# Staff Report

**Summary:**

**Hearing on Internet Education: Exploring the Benefits and Challenges
of Web-Based Education**

**Before the Senate Committee on Health, Education, Labor, and
Pensions**

**Advisory Committee on Student Financial Assistance**

**September 26, 2002**

## OVERVIEW

On Thursday, September 26, 2002, members of the distance education
community testified before the Senate Committee on Health, Labor,
Education, and Pensions in a hearing titled "Internet Education:
Exploring the Benefits and Challenges of Web-Based Education." The
hearing was conducted on Senator Enzi's bill, S. 1445, as well as in
preparation for the reauthorization of the Higher Education Act. The
hearing was held at 10:00am in Room 430 of the Dirksen Senate Office
Building. Only Senator Wellstone and Senator Enzi were present.

*Witnesses included:*

Ms. Cornelia M. Ashby, Director, Education, Workforce & Income Security
Issues, U.S. General Accounting Office (GAO)

Dr. A. Frank Mayadas, Program Director, Alfred P. Sloan Foundation

Mr. Robert W. Mendenhall, President, Western Governors University

Dr. Stephen Shank, Chancellor, Capella University

Members of the panel were asked to discuss how Internet education is
changing higher education, and what consequences this could have on the
Title IV programs, as well as other government support for higher
education.

## SUMMARY OF PROCEEDINGS

***Opening Statement of Senator Paul Wellstone (D-Minnesota)***

Senator Wellstone apologized for having to leave early for a hearing on
Iraq, but said he would like to make some comments about the excellent
work distance education is accomplishing. He thanked the members of the
panel for their work, especially for helping to expand education to more
people. The goal of government aid and oversight, he noted, should be
programs of good quality without onerous government regulations. Senator
Wellstone said that he very much believed in distance education, and
looked forward to helping to make things easier for its expansion.

***Opening Statement of Senator Mike Enzi (R-Wyoming)***

Senator Enzi echoed Senator Wellstone's comments, and said he was
looking forward to helping expand access to higher education through
areas such as Internet education.

## TESTIMONY OF WITNESSES

### Testimony of Dr. Stephen Shank

Dr. Shank testified about the importance of online education, and its
role in extending access to higher education for working adults. He
noted that internet education is widely used and accepted among most
higher education institutions, and that 84 percent of 4-year colleges
and universities offer distance courses, enrolling some 2.2 million
students last year. Currently 120,000 students are enrolled in fully
on-line programs, making this not a minor subculture, but a major new
part of higher education.

Capella University is a recently accredited virtual university, meaning
that all of their classes are offered online. They now enroll over 6,500
students in all 50 states, 55 percent of whom receive financial aid from
the federal programs. Capella is an accredited school as well. Dr. Shank
noted that standards and quality were important in accrediting distance
education schools, but that outcomes should be the focus more than
inputs. At Capella, each unit has specific objectives for learning
outcomes, and programs are evaluated using these criteria. Dr. Shank
suggested that the expectation should be that the educational
effectiveness of distance and Internet based programs should be the same
as traditional models.

Dr. Shank said that the future of Internet education relies on federal
support, especially through the financial aid programs. He noted the
current Title IV rules were "overly restrictive," and suggested that
Congress build financial aid programs built on outcome quality, as
opposed to the structure of the institution. He suggested extending the
demonstration project or making it permanent, and modifying the 50
percent rule to accommodate quality programs, while retaining some
safeguards against abuse. He suggested that criteria should include: the
granting of actual degrees, faculty led courses, required level of
interaction with classmates and faculty, and regular assessment of
outcomes, including persistence and graduation rates. He concluded by
noting that Internet education is an exciting innovation to higher
education, and he urged Congress to help accommodate this innovation in
the financial aid rules.

### Testimony of Ms. Cornelia M. Ashby

Ms. Ashby testified that the GAO was currently conducting a study about
distance education, and its implications on federal education policy.
This GAO report will be issued in September of 2003, but Ms. Ashby said
she was happy to share with the committee some of their preliminary
findings. Distance education is not a new concept, but the Internet
brings a new format, and with it new challenges. The biggest challenge
is how to help access to this form of higher education while still
preventing fraud in the Title IV programs.

