SUMMARY OF DISTANCE EDUCATION AND INNOVATION

Final Rule

Summary

Distance learning has provided new educational opportunities to millions of Americans who, as a result 

of their work schedule, family responsibilities, transportation limitations or military deployments 

cannot enroll in or complete postsecondary education offered in the traditional campus setting. 

Moreover, distance learning has enabled colleges and universities to partner to expand course 

offerings available to students, and it has enabled institutions to provide innovative solutions, such as 

competency-based learning and subscription-based programs, that provide students more flexibility, 

greater cost savings and that honor the knowledge and skills that adult learners bring with them to the 

classroom. However, the Department’s regulations regarding distance learning had not kept pace with 

advances in technology and they created tremendous uncertainty for institutions about what kinds of 

innovations were permissible, including innovations in team-approaches to instruction.

The COVID-19 pandemic has brought renewed attention to the need for postsecondary institutions to 

expand high-quality learning opportunities through the use of remote and advanced technologies to 

assist students in reaching their educational goals. 

Crafted by a diverse group of experts during the Department’s 2019 negotiated rulemaking, these final

Distance Education and Innovation regulations establish the right framework to facilitate innovation 

while maintaining educational quality, as well as important safeguards to protect students and 

taxpayers. These flexibilities go beyond the temporary waivers offered during the pandemic and 

provide the certainty institutions need to make longer-term investments in the development of new 

learning strategies, materials and opportunities. They also respond to Secretary Betsy DeVos’s call for 

institutions, educators, and policy makers to “rethink higher education” and find new ways to expand 

educational opportunity, demonstrate the value of a postsecondary credential and lifelong learning, 

and reduce costs for students, schools, and taxpayers.

These final regulations were the result of a months-long negotiated rulemaking effort that began with 

public hearings. We then engaged a subcommittee of subject matter experts to provide 

recommendations to negotiators representing the higher education community and related 

stakeholders. The negotiators considered the subcommittee recommendations and deliberated during 

four negotiating sessions, ending in consensus language that became the proposed rule. The 

Department then solicited public comments and made improvements before publishing the final 

regulation. This final regulation strikes the right balance between fostering innovation and protecting 

students and taxpayers from waste, fraud, and abuse. 

Significant Policy Changes

The final regulations –

• Provide flexibility to distance education, competency-based education (CBE), and other types of 

educational programs that emphasize demonstration of learning rather than seat time when 

measuring student outcomes.

• Remove confusion about the distinction between distance education and correspondence 

courses and more clearly define the requirements of “regular and substantive interaction” 
between students and faculty and the permissibility of engaging instructional teams in the 

delivery of education through distance learning. In addition, given the increasing reliance on 

mixed-modalities among different courses in a student’s program, the new regulations clarify

that, when calculating the number of correspondence students, a student is considered 

“enrolled in a correspondence course” if correspondence courses constitute 50 percent or 

more of the courses in which the student enrolled during an award year.

• Allow institutions to respond to students’ educational needs and potentially shorten the time to 

degree completion and the cost of completing a credential through direct assessment programs

by:

o Clarifying the requirements for direct assessment programs, including how to determine 

equivalent credit hours and how to distribute aid to simplify administration, reduce 

confusion, and protect taxpayers.

o Limiting the requirement for institutions with strong track records to obtain approval 

from the Secretary for only the first direct assessment program offered by the school at 

a given credential level. Institutions with proven track records will still be overseen by 

accreditors, but the additional Department approval for subsequent programs would be 

removed.

o Requiring institutions to report to the Secretary when adding a second or subsequent 

direct assessment program or establishing a written arrangement for an institution or 

organization that is not eligible to participate in the Title IV, HEA program to provide 

more than 25 percent, but no more than 50 percent, of a program. This requirement 

balances necessary transparency with greater flexibility for institutions to create 

partnerships, leading to jobs for students.

o Recognizing the value of “subscription-based programs,” and simplifying rules regarding 

the disbursement of title IV funding to students enrolled in these programs, which allow 

students to work at their own pace and complete their programs more quickly while 

paying a flat fee, rather than per credit tuition. The rule would create a new, studentcentric system for disbursing title IV, HEA assistance to students in subscription-based 

programs.

