Distance education is not a new concept, but in recent years, it has assumed markedly new forms and greater prominence. Distance education’s older form was the correspondence course—a home study course generally completed by mail. More recently, distance education has increasingly been delivered in electronic forms, such as videoconferencing and the Internet. Some of these newer forms share more features of traditional classroom instruction. For example, students taking a course by videoconference generally participate in an actual class in which they can interact directly with the instructor. Many postsecondary schools have added or expanded electronically-based programs, so that distance education is now relatively common across the entire postsecondary landscape. We estimate that in the 1999-2000 school year, about 1.5 million of the 19 million students involved in postsecondary education took at least one electronically transmitted distance education course. Education reports that an estimated 84 percent of four-year institutions will offer distance education courses in 2002. While newer forms of distance education may incorporate more elements of traditional classroom education than before, they can still differ from a traditional educational experience in many ways. For example, Internet- based distance education, in which coursework is provided through computer hookup, may substitute a computer screen for face-to-face interaction between student and instructor. Chat rooms, bulletin boards, and e-mail become common forms of interaction. Support services, such as counseling, tutoring, and library services, may also be provided without any face-to-face contact. As the largest provider of student financial aid to postsecondary students (an estimated $52 billion in fiscal year 2002), the federal government has a substantial interest in the quality of distance education. Under Title IV of the HEA, the federal government provides grants, work-study wages, and student loans to millions of students each year. For the most part, students taking distance education courses can qualify for this aid in the same way as students taking traditional courses. Differences between distance education and traditional education pose challenges for federal student aid policies and programs. For example, in 1992, the Congress added requirements to the HEA to deal with problems of fraud and abuse at correspondence schools—the primary providers of distance education in the early 1990’s. These requirements placed limitations on the use of federal student aid at these schools due to poor quality programs and high default rates on student loans. Such problems demonstrate why it is important to monitor the outcomes of such forms of course delivery. In monitoring such courses, the federal government has mainly relied on the work of accrediting agencies established specifically for providing outside reviews of an institution’s educational programs. Our analysis of the NPSAS showed that the estimated 1.5 millionpostsecondary students who have taken distance education courses have different demographic characteristics when compared with the characteristics of postsecondary students who did not enroll in distance education. These differences included the following. Distance education students are older. As figure 1 demonstrates, students who took all their courses through distance education tended to be older, on average, when compared to other students. Distance education students are more likely to be married. Figure 2 shows that graduate and undergraduate students that took all of their courses through distance education are more likely to be married than those taking no distance education courses. Undergraduates taking distance education courses are more likely to be female. Women represented about 65 percent of the undergraduate students who took all their courses through distance education. In contrast, they represented about 56 percent of undergraduates who did not take a distance education course. For graduate students, there was no significant difference in the gender of students who took distance education courses and those who did not. Distance education students are more likely to work full-time. As figure 3 shows, a higher percentage of distance education students work full-time when compared to students who did not take any distance education courses. This difference was greatest among graduate students where about 85 percent of the students that took all of their courses through distance education worked full-time compared to 51 percent of students who did not take any distance education courses. Distance education students are more likely to be part-time students. As might be expected, distance education students tend to go to school on a part-time basis. For undergraduates, about 63 percent of the students who took all their courses through distance education were part-time students while about 47 percent of the students who did not take any distance education courses were part-time students. This trend also occurred among graduate students (about 79 percent of those who took their entire program through distance education were part-time students compared with about 54 percent of those who did not take any distance education courses). Distance education students have higher average incomes. Figure 4 shows that in general, graduate students that took distance education courses tended to have higher average incomes than students that did not take any distance education courses. We found similar patterns for undergraduate students. In addition to the demographic characteristics of distance education students, NPSAS provides certain insights on the characteristics of institutions that offer distance education programs. Among other things, it provides data on the modes of delivery that institutions used to provide distance education and the types of institutions that offered distance education. Public institutions enrolled the most distance education students. For undergraduates, public institutions enrolled more distance education students than either private non-profit or proprietary institutions. Of undergraduates who took at least one distance education class, about 85 percent did so at a public institution (about 79 percent of all undergraduates attended public institutions), about 12 percent did so at private non-profit institutions (about 16 percent of all undergraduates attended private non-profit institutions), and about 3 percent did so at proprietary schools (about five percent of all undergraduates attended proprietary schools). For graduate students, public institutions also enrolled more—about 63.5 percent—distance education students than private non-profit or proprietary schools (32 and 4.5 percent, respectively). About 58 percent, 40 percent, and two percent of all graduate students attended public institutions, private non-profit, and proprietary schools, respectively. Institutions used the Internet more than any other mode to deliver distance education. Postsecondary institutions used the Internet more than any other mode to deliver distance education. At the three main types of institutions (public, private non-profit, and proprietary), more than half of the undergraduate students who took at least one distance education course did so over the Internet. Over 58 percent of undergraduate distance education students at public institutions used the Internet and over 70 percent of undergraduate distance education students at private non-profit and proprietary schools also used the Internet. Institutions that offered graduate programs also used the Internet as the primary means of delivering distance education courses. For graduate students who took at least one distance education class, 65 percent of students at public institutions used the Internet, compared with about 69 percent of students at private non-profit institutions, and about 94 percent of students at proprietary institutions. Institutions enrolled the most distance education students in subjects related to business, humanities, and education. For undergraduates, about 21 percent of students who took their entire program through distance education studied business and 13 percent studied courses related to the humanities. This is similar to patterns of students who did not take any distance education classes (about 18 percent studied business and about 15 percent studied humanities). For graduate students, about 24 percent of students who took their entire program through distance education enrolled in courses related to education and about 19 percent studied business. Again, this is similar to patterns of graduate students who did not take any distance education classes (about 23 percent studied education and about 17 percent studied business). Federal student aid is an important consideration for many students who take distance education courses, although not to the same degree as students in more traditional classroom settings. Students who took their entire program through distance education applied for student aid at a lower rate than students who did not take any distance education courses (about 40 percent compared with about 50 percent), and fewer also received federal aid (about 31 percent compared with about 39 percent). Nonetheless, even these lower percentages for distance education represent a substantial federal commitment. A number of issues related to distance education and the federal student aid program have surfaced and will likely receive attention when the Congress considers reauthorization of the HEA or when Education examines regulations related to distance education. Among them are the following: “Fifty percent” rule limits aid to correspondence and telecommunication students in certain circumstances. One limitation in the HEA—called the “50 percent rule”—involves students who attend institutions that provide half or more of their coursework through correspondence or telecommunications classes or who have half or more of their students enrolled in such classes. When institutions exceed the 50 percent threshold, their students become ineligible to receive funds from federal student aid programs. As distance education becomes more widespread, more institutions may lose their eligibility. Our initial work indicates about 20 out of over 6,000 Title IV-eligible institutions may face this problem soon or have already exceeded the 50 percent threshold. Without some relief, the students that attend these institutions may become ineligible for student aid from the federal government in the future. As an example, one institution we visited already offers more than half its courses through distance education; however, it remains eligible for the student aid program because it has received a waiver from Education’s Distance Education Demonstration Program. Without a change in the statute or a continuation of the waiver, more than 900 of its students will not be eligible for student aid from the federal government in the future. To deal with this issue, the House passed the Internet Equity and Education Act of 2001 (H.R. 1992) in October 2001.