Other than statutory and regulatory requirements included in the document, the contents of this guidance do not have the force and effect of law and are not meant to bind the public. This guidance is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.

**Q1:** What makes competency-based education (CBE) programs different from traditional academic programs?

**A1:** Competency-based education (CBE) is an innovative approach in higher education that organizes academic content according to competencies – what a student knows and can do – rather than following a more traditional scheme, such as by course. [Guidance issued 02/06/2024]

**Q2:** Are there differences between credit hour CBE programs and direct assessment programs?

**A2:** There are two types of CBE programs: (1) those that measure progress using clock hours or credit hours; and (2) those that measure progress by directly assessing whether a student can demonstrate that he or she has command of a specific subject, content area or skill, or can demonstrate a specific quality of the program.

A program that is organized by competency, but measures student progress using clock or credit hours, is a CBE program but not a direct assessment program. In such a program, Title IV aid must be administered under normal statutory and regulatory provisions for clock or credit hour programs. Note that an    institution offering a CBE program using credit hours must ensure that each credit hour requires sufficient educational activity to fulfill the Federal    definition of a credit hour, as described in Q&A #3.

A direct assessment program is another form of a CBE program. Student progress in a direct assessment program is measured solely by assessing whether the student can demonstrate that he or she has a command of a specific subject, content area, or skill, or can demonstrate a specific quality associated with the subject matter of the program. Therefore, unlike a CBE program measured in credit hours, a direct assessment program does not specify the level of educational activity in which a student is expected to engage in order to complete the program. However, the program must provide students with sufficient educational resources, including substantive interaction with instructors, for students to develop each competency required for completion. Additionally, before an institution may provide Title IV aid to students in a direct assessment program, that program must be approved under the regulatory    provisions at 34 CFR 668.10.

Note that if an institution measures student progress in a program using direct assessment, but also provides credit or clock hour equivalents on a student’s transcript in order to facilitate the transfer of credit to other institutions, that    program would still be considered a direct assessment program subject to the requirements in 34 CFR 668.10. In such a case, institutional policies, publications and consumer information would need to be clear in specifying that the program is a direct assessment program rather than a clock or credit hour program. [Guidance issued 02/06/2024]

**Q3:** What are the requirements for establishing credit hours for a CBE program that is not offered using direct assessment?

**A3:** The definition of a credit hour in the regulations at 34 CFR 600.2 includes a provision    that allows an institution, along with its accrediting agency, to establish    credit hours in a CBE program that are based on an amount of expected educational activity that reasonably approximates not less than one hour of classroom instruction and two hours of out of class work each week.

For example, consider a degree program that measures student progress in credit hours. In a traditional version of that program a credit hour could consist of one    hour-long class session per week with an assumption of at least two hours of    out of class preparation (e.g., homework). A credit hour CBE version of the    program might not require structured class sessions, but it would still require sufficient academic activity – for instance, reading and writing assignments, with feedback from an instructor – to reasonably approximate three hours of expected academic engagement per week for each credit hour. The CBE version of the program could allow this work to be completed more flexibly and at the student’s desired pace, as long as the student was otherwise making satisfactory academic progress.

An institution’s policies for establishing credit hours for a CBE program must also meet all requirements and standards set by the institution’s accrediting agency. See    Q&As #14 and #15 for more about accrediting agencies’ responsibilities for reviewing CBE programs. [Guidance issued 02/06/2024]

**Q4:** What are the requirements for establishing credit hour equivalencies for the competencies in a direct assessment program?

**A4:** For CBE programs that are direct assessment programs, the regulations at 34 CFR 668.10(a)(3) require an institution    establish a methodology to reasonably equate each module in a direct    assessment program to either credit hours or clock hours. This methodology    must be consistent with the requirements of the institution’s accrediting    agency or State approval agency. The regulatory requirements that refer to    credit or clock hours as a measurement apply to direct assessment programs    according to whether they use credit or clock hour equivalencies,    respectively.