Ms. Ashby noted that in academic year (AY) 1999-2000, 1.5 million of 19
million postsecondary students took at least one distance education
class. The GAO has found that students that enroll in distance education
are usually older, more likely to be employed, and attending school
part-time. They are also have higher income levels, and are more likely
to be married. Most distance education courses are at public
institutions, and more are in two-year schools than four-year schools.
Fewer students are enrolled in these courses, however, at minority
serving institutions.

Regarding financial aid, Ms. Ashby said that about one-third of students
enrolled solely in distance education receive Title IV financial aid. In
AY 99-00, 40 percent of these students applied, while 31 percent
received aid. She commented that several issues existed regarding Title
IV aid, most importantly the 50 percent rule and the 12-hour rule. The
GAO also feels that accreting programs is important, as it serves as a
"gatekeeper" for quality, and is added protection against fraud.

In conclusion, Ms. Ashby testified that Internet education can present
new opportunities to expand higher education, and that Congress may want
to consider changing some of the Title IV laws to make more students
eligible for financial aid. However, she strongly commented that changes
to the Higher Education Act and regulations can not increase fraud in
the programs. She said that further research is still being conducted,
and will be featured in the final GAO report next year.

### Testimony of Dr. A. Frank Maydas

Dr. Maydas introduced himself as the Program Director at the Alfred P.
Sloan Foundation. The foundation has since 1992 run a program supporting
online learning, providing over \$45 million in grant support to 65
institutions of higher education. The Sloan Consortium now enrolls about
500,000 students annually, and offers over 400 degree and certificate
programs. He commented that Sloan views online learning to be one of the
most significant developments for higher education in the past 100
years, especially in its ability to expand access to populations never
before serviced by higher education.

Dr. Maydas testified that online learning comes in many different
formats, and it is important to look at which ones give the best quality
education to students. There are two basic models for online education.
The first is "self-study", where a student views or works with materials
posted on the web at their own pace. This is a more technological
version of the correspondence courses that have been available through
the mail for years, where students get access to materials and then
study them at their own pace. The second, and newer model, is an
"interactive" one, where students participate in classes that start at a
given time, and "attend" with a particular cohort group (and are taught
by a particular faculty member), and feature interaction through
teleconferencing, group e-mail, chat tools, and other interactive
features.

Dr. Maydas said Sloan finds this new interactive format to be the most
promising, as it reproduces the elements of a campus-based class, while
still allowing for the convenience that distance education provides. The
three elements that are reproduced are access to learning materials,
access to a professor, and interaction with other students. Dr. Maydas
commented that Sloan was excited at the potential for reproducing the
quality learning associated with campuses to a "multiplicity of
environments."

In regard to ensuring a quality education, Dr. Maydas and the Sloan
Foundation suggest that the quality of online offerings should be "about
the same" as traditional offerings of the same institution, or similar
institutions. In addition, Sloan has a quality framework of five
elements it uses for its grant recipients: increasing access beyond what
was possible with traditional methods, equivalent learning effectiveness
to on-campus students, same range and talent of faculty in online
programs as in traditional classrooms, cost effective programs, and
equal student satisfaction to students in a traditional setting. Many of
these benchmarks are meant to be compared to a school's traditional
offerings, because Sloan has found that traditional institutions with a
"campus base" run most online education programs.

Overall, Dr. Maydas noted that Sloan believes the interactive model of
online learning works, and could greatly expand access to many segments
of the population. He strongly encouraged the government to help support
this growing segment of higher education, and encouraged them to use
quality, not mode of delivery, as the criterion for this aid and
support.

