The U.S. Department of Education has released the final report for its audit of Western Governors University (WGU). Here it is.
Western Governors University began participating in the Federal student financial assistance programs in July 1999 as part of the Distance Education Demonstration Program authorized by Congress in the 1998 amendments of the Higher Education Act of 1965, as amended (HEA). As part of the Distance Education Demonstration Program, schools received waivers to provide them access to Federal funds for students whose education was delivered via distance education. Upon completion of the Distance Education Demonstration Program in 2005, the U.S. Department of Education (Department) approved Western Governors University’s continued participation in the student financial assistance programs authorized by Title IV of the HEA (Title IV).
In 2006, Congress removed restrictions that limited participation in the Title IV programs by schools offering distance education programs. Congress provided that distance education courses (then referred to as telecommunications courses) would no longer be considered correspondence courses as long as the distance education courses offered by a school exceeded 50 percent of its total course offerings. Congress retained the restrictions on correspondence programs, prohibiting the use of Title IV funds for living expenses unless a program had a residential component. Schools also continued to be ineligible if courses offered by correspondence exceeded 50 percent of the total course offerings or student enrollment in correspondence programs exceeded 50 percent of total enrollment. Additionally, students enrolled in correspondence programs continued to be limited to a half-time Federal Pell Grant Program (Pell) award. In 2008, Congress further amended the HEA to require that distance education programs “support regular and substantive interaction between the students and the instructor.”
Western Governors University’s online, competency-based educational programs were accredited as distance education programs by the Northwest Commission on Colleges and Universities (Northwest Commission). We conducted this audit to determine whether Western Governors University complied with the HEA and selected Title IV regulations governing (1) institutional eligibility, (2) program eligibility, (3) disbursements, and (4) return of Title IV aid. We evaluated compliance with the requirements for each objective independently of one another (that is, noncompliance with one requirement did not affect our conclusions about compliance or noncompliance with the other requirements). Specifically, we evaluated compliance with the requirements that •
- limit the percentage of regular students who may enroll in correspondence courses, •
- prohibit a school from awarding Title IV funds to students based on credit for learning that took place before they enrolled in the school’s courses,
- require a school to disburse Title IV funds only to students who had started attendance and to make subsequent disbursements only to students who were eligible for them at the time of the disbursements, and
- require a school to correctly determine the amount of Title IV funds students earned while enrolled.
We evaluated compliance with these requirements for award year 2013–2014 (July 1, 2013, through June 30, 2014).
We evaluated the school’s compliance with the institutional eligibility requirements of the HEA and Title IV regulations that were in effect during our audit period. Those requirements described the difference between distance education and correspondence courses: for a course to be considered distance education, the course must use technologies to support regular and substantive interaction between students and their instructors (Section 103(7) of the HEA). Although the HEA and Title IV regulations did not limit the percentage of courses that a school could offer through distance education or limit the percentage of regular students who could enroll in courses offered through distance education, a school became ineligible to participate in the Title IV programs if it offered more than 50 percent of its courses by correspondence or if 50 percent or more of its regular students were enrolled in correspondence courses. This 50- percent limitation was based on courses, not programs (Section 102(a)(3)(A) and (B) of the HEA and Title 34 of the Code of Federal Regulations, Section (34 C.F.R. §) 600.7(a)(1)). Therefore, we evaluated whether the design of the school’s individual courses met the Title IV definition of distance education or correspondence.
We concluded that Western Governors University did not comply with the institutional eligibility requirement that limits the percentage of regular students who may enroll in correspondence courses. Therefore, the Department should require the school to return the $712,670,616 in Title IV funds it received from July 1, 2014, through June 30, 2016, and any additional funds it received after June 30, 2016.
Of the 61,180 regular students enrolled in the school’s courses during award year 2013–2014, at least 37,899 (62 percent) were enrolled in one or more courses that did not meet the Title IV definition of distance education.6 For each of the 102 courses required to complete the school’s 3 largest programs, we reviewed course design materials for evidence that each course was designed to offer regular and substantive interaction between students and instructors, the key requirement to be considered a course offered through distance education. We concluded that at least 69 of the 102 courses were not designed to offer regular and substantive interaction with an instructor and, therefore, did not meet the regulatory definition of distance education. Instead, these 69 courses met the Title IV definition of a correspondence course (34 C.F.R. § 600.2). None of these 69 courses could reasonably be considered as providing regular and substantive interaction between students and instructors. Course design materials for 32 of the 69 courses described no substantive interaction with an instructor. Course design materials for 27 courses described 1 substantive interaction with an instructor. Course design materials for 10 courses described 2 substantive interactions with an instructor.
