upward, he says, easing regulations will allow more competition in online education, resulting in improved accessibility for students. "The current law limits schools on how much education they can provide," Mr. McKeon says. "The ones that get hurt the most are these minority students and these nontraditional students." But Tom Kiley, a spokesman for Rep. George Miller from California, the ranking Democrat on the House Committee on Education and the Workforce, says Congress is going too far. "The 50-percent rules helped stem fraud and abuse, but also could have been more flexible," Mr. Kiley says. "Scrapping the 50-percent rules without putting something meaningful in their place — which Congress has done — may create flexibility, but it will lead to increased fraud and abuse."

The Department of Education has supported ending the 50-percent rule, arguing in an April report to Congress that ditching the rule would increase accessibility to higher education. In the same report, the department estimated that getting rid of the rule could result in $697-million in additional loans over 10 years. Jane Glickman, a spokeswoman for the department, says it will be difficult to tell how many more institutions will seek to participate in Title IV of the Higher Education Act, which governs federal financial aid. Some colleges that will be made eligible may not be interested because of the paperwork and personnel required to comply with Title IV regulations.

"We will not know until such time as these institutions become eligible to apply for the federal student-aid programs," she says. "We expect a relatively small number of new institutions to apply to participate."
Shifting Oversight Leaders of accrediting groups say they are confident they can handle their new responsibility of online oversight effectively.
"The accreditors are doing a good job at looking at it now," says Judith S. Eaton, president of the Council for Higher Education Accreditation. "Based on what we know now, I think we're OK." The Distance Education and Training Council has accredited distance-education programs of various types since 1955. If the 50-percent rule is dropped, many of the institutions accredited by the council will want their students to be able to apply for federal student aid.

Michael P. Lambert, executive director of the council, says the lifting of the 50-percent rule has been a long time coming, and the responsibility of quality assurance is back where it should be — with the accreditors.
"Our institutions have been waiting for this, but we are going to be approaching this with great diligence and care so that we don't have a repeat of the 1980s," Mr. Lambert says. "We welcome that challenge. We think it is our job."

Mr. Lambert says institutions accredited by the council that want to participate in federal student-aid programs will have to satisfy requirements that are tougher than federal laws governing for-profit institutions. For the first year after an institution accredited by the council is accepted into the Title IV program, for instance, the institution can only earn half of its revenue from Title IV money. In subsequent years, the institution can only receive up to 75 percent of its revenue from Title IV.
That way, Mr. Lambert says, fraudulent institutions will be kept at bay by not being able to rely solely on federal money to exist. "It's not going to be a walk in the park," he says. "Of course, we waited a long time, 14 years, for this, and we're not going to abuse their trust."

Even with such safeguards in place, some college officials worry that Congress is easing the rules too much. Mr. Nassirian, of the American Association of Collegiate Registrars and Admissions Officers, says the 50-percent rule has been effective in reducing the number of diploma mills. Getting rid of it now, he says, is just inviting trouble. "Congress is putting us on autopilot and hoping the plane doesn't crash," Mr. Nassirian says. "A whole bunch of people will be victimized in the interim." A Telling Precedent? Critics expressed similar misgivings when the Department of Education debated whether to get rid of a previous distance-education regulation, called the 12-hour rule. That rule required higher-education programs that did not operate in a standard semester, trimester, or quarter system to offer a minimum of 12 hours of course work a week if their students were to be eligible for federal financial aid.

College officials clamored for the rule to be killed, arguing that it was inhibiting instructors from being innovative in online-education programs. But since the regulation was cast aside, in 2002, there do not appear to be any college programs that have taken advantage of the change, nor has there been any fraudulent activity reported, despite critics' fears.
But Mr. Nassirian says fraudulent behavior could be going on undetected. Besides, he says, nibbling away at these safeguards will eventually cause big problems.

"We are slowly gutting the integrity framework," Mr. Nassirian says. "What Congress has done, in effect, is it made fraud easier." Sally Johnstone, executive director of the Western Cooperative for Educational Telecommunications at the Western Interstate Commission for Higher Education, says it is time for the 50-percent rule to go away, but she is concerned that Congress has not put any significant safeguards in its place. She expects fraudulent behavior to result from the ending of the rule, which will lead Congress to tighten the rules once again. "With losing the 50-percent rule, it basically means that a start-up organization can start immediately in an online environment without any history in education," Ms. Johnstone says. "Now on the one hand that might be really good. On the other hand, it's also possible that people who want to take advantage of the system can do that."