### Testimony of Mr. Robert Mendenhall

Mr. Mendenhall thanked the committee for holding the hearing and asking
him to testify. He described Western Governors University (WGU), which
is a private institution created by the governors of 19 states to expand
access to higher education through distance education. Mr. Mendenhall
noted that distance education was not for everyone, nor could every
subject be taught in a distance format. He noted though that for many,
it is the only option however, which is why it is the fasted growing
segment of higher education. In the "new" economy, Mr. Mendenhall
remarked that the average working adult must now be retrained every 7
years, and distance education provides a way of doing this that meets
the needs of working adults, and is still as effective as the
traditional classroom model -- indeed, he feels it may even be better.

Mr. Mendenhall said that at WGU, the focus is on the outcome of the
education process, and that problems with Internet learning are mostly
problems with a particular course or professor, not with the method as a
whole. In his opinion, it was bad to compare distance education to a
classroom environment, except in asking the question of whether or not
the outcomes were effective.

WGU has been able to achieve some successes, especially in the WGU
teacher's college, which has helped to train career-switchers, and other
uncertified teachers. Mr. Mendenhall suggested that distance education
is perfect for this type of training. He said that this was just one of
the many areas in which Internet education could play a role in helping
to expand access, and help improve a field such as teaching.

Mr. Mendenhall had four recommendations for changes in law and policy
regarding distance education. First, he recommended ending the 50
percent-rule, which would allow distance-only institutions to offer aid
to students. Secondly, he argued that the Distance Education Training
Council (DETC) should be allowed to accredit institutions for the
purposes of Title IV. DETC is a recognized accreditation agency with
experience in distance education, and could help play a role in assuring
quality at distance education programs. Finally, he recommended keeping
the demonstration program in place, and to make changes in the Higher
Education Act reauthorization to allow distance education institutions
to participate in the student aid programs.

## QUESTIONS AND ANSWERS

### Financial Aid for Distance Education Students

Q: Senator Enzi (who was the only questioner) noted that he was a big
supporter of adopting new technology, and distance education was no
exception. He recalled that his wife had gotten a Master's degree
through distance learning, and this allowed him to see many of the
advantages, and disadvantages, first hand. He discussed his sponsorship
of S. 1445, the Internet Equity Act, which would expand access to
financial aid for distance education institutions. In his home state of
Wyoming, it could also be useful, as the University of Wyoming is the
only 4-year institution in the state. Senator Enzi then asked Ms. Ashby
about a comment in her written testimony that stated that financial aid
was not as important for distance education students.

A: Ms. Ashby replied that students have just applied for it less;
therefore they receive less aid than traditional students. Also, since
distance education students are usually older, they may have more
resources to pay for college. Finally, many distance students only
attend part-time, further reducing their costs.

Q: Senator Enzi commented that some distance education students are
applying for aid, but the rates are lower than all students. Is this
because they know that they are not eligible?

A: Ms. Ashby said that if students were eligible for aid and applied for
it, they received it. She couldn't speculate on the causes of students
not applying for aid, but said that if they were attending an ineligible
school, they would likely know not to apply.

Q: Senator Enzi asked what percentage of students in distance education
would be eligible for financial aid?

A: Ms. Ashby said she did not know the answer to the Senator's question.

### Ensuring Quality

Q: Senator Enzi then asked Dr. Mayadas how distance-only education
institutions could ensure quality.

A: Dr. Mayadas replied that it is easier to ensure quality if you have
some classroom based classes at the institution to compare it too. One
way to compare online institutions with other institutions would be to
compare them to similar ones that may have campus based segments, where
Sloan's five elements of quality would be easy to apply. Learning
effectiveness studies could also be done through this type of
comparison.

### Different Methods of Online Learning

Q: Senator Enzi noted that Dr. Mayadas talked a lot about the two modes
of online education: broadcast versus interactive. He asked if you could
have quality programs that are self-paced?

A: Dr. Mayadas said that if you have a cohort, it interacts much like a
class, with many benefits. If a course is self-paced, it works in some
fields, and for continuing education or training purposes, but he feels
it is not a good model for credit-based education. Interactivity also
ranks higher in satisfaction surveys among students.

Q: Senator Enzi asked Dr. Mayadas about a Army program he mentioned in
his written testimony.