One approach to    establishing credit hour equivalencies for a direct assessment program is to    identify the intended learning outcomes of a traditional course or courses    that correspond to the competencies that have been defined for the direct    assessment program. The following example demonstrates an institution’s    mapping of the program’s competencies to traditional courses or to components    of traditional courses.
            Traditional Course 
Credit Hours

Competency

Credit Equivalent

Marketing 101

3

Apply theories, models, and practices      of marketing

1

Analyze how a company uses marketing      resources

2

Accounting 101

4

Apply theories, models, and practices      of accounting in the analysis of financial statements

1.5

Describe regulatory and ethical      issues in accounting

0.5

Integrate accounting theories,      models, and practices across an organization

2

English 101

3

Write appropriately researched      persuasive arguments

6

Communications 101

3

Statistics 101

3

Perform complex statistical      calculations

3

Management 101

4

Identify the recent major trends in      leadership theory

2

Analyze and critique leadership case      studies

2

Total

20

Total

20

Note that in order for any direct assessment program to qualify as an eligible program, the accrediting agency must have evaluated the program based on the agency’s accreditation standards and criteria, and included it in the institution’s grant of accreditation or preaccreditation. In addition, the accrediting agency must have reviewed and approved the institution’s claim of each direct    assessment program’s equivalence in terms of credit or clock hours.

The mapping described above is not the only possible method for establishing equivalencies. Another approach would be to establish the credential level of the direct assessment program, the number of credit hours typically needed to attain that    credential in an equivalent traditional program, and the proportion of the    direct assessment program represented by each competency. With this approach,    each competency could be assigned a proportional share of the total number of    expected credit hours for the program for Title IV purposes. As with the    approach described above, the institution would need to provide accrediting    agency approval. [Guidance issued 02/06/2024]

**Q5:** Are CBE programs, including direct assessment programs, less than a    year in duration eligible for Title IV, HEA program funds?

**A5:** Yes, as with any eligible program, direct assessment programs may be as    short as 10 weeks of instructional time in duration if other applicable    requirements are met. The regulatory requirements for program length are    provided in the regulations at 34 CFR 668.8. Because, as discussed above in Q&A #2, direct assessment programs    do not measure student progress using credit hours, the competencies in the    program must be the equivalent, in terms of content, to a program of at least    the minimum number of credit hours required for Title IV eligibility, and the    institution must document that mastery of program content typically requires at    least 10 weeks of academic engagement. [Guidance issued 02/06/2024]

**Q6:** Is there a specific calendar format – standard term, nonstandard term, nonterm, or subscription-based – that CBE programs must use?

**A6:** All CBE programs, including direct assessment programs, could be offered as nonterm programs. A CBE program may also be offered as a standard or nonstandard term program; however, to be offered as a standard or as a nonstandard term program, a CBE program must require students to start and finish competencies within established term dates.

Note that if an institution chooses to offer a direct assessment program as a standard term program, the duration of the term should correspond with the appropriate credit equivalency. For example, if the standard term is 14 to 21 weeks in length, the institution must use semester hour    equivalencies. If the standard term is 9 to 13 weeks in length, the    institution must use quarter hour equivalencies.

Some institutions may also use subscription-based academic calendars where an institution charges a student for each term on a subscription basis with the expectation that the student completes a specified number of credit hours (or the equivalent) during that term. If an institution is using a subscription-based academic calendar, coursework in a subscription period is not required to begin or end within a specific timeframe in each term. Additionally, students in subscription-based programs must complete a cumulative number of credit hours (or the equivalent) during or following the end of each term before receiving subsequent disbursements of Title IV aid.

CBE programs may but are not required to use subscription-based academic calendars.    Institutions may also choose to charge tuition on a subscription basis in programs using standard or nonstandard term academic calendars or nonterm calendars. However, in nonterm CBE programs, a payment period is defined as the period in which a student successfully    completes half of the number of clock or credit hours or their equivalents    (in a direct assessment program) and half of the weeks in the academic year. Therefore, in a nonterm CBE program, students’ payment periods may or may not coincide with an institution’s subscription period.

More information about subscription-based academic calendars can be found in Volume 3, Chapter 1 of the Federal    Student Aid Handbook. [Guidance issued 02/06/2024]

**Q7:** Are indirect costs – e.g. food and housing – included in a CBE student’s cost of attendance?

**A7:** A student’s cost of attendance (COA) is defined in section 472 of the HEA and, for a student enrolled on at least a half-time basis, must include allowances for living expenses (food and housing), transportation, and miscellaneous personal expenses, unless the student is incarcerated or enrolled in a correspondence program.