But Ms. Hawkins, of Bellevue, says students are becoming savvier about avoiding diploma mills than they were only a few years ago. They have been asking Bellevue more questions about its accreditation and the quality of its programs before enrolling. While the Internet has made it easier to defraud people, she says, it is also serving to spread information about how to avoid shady institutions.

"The 50-percent rule hasn't stopped fraud, and people will always find their way around that," Ms. Hawkins says. "Establishing your reputation as quality is becoming easier in the market."

Mixed Results

The 50-percent rule has already been waived for a select few institutions, including all-online colleges such as Capella and Jones International Universities, which are part of the Distance Education Demonstration Program. Congress created the program, run by the Department of Education, in 1998 to allow some institutions to bypass the 50-percent rule as an experiment. In addition to all-online institutions, program participants include mainstream universities that are nowhere near having 50 percent of their enrollment online, such as Texas Tech University, which act as a type of control group for the experiment.

Some of the institutions that participated in the demonstration program saw significant growth in their online enrollment. Western Governors University, an all-online institution, saw its enrollment jump into the thousands since it was created in the late 1990s. University of Maryland University College's online enrollment surpassed its traditional enrollment several years ago.

However, the demonstration program did experience problems. The Masters Institute, based in San Jose, began enrolling more than half its students online shortly after receiving a waiver through the program. But soon afterward, the institution closed down, leaving its students in a lurch.
The Education Department found that Masters had committed fraud in its dispersal of student aid, but department officials determined that the fraud was not related to the institution's participation in the demonstration program. Some California education officials, however, maintain that it was the university's foray into distance education that caused many of its problems (The Chronicle, February 1, 2002).

Several online institutions that were not part of the demonstration program have been anxiously waiting for the 50-percent rule to be lifted. Previously, many of those institutions relied on students who were in the military or worked for private companies that would reimburse them for the cost of their education.

Grantham University, an online institution based in Kansas, plans to become Title IV eligible, but officials are going to make the move slowly. Tom Macon, chief executive of Grantham, says the university should become eligible by mid-2006 and then, if it appears to be ready, may begin letting students use federal financial aid at the beginning of 2007.
"As we get comfortable, we'll dip our toe in that pool," Mr. Macon says. "We're really going to be very methodical about this. We're not going to jump in."

The last thing he wants to do, Mr. Macon says, is make a mistake. So the university is going to spend the coming months setting up its infrastructure and getting outside help to make sure students don't run into problems when they apply for federal aid. "I know a lot of people are going to jump into it, and they're going to make mistakes," Mr. Macon says. "There's no margin for error when it comes to Title IV. None."

Accounting for non accountants blog added to our blog roll!

We are always looking for new resources. We just added the, "Accounting for non-accountants blog" to our blog roll. John Day the author has been a practicing accountant for over twenty-seven years. Currently, he maintains an active accounting and tax practice in Santa Barbara, and Sonora, California. We hope you enjoy this and our other great recommended blogs and web sites!

Just steps from campus, some students still prefer classes online.

This is a great article written by Justin Pope who is an Education Writer for The Associated Press. To read the article click here. We found this great article on Online Learning Update Blog by Ray Schroeder. A link to his blog is on our blog roll. Thanks Ray!

Online learning update blog is added to our blog roll.

We are always looking for more learning resources to share with you. We also want to make sure the content of blogs and links we recommend will be helpful to you. We are pleased to announce the recent addition of the Online Learning Update Blog to our blog roll and links list.

This blog is written and maintained by Ray Schroeder, Professor Emeritus/Director Office of Technology Enhanced Learning University of Illinois at Springfield. Thanks Ray for your great blog!

State of Michigan considers requiring high school students to take one online course.

The Chronicle of Higher Education recently reported, "The Michigan State Board of Education is set to approve a new graduation requirement that would make every high-school student in the state take at least one online course before receiving a diploma.

The new requirement would appear to be the first of its kind in the nation. Mike Flanagan, the Michigan state superintendent of public instruction, said he proposed the online-course requirement, along with other general requirements, to make sure students were prepared for college and for jobs, which are becoming more technology-focused." To read the entire article click here.