A: Dr. Mayadas said the Army currently runs a distance education program
that is a consortium of schools. More than 20 participate currently,
with more every year. A solider can sign up for a program, and it does
not matter where they are stationed, or if they get transferred, as it
is a distance program. The Army also provides a computer and internet
access, and puts a requirement on the solider that they must make
progress in the degree program along a timeline, or else they have to
pay for the computer. Currently, 30,000 enlisted personnel are enrolled
in this program, with high completion rates. It's a good example of what
distance education can do with the right incentives.

### Is online education better for adults?

Q: Senator Enzi asked Dr. Shank why online education might be better for
adults.

A: Dr. Shank replied that the Capella model was based on adult learning.
Adults cannot usually be on campus and devote their whole live to their
education as young people can. Adults also tend to learn more if
actively engaged as peers, epically with people in similar live
circumstances. Adults do not usually respond well to the traditional
lecture-based one-way flow of information.

At a distance only institution, outcomes are what is focused on, and
students are provided with a set of outcomes for every course. Capella
tries to set outcomes, and students are evaluated on if they achieve
them.

Q: Senator Enzi asked if Dr. Shank could elaborate more on why adults
were better with interaction.

A: Dr. Shank said he liked Sloan's indicators of quality, and that
Capella has implemented most of them in their model. Active
participation is required of all students, and no one can "sit in the
back of the class" as in a traditional classroom.

Q: Senator Enzi noted that Capella was in the demonstration program, and
that 55 percent of their students received financial aid. He asked Dr.
Shank what would happen if the demonstration program ended?

A: Dr. Shank replied that the students would obviously lose their
financial aid. He also noted that a majority of students in distance
education are in schools that would not meet the 50 percent rule.

Q: Senator Enzi asked Mr. Mendenhall about some criticisms of distance
education. Specifically, detractors say that distance education limits
interaction. He asked if this was true?

A: Mr. Mendenhall said it was true in some cases, but noted that
interaction is also limited in large lecture classes that many
campus-based students have to attend. In both settings, it does not need
to be true. Western Governors University does have self-paced classes,
but every student is part of a least one learning community that
interacts with others through discussion groups, chats, and posting
boards. Faculty members also mentor students. Mr. Mendenhall said that
students at WGU are actually probably in contact with faculty members
more than students at traditional institutions.

### Teacher Education

Q: Senator Enzi asked Mr. Mendenhall how WGU helps teacher education.

A: Mr. Mendenhall noted the "No Child Left Behind" education bill asked
paraprofessionals in schools to obtain associate's degrees, and also to
have a highly certified teacher in every classroom. Currently there are
500,000 paraprofessionals in K-12 schools in need of associate's
degrees. These paraprofessionals cannot take 2 years to go back to
school to get these degrees, but it is easy for them to complete them
online. In fact, WGU has found that most students do their work online
between 10pm and 2am, meaning that most students likely work during the
day and do their studies at night. Regarding the certification of
teachers, there is in many cases no practical way to do it without
taking them out of the classroom, so online education is a factor in not
forcing those people from education, where they are badly needed.

### Quality Assurance

Q: Senator Enzi asked what quality assurance measures online schools can
take, and how they become accredited institutions.

A: Mr. Mendenhall replied that WGU uses a competency-based model to
assure quality. Students move forward when they can meet defined
assessments, not just based on passing courses, students are expected to
actually demonstrate they have acquired the skills they were supposed
to. Students also have to pass a degree assessment to graduate. He noted
that most accreditors don't like that model. They tend to look more at
institutional governance, faculty, and try to compare online
institutions with campus-based institutions. WGU has worked well with
accreditors though, and is accredited through the Western States
Association. WGU is also accredited through the DETC, which he thinks
should be a Title IV accrediting agency. One of the main reasons for
this is that regional accreditation takes up to 5 years, where DETC
accreditation can take only a year, which is important for a new
institution.

