WGU Doesn’t Owe $730 Million After All: What the Ruling Means for WGU and Online Learning

In 2017, Western Governors University (WGU) was slapped with a huge bill from the federal government. Two years later, WGU has been informed that it doesn’t owe $730 million after all. If WGU is no longer under pressure to pay back the funds, Secretary Betsy DeVos is likely to thank for the reprieve. But the WGU ruling also has broader implications for online learning nationwide.

The Back Story

WGU’s problems started back in 2017 when a federal audit found that close to 38,000 of WGU’s more than 60,000 students had completed one or more courses that didn’t meet federal standards in 2013-2014. The report also found that an estimated 69 courses that are required by WGU’s three largest programs were among the courses that did not meet federal standards. Having already received funding for these courses, the university was then asked to pay back more than $700 million dollars. At the time news broke about WGU’s woos, the Chronicle of Higher Education offered a terse assessment of the situation:

“In a traditional college, professors play a number of roles: developing the curriculum, teaching classes, evaluating students’ work, and mentoring students. Western Governors has disaggregated those roles such that the faculty member assessing students’ work and the faculty member mentoring a student could be two different people. The whole model is designed to provide lots of faculty interaction to a group of students who may need extra support to succeed in college.”

In other words, when the audit was conducted, WGU’s approach to higher education was considered problematic precisely because the  auditor didn’t think it was innovative but just another version of correspondence education and according to a 1992 law, correspondence courses aren’t eligible for Title IV funds because they just don’t meet student-faculty contact hour benchmarks.

The DeVos Factor

If WGU didn’t appear content to sit back and accept the results of the federal audit, it likely had something to do with the timing. While the audit was initiated under President Obama’s administration, by the time the results arrived and they received their fine, President Trump has been sworn in and so had his Secretary of Education, Betsy DeVos. DeVos is an outspoken advocate of competency-based learning, personalized learning, and online learning of all kinds, and as predicted, her arrival ultimately proved to be good news for WGU.

While it is unclear if the WGU audit was a direct factor, in early 2019, DeVos told the nation’s educators and the accreditors who oversee educational institutions that she wants to change the rules of the game. Her announcement has important implications for WGU and for many other online programs schools, since the change effectively means that federal funds can now be applied to a wider range of postsecondary courses. DeVos is proposing to give accrediting agencies more flexibility in deciding which programs are legit and which ones are not. This includes courses that may not meet minimum benchmarks for instructor-student contact hours.

How the WGU Decisions Will Impact Other Online Programs

On January 11, just four days after DeVos announced plans to change what counts as a course, WGU received a letter from the Office of Federal Student Aid indicating that due to “the ambiguity of the law and regulations and the lack of clear guidance available at the time of the audit period,” they would not be asked to pay back the $730 million in Title IV funds they had already received. According to Inside Higher Education, WGU will still have to pick up a small bill of $2,600 due to a minor infraction involving one student who withdrew before the cutoff date used to determine eligibility for federal funds.

For WGU, DeVos’s proposal to redefine what counts as course eligibility has already brought good news. The institution is no longer on the hook for $730 million and, moving forward, it can continue to radically disrupt what higher education looks like for thousands of students nationwide. But some observers still fear that the WGU ruling and DeVos’s proposed changes may be subject to abuse in the future.

On January 18, Robert Shireman, director of higher education excellence and senior fellow at The Century Foundation, published an article on