With the exceptions stated above, an institution must include  allowances for each of the costs above in a student’s cost of attendance when determining that student’s eligibility for Title IV funds unless the institution can document, on a case-by-case basis, that an individual student  has no such expenses, and the institution exercises professional judgment to    omit these expenses from the student’s COA. Please review the FSA  Handbook, Volume 3, Chapter 2 for more    information about other items that can be included in the COA. [Guidance issued 02/06/2024]

**Q8:** Does an institution need to document weekly academic engagement by each student in a CBE program?

**A8:** While it is expected that students will generally be academically engaged throughout an educational program, there is no requirement that the institution be able to document academic engagement for each student for every week of instructional time.

However, institutions must ensure that the instructional materials and faculty support necessary for academic engagement are available to students every week that the institution counts toward its definition of a payment period or an academic year. Note that, to the extent that instructional services supporting educational activity are not offered at any time during a    seven-day period, that week would not count toward the institution’s  definition of a payment period or an academic year, nor would it count toward    the minimum program length requirements in 34 CFR 668.8.

For all CBE programs, including direct assessment programs, academic engagement is defined as “active participation by a student in an instructional activity related to the student's course of study that is  defined by the institution in accordance with any applicable requirements of its State or accrediting agency.”

Academic engagement includes, but is not limited to:

- Attending a  synchronous class, lecture, recitation, or field or laboratory activity,    physically or online, where there is an opportunity for interaction between  the instructor and students;
- Submitting an academic assignment;
- Taking an assessment or an exam;
- Participating in    an interactive tutorial, webinar, or other interactive computer-assisted    instruction;
- Participating in a study group, group project, or an online discussion that is assigned by the    institution; or
- Interacting with an instructor about academic matters

It does not include, for example:

- Living in institutional housing;
- Participating in the institution's meal plan;
- Logging into an  online class or tutorial without any further participation; or
- Participating in academic counseling or advisement

Note that not all of the forms of academic  engagement described above fulfill the requirements for regular and    substantive interaction between students and instructors, as described in  Q&A #9 below. [Guidance issued 02/06/2024]

**Q9:** Is regular and substantive interaction between students and faculty    required for CBE programs, including direct assessment programs?

**A9:** All Title IV eligible programs, except correspondence programs, must be designed to ensure that there is regular and substantive interaction between students and instructors. Such interaction must occur as a required part of  the program. Therefore, any CBE program, including a direct assessment program, that does not include regular and substantive interaction between    students and instructors would be considered to be a correspondence program    with the significant limitations and restrictions on Title IV eligibility    that apply to such programs. [Guidance issued 02/06/2024]

**Q10:** What are the required conditions for regular and substantive interaction between students and instructors for CBE programs, including direct assessment programs?

**A10:** An institution ensures regular interaction between a student and an instructor or instructors by, prior to the student’s completion of a course or competency:

- Providing the  opportunity for substantive interactions with the student on a predictable and scheduled basis commensurate with the length of time and the amount of    content in the course or competency; and
- Monitoring the  student’s academic engagement and success and ensuring that an instructor is responsible for promptly and proactively engaging in substantive interaction    with the student when needed on the basis of such monitoring, or upon request by the student

Substantive interaction is engaging students in teaching, learning, and    assessment, consistent with the content under discussion, and also includes    at least two of the following:

- Providing direct instruction;
- Assessing or providing feedback on a student’s coursework;
- Providing information or responding to questions about the content of a course or    competency;
- Facilitating a group discussion regarding the content of a course or competency; or
- Other instructional activities approved by the institution’s or program’s    accrediting agency

We do not consider interaction that is wholly optional or initiated    primarily by the student to be regular and substantive interaction between    students and instructors. Interaction that occurs only upon the request of    the student (either electronically or otherwise) would not be considered  regular and substantive interaction.

Some institutions design their CBE programs using a faculty model where  no single faculty member is responsible for all aspects of a given course or  competency. In these models, different instructors might perform different  roles: for example, some working with students to develop and implement an    academic action plan, others evaluating assessments and providing substantive  feedback (merely grading a test or paper would not be substantive  interaction), and still others responding to content questions.

Such a model may be used to ensure regular and substantive interaction between students and instructors. However, in applying such a model, an institution must ensure that the interaction is provided by institutional  staff who meet accrediting agency standards for providing instruction in the subject matter being discussed, that the interaction is regular, and that the amount of faculty resources dedicated to the program is sufficient in the judgment of the accrediting agency. Interactions between a student and    personnel who do not meet accrediting agency standards for providing instruction in the subject area would not be considered substantive interaction with an instructor. [Guidance    issued 02/06/2024]

**Q11:** How are the quantitative and qualitative  components of the satisfactory academic progress (SAP) requirements handled for students in CBE programs?