Dr. Shank said that Capella's model followed more of a traditional
academic model, where students are in classes on a regular basis. Every
learner also has to turn in papers, exams, etc to show they are
achieving the outcomes. Distance education has a different paradigm for
quality however, for example faculty members must respond quickly to
student concerns and inquiries. Also, student services are important as
well, for example, does the financial aid process work smoothly; is
there good advising, and more remedial help? Students in online
institutions can't wait in line at the financial aid office or for an
advisor like traditional students can, there needs to be a better way of
getting the services to them. Capella also spends some money on helping
their faculty teach more effectively in the online setting.

### Preventing Title IV Fraud

Q: Senator Enzi asked what some of the safeguards were to prevent fraud
in the Title IV programs?

A: Dr. Mayadas said that outcome measurements and accreditation of
institutions were the best safeguards.

Dr. Shank said that Capella proposed certain criteria be established,
such as required interaction. He was not as confident about self-paced
education meeting those standards. Dr. Shank also noted that much of the
problems with fraud were vocational and correspondence schools, and that
unlike them, online schools are accredited degree granting institutions.

Ms. Ashby replied that it is unknown just how well the accrediting
process is working. Can it be improved? If working, it would be a good
method for accountability. She felt that outcome measures alone would
not be enough protection.

Mr. Mendenhall noted that in the 1992 Higher Education Act
reauthorization, the Title IV ban was because of correspondence schools.
Since then there have been over 100 changes in financial aid
administration, which he feels should now be sufficient to cur abuse. He
encouraged Congress to during the reauthorization to be open to new
forms of education, and not require a method of learning, but rather
require outcomes. Accreditation can be a good safeguard, but it must be
timely - school should not have to wait 5 years for an initial
accreditation.

Dr. Mayadas further commented that he felt instructor-based classes
should not be a requirement, that there were other alternatives that
were worth pursuing. A lot of students are also special cases; they may
not pay tuition (i.e. the Army program, corporate programs). But, for
the average citizen, not having access to financial aid will be a
problem, so the 50 percent rule should be looked at.

### Creating New Institutions

Q: Senator Enzi asked Mr. Mendenhall why he felt that new institutions
would be better able to use distance education than existing
institutions.

A: Mr. Mendenhall replied that some existing institutions are doing a
good job, but in general (and not just with education), new innovations
require new companies. He said that it was difficult to get good
innovation within a traditional environment, there would be too much
consideration of the rest of the school, and faculty senates may have
too much of a voice, and too many concerns to allow good programs to
develop. WGU creates a new type of faculty, whose primary purpose is to
help students learn, not conduct research. Real innovation in higher
education will require new institutions.

Q: Senator Enzi asked why did governors of states with state
universities create WGU?

A: Mr. Mendenhall replied that the main reason was for economic
development. State institutions had for the most part been unresponsive
in innovating in these areas, especially with competency-based education
and access to rural areas.

Q: Senator Enzi asked the panel if there was a question he should have
asked that he did not.

A: Dr. Mayadas replied that in response to Mr. Mendenhall's comments, he
thought the motivation of the institution was more important -- new
institutions were not necessarily needed. Some community colleges have
been really motivated, and have done well. Tuition dependent private
institutions also have incentive to innovate as well.

Ms. Ashby said that she felt more internal controls were also important
to help prevent fraud.

Dr. Shank commented that the role of traditional school should be looked
at more, especially that of 2-year colleges. Many of these schools were
looking at collaborating with institutions like Cappella to expand their
reach. Many community colleges do not have the technical capacity or
financial resources to do this on their own. Collaboration is good, but
Title IV implications could limit it if not changed. He stressed that
overall, the regulation of quality was more important, especially
thinking, "What will employers think of this program?"

Mr. Mendenhall said that the demonstration program should be looked at
closely. How has it gone? What were the positives and negatives? It is
important for programs and institutions without employer support that
the get financial aid. WGU and others have worked with the Dept. of
Education to get satisfactory program guidelines. He recommended that
the demonstration program be made permanent in the new reauthorization.

## CLOSING STATEMENT

***Closing Statement of Senator Enzi (R-Wyoming)***

Senator Enzi thanked the witnesses for their testimony, and while the
Internet Equity Act may not pass this Congress, he would definitely use
the information they provided as Congress begins to look at the Higher
Education Act.