According to Section 102(a)(3)(B) of the HEA and 34 C.F.R. § 600.7(a)(1), a school is not eligible to participate in the Title IV programs if, for its latest complete award year, 50 percent or more of the school’s regular students were enrolled in correspondence courses. Because more than 50 percent of its regular students were enrolled in at least one correspondence course during award year 2013–2014, Western Governors University became ineligible to participate in the Title IV programs as of June 30, 2014 (34 C.F.R. § 600.40(a)(3)).
Although our review was limited, we did not identify any evidence indicating that Western Governors University violated the program eligibility requirement prohibiting a school from awarding Title IV funds to students based on credit for learning that took place before they enrolled in the school’s courses. We evaluated the policies and procedures that the school designed to provide reasonable assurance that it would not award Title IV funds for instruction provided by other schools, examinations, or direct assessments provided for other accomplishments (such as life experience). We then reviewed the school’s records for a sample of 10 student terms in which a student completed 36 or more competency units. We did not identify any instances in which the students received Title IV funds for learning that took place before they enrolled in Western Governors University’s courses.
Title IV Disbursements
Western Governors University did not comply with the requirements governing disbursements. The school defined its academic year as 52 weeks of instructional time during which a full-time, undergraduate student was expected to complete at least 24 competency units.7 We reviewed the records for nine full-time, undergraduate students and the course design materials for the courses in which those students were enrolled during the academic year. We concluded that the design of these courses did not provide 52 weeks of instructional time to eight of the nine students. The number of weeks of instructional time provided to the eight students varied from 8 through 40 weeks, with six students being provided fewer than the minimum number of weeks for an academic year (30 weeks) required by the HEA. Additionally, the design of these courses did not ensure that Western Governors University provided at least 26 weeks (one half of the school defined academic year or one payment period) of instructional time before disbursing Title IV funds for the students’ subsequent payment periods.
Because its academic year and payment periods did not provide the minimum weeks of instructional time required by Section 481(a) of the HEA and 34 C.F.R. § 668.3(a), Western Governors University should have considered its programs to be nonterm programs, defined payment periods as prescribed by 34 C.F.R. § 668.4(c), disbursed Title IV funds for subsequent payment periods based on the requirements for a nonterm program, and adjusted students’ Pell awards based on the regulations for nonterm programs. Instead, the school disbursed funds to students based on the requirements for a term-based program, resulting in disbursements to students who were ineligible for such disbursements at the time the school made them and resulting in the school not properly adjusting students’ Pell awards.
We also concluded that the school did not always confirm that students started attendance in the courses on which their eligibility was based before disbursing Pell funds on or after the first day of a payment period. By not confirming attendance before disbursing Pell funds, the school increased the risk that it would disburse the funds to students who were not academically active during the payment period (see OTHER MATTERS).
Return of Title IV Aid
Western Governors University did not always comply with the requirements governing the return of Title IV aid. We reviewed the school’s records for 15 students who withdrew, earned zero competency units, or both, during the payment period. We concluded that the school correctly calculated the amounts that 10 of the 15 students earned for the payment period. However, the school did not correctly determine the amounts that five of the students earned. One student never attended during the payment period but the school did not return any Title IV funds. Four other students either officially or unofficially withdrew from school but the school incorrectly calculated the amounts to return for three students (one of the students did not require a return of funds). As a result, the school returned $10,509 less than required for the four students.
We recommend that the Chief Operating Officer for Federal Student Aid (FSA) take the following actions:
- Initiate appropriate administrative action against the school pursuant to 34 C.F.R. § 600.41.
- Determine whether the school complied with the institutional eligibility requirements before award year 2013–2014. If FSA determines that the school did not comply with the institutional eligibility requirements, the Chief Operating Officer for FSA should require the school to return all Title IV funds disbursed to regular students enrolled during award years for which the school was not eligible to participate in the Title IV programs.