• Require prompt action by the Department on applications by institutions to the Secretary 

seeking certification or recertification to participate as an eligible institution in the HEA, title IV 

program. In the past, such applications have been stalled for months or even years.

o Clarify that the Secretary may deny an institution’s application for certification or 

recertification to participate in the title IV, HEA programs if an institution is not 

financially responsible or does not submit its audits in a timely manner.

• Add a definition of “juvenile justice facility” to ensure that students incarcerated in a juvenile 

justice facility continue their eligibility for Pell Grants.

• Allow students enrolled in Title IV, HEA-eligible foreign institutions to complete up to 25 

percent of their programs at an eligible institution in the United States. This provision is

particularly important for students temporarily unable to attend courses abroad due to the 

COVID-19 pandemic, for students who wish to accelerate degree completion by taking classes 

while in the U.S. during school breaks, and enabling students who need to return to the U.S. for 

other reasons to remain enrolled in postsecondary education and making progress toward 

credential completion.
• Encourages employer participation in developing educational programs by clarifying that 

institutions may modify their curricula based on industry advisory board recommendations 

without relying on a traditional faculty-led decision-making process.

• Simplifies clock-to-credit hour conversions and clarifies that homework time included in the 

credit hour definition do not translate to clock hours, including for the purpose of determining 

whether a program meets the Department’s requirements regarding maximum program length. 

• Encourages institutions to give students equal credit for time spent preparing for and 

participating in lecture and laboratory courses. For decades students have received less credit

for completing laboratory courses than lecture or other courses. 

• Clarify, in consideration of the challenges to institutions posed by State’s varying minimum 

program length standards for occupational licensing requirements that an institution may 

demonstrate for purposes of participating in title IV, HEA programs, a reasonable relationship 

between the length of a program if the number of clock hours does not exceed either 150 

percent of the minimum requirement to work in the State in which the institution is located or 

100 percent of the minimum hours in an adjacent State.

• Provide that the Secretary will rely on the accrediting agency or State authorizing agency to 

evaluate an institution’s appeal of a final audit or program review determination by the 

Department that includes a finding about the institution’s classification of a course or program 

as distance education or the institution’s assignment of credit hours.

• Encourage closing institutions to offer quality teach-outs by permitting the application of 

sanctions to individuals or institutions affiliated with other institutions that closed without 

executing a viable teach-out plan or agreement.

The Department received 237 comments from the public, most of which were supportive of the 

proposed rule. A number of comments offered suggestions for improvements, some of which were 

included in the final rule, including:

• Allowing asynchronous delivery of some courses or portions of courses delivered as part of 

clock hour programs. The COVID-19 pandemic coupled with new technologies have 

encouraged States, accrediting agencies, and licensing boards to reconsider earlier restrictions 

on the use of asynchronous distance learning technologies to deliver portions of programs that 

are typically considered to be hands-on programs. Commenters suggested that the 

Department permit the use of asynchronous learning in clock-hour programs, and the 

Department agreed, as long as licensing bodies permit the use of asynchronous learning and 

will include clock hours earned through asynchronous learning toward the clock hour 

instruction requirements.

• Clarifying that subscription-based programs are not limited to direct assessment programs. The 

proposed rule limited subscription models to direct assessment programs; however,

commenters correctly pointed out that not all competency-based education programs use 

direct assessment. The Department believes that this accountable payment structure might be 

useful to traditional ground-based programs, too.

Removing the “prior experience” requirement from written arrangements. Commenters noted

inconsistencies between the Department’s recently promulgated Accreditation and State 

Authorization regulation, and the proposed Distance Learning and Innovation regulation 
regarding similar prior experience requirements. The Department changed this regulation to 

align with the already finalized accreditation regulation, and in recognition that a prior 

experience requirement would have presented an unworkable catch-22 situation because the 

necessary experience is often difficult to obtain without regulatory permission to do so. The 

prior experience provision would have been mostly unenforceable and is seen as a barrier to 

promoting competition. 

The regulations will take effect July 1, 2021, but institutions may voluntarily implement any or all 

provisions upon publication in the Federal Register.