**A11:** Satisfactory academic progress (SAP) is treated the same way in a CBE    program as it would be for other Title IV-eligible programs under 34 CFR 668.34.

An institution’s SAP policy must specify the pace at which a student is expected to progress through the CBE program to ensure that the student will complete an undergraduate program within 150% of the published length of the educational program (also known as the “quantitative measure”). If the program is a graduate program, the maximum timeframe is a period defined by the institution based on the length of the program. Because CBE programs are generally self-paced, students may graduate earlier than the published length of the program, but the institution must make a reasonable determination regarding the normal time to completion and use that determination as its published length. 

If a CBE program is measured in credit hours, or if the institution uses credit hour equivalencies for a direct assessment program, then the institution must evaluate a student’s pace under the requirements for credit hour programs in 34 CFR    668.34(a)(5) and 668.34(b). Pace in a credit hour program must be calculated by dividing the  cumulative number of hours the student has successfully completed by the  cumulative number of hours the student has attempted. The quantitative    measurement is not required in nonterm credit hour and clock hour settings.

An institution’s SAP policy must also specify a qualitative measure that a student must achieve at each evaluation. If grade point average is not an appropriate qualitative measure, a comparable assessment measured against a norm may fulfill this requirement. If an institution documents that the degree of mastery necessary to complete a competency in a CBE program equals or exceeds the equivalent of a “C” grade in a traditional program, then it may consider a student to have met the SAP qualitative measure as long as  that student has an academic standing consistent with the institution’s  requirements for graduation from the program.

Subscription-based programs follow general SAP requirements associated with term-based programs, except that an institution is not required to    perform a quantitative/pace measurement for students in such programs. In    addition, coursework completed in the middle of a subscription period (term)    will be factored in the next SAP evaluation checkpoint. [Guidance issued 02/06/2024]

**Q12:** Do the Return of Title IV Funds regulations (34 CFR 668.22) apply to CBE programs?

**A12:** Institutions offering CBE programs must follow all current regulations    and guidance related to the Return of Title IV Funds (R2T4) requirements.    Institutions should refer to the regulations at 34 CFR    668.22 and Volume 5 of the Federal Student    Aid Handbook for complete requirements and guidance. [Guidance issued 02/06/2024]

**Q13:** Since students generally progress in competency-based programs at their own pace, how are the Return of Title IV Funds (R2T4) provisions to be implemented when there are no established start and end dates for competencies?

**A13:** Because of the self-paced nature of CBE programs, we consider the time when a student is enrolled in a competency to be, for Title IV R2T4 purposes, a module if enrolled in standard or nonstandard term program, excluding subscription-based programs, or a course if enrolled in a subscription-based or nonterm program. We consider a CBE module or course to have begun when the student began working toward demonstrating mastery of the competency and ending when the student has successfully demonstrated mastery. An institution must have a  mechanism for determining and documenting that a student has begun attendance  in a payment period by working toward one or more competencies.

When a student demonstrates mastery or otherwise ceases enrollment in all competencies without beginning another competency during a payment period or period of enrollment, the institution must follow the same R2T4 provisions    that apply to the type of program a student     was enrolled in to determine if the student is considered to have    withdrawn, including a procedure for identifying students who have    unofficially withdrawn. See the regulations at 34 CFR 668.22(a)(2).

When the competencies in a term-based CBE program do not have specified start and end dates and students are enrolled to complete as many competencies as they can during the term – as in a program using “subscription periods,” as described in Q&A #6 above – students are considered to be scheduled to attend for the entire term/payment period. When,  for R2T4 purposes, an institution determines the total number of calendar days in the payment period or period of enrollment for a program offered in modules or a subscription term-based program, that calculation does not include any scheduled breaks of at least five consecutive days and days when the student is not enrolled in any competency/module or in any other course offered during that period of time (34 CFR    668.22(f)(2)(ii)(B)). Therefore, when a student withdraws from a CBE    program where the student is expected to complete as many competencies as    possible in a term, the total number of calendar days in the denominator of    the R2T4 calculation would include all of the days in the term/payment    period, less any institutionally scheduled breaks of at least five    consecutive days and any days during which the student was not enrolled in    any particular competency, module, or course.