We also recommend that the Chief Operating Officer for FSA require Western Governors University to take the following actions:
- Return to the Department the $712,670,616 in Title IV funds the school received from July 1, 2014, through June 30, 2016, and any additional funds received after June 30, 2016.
- Return to the Department all funds disbursed to students who never earned a subsequent disbursement for student terms that started from July 1, 2013, through June 30, 2016.8
- Recalculate Pell awards in accordance with the regulations for credit-hour programs without terms for all students who received Pell funds for student terms that started from July 1, 2013, through June 30, 2016, and return to the Department all excess funds disbursed.
- Return $10,509 to the Department for students who did not begin attendance or withdrew.
- Review the records for all students whose files we did not review, determine the amount of Title IV funds that the students did not earn for the payment period, and return any unearned funds to the Department (only applies to award year 2013–2014).
- Stop making subsequent disbursements of Title IV funds to students until it implements policies and procedures for ensuring that students have completed at least the regulatory minimums for both weeks of instructional time and credit hours (competency units).
- 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.
Finally, the Chief Operating Officer for FSA needs to determine whether Western Governors University should be allowed to continue using a student’s date of academic activity verification (AAV) as the date on which the student started attending all of the classes on which his or her Title IV eligibility was based.
Western Governors University Comments
We provided the draft of this report to Western Governors University for review and comment. The school provided us with comments on the three findings but did not provide any comments on the Other Matters section of this report (see Enclosure).
Western Governors University disagreed with the finding that it was not eligible to participate in the Title IV programs (Finding No. 1). The school stated that all of the courses that the Office of Inspector General (OIG) determined to be correspondence courses were distance education courses as prescribed by the law, regulations, and sub-regulatory guidance. Western Governors University also disagreed with the finding that it disbursed Title IV funds to students before the students were eligible to receive them (Finding No. 2). The school stated that (1) the OIG only counted weeks in which individual students participated in a qualifying activity, rather than the weeks of instructional time available; (2) the school had a sufficient number of weeks of instructional time to meet its definitions of payment period and academic year; and (3) the school’s courses were not self-paced. Finally, Western Governors University disagreed with the finding that it did not always comply with the requirements governing the return of Title IV funds (Finding No. 3). The school stated that it disagreed with four of the instances cited in the finding and was researching one other instance.
In summary, Western Governors University stated that it complied with all legal and accreditation standards, and its model fulfilled the overarching purpose of the HEA in improving quality and expanding access to higher education. Therefore, the school requested that the OIG withdraw its findings and close the audit.
Since 2007, when the Department recognized Western Governors University as a competencybased, credit-hour school, the school has been required to follow all Title IV requirements applicable to a credit-hour school. Therefore, we evaluated the school’s compliance with requirements governing competency-based, credit-hour programs; we did not assess whether the school’s model was improving educational quality or expanding access to higher education. We are not withdrawing our findings or the corresponding recommendations. Western Governors University did not provide any evidence to demonstrate that the courses that we determined met the regulatory definition of correspondence courses were distance education courses (Finding No. 1). We added information to the finding to clarify our evaluation process.
Also, Western Governors University incorrectly stated that we only counted weeks in which students participated in a qualifying activity. We counted the number of weeks of instructional time that the school designed into each course (as described in the course design materials for each of the courses in which the students in our sample enrolled during the academic year). Western Governors University did not provide any additional evidence to show that it offered a sufficient number of weeks of instructional time to meet its own definition of an academic year (52 weeks) and a payment period (26 weeks) or to show that its courses were not self-paced (Finding No. 2). We clarified the finding to show that we based our conclusion on the design of each course and not actual student participation.
Finally, the school did not provide any additional evidence to show that it complied with the Title IV requirements for the return of Title IV funds for the five students cited in the finding (Finding No. 3). In the finding, we clarified that Western Governors University was not required to take attendance and did not use the midpoint of the payment period when calculating the amount of Title IV funds that should be returned for students who unofficially withdrew.
We summarized Western Governors University’s comments after each finding and included the comments in their entirety as an Enclosure to this report.
The full WGU Audit Final Report.
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