If an institution’s CBE program is a credit hour non-term program the institution must establish a reasonable policy for determining the likely timeframe for when a withdrawn student would have completed the payment period or period of enrollment based on that student’s progress prior to    withdrawal. (See Percentage of Title IV aid earned for withdrawal    from a credit-hour non-term program in Volume 5 of the Federal Student Aid Handbook.) [Guidance issued 02/06/2024]

**Q14:** Students in CBE programs may be able to demonstrate mastery of a  competency at an accelerated pace because of prior knowledge or experience. May the credit for such mastery be used in the determination of a student’s  Title IV eligibility even if the institution provides no instruction to the student?

**A14:** No. Credit that is based solely on prior learning may not be incorporated into a student’s enrollment status for Title IV purposes in a term-based program, nor may it be considered to apply toward a student’s completion of a payment period or academic year in a non-term program.

The definition of an educational program, including a CBE program, in the regulations at 34 CFR 600.2, and the direct assessment regulation at 34 CFR    668.10(b)(2)(ii) and (d), provide that Title IV program funds may be used to support    instruction provided, or overseen, by the institution, except for the portion    of the program that the student is awarded based on prior learning.

Thus, an institution may not provide Title IV funds for an evaluation of a student’s learning without the student having engaged in substantial educational activity at the institution. An institution must be able to demonstrate that it has separated credit hours earned as a result of prior learning from hours earned as a result of educational activity at the institution.

For example, consider an institution that permits a student to earn credit or demonstrate competency after taking an examination or other assessment without the student having been engaged in any educational activity. While, consistent with the institution’s academic policy, such a student would be  able to receive academic credit toward completion of his/her program, the  institution could not include that academic credit for Title IV purposes. [Guidance issued 02/06/2024]

**Q15:** What are accrediting agencies’ roles with respect to CBE programs?

**A15:** Since offering a program using competency-based education for the first    time would be considered a substantive change to an institution’s offerings    of educational programs, pursuant to the regulations at 34 CFR    602.22, the institution must first obtain its  accrediting agency’s approval of the change before Title IV aid can be provided to students enrolled in a competency-based program.

Additionally, when an institution’s accrediting agency reviews an institution for initial accreditation, renewal of accreditation, or for a substantive change under 34 CFR 602.22, the agency must include in that review, the    institution’s policy for determining credit hours for its CBE programs to    ensure that those policies conform to commonly accepted practice in higher    education. Accrediting agencies should also ensure during such reviews that the instructors used in a CBE program meet accrediting agency standards and that the institution devotes sufficient faculty resources to the program. 

Finally, in order to approve a CBE program that is offered in whole or in part using direct assessment, an accrediting agency must be recognized by the Department to evaluate direct assessment education. An accrediting agency’s authorization to approve direct assessment programs will be noted in its scope of recognition. 	[Guidance issued 02/06/2024]

**Q16:** Are there additional accrediting agency requirements for CBE programs that are offered using direct assessment?

**A16:** An institutional accrediting agency has a number of additional roles to play in approving a direct assessment program before Title IV funds may be awarded in such a program. In order for a direct assessment program to be approved by the Department, the institution’s accrediting agency must evaluate the program based on the agency’s accreditation standards and criteria and include it in the institution’s grant of accreditation or preaccreditation.  In addition, the accrediting agency must review and approve the institution’s claim of each direct    assessment program’s equivalence in terms of credit or clock hours.

When an institution applies to the Secretary to award Title IV funds in  a direct assessment program, it must submit documentation from its accrediting    agency that the agency has evaluated the institution’s offering of the direct   assessment program and approved both the program in general and the  institution’s methodology for determining credit hour equivalence. The  Department will then review the documentation submitted by the institution to    ensure that the appropriate approvals have been provided and that the program    otherwise meets the requirements for Title IV eligibility.

Following the approval of the school’s direct assessment program by the    Department, additional direct assessment programs at an equivalent or lower    academic level may be determined to be eligible without further approvals    from the Department.  However, these    programs must be reported to the Department within 10 days of the    change.  Approval is required when the    institution offers a direct assessment program at a different level of    offering than what was previously approved.

Even if it is determined that Department approval of an additional direct assessment program is not required, each new direct assessment program must be evaluated by the institution’s accrediting agency and included in the institution’s accreditation. Additionally, the accrediting agency must review    and approve the institution’s claim of the institution’s clock or credit hour equivalency methodology for each direct assessment program. [Guidance issued 02/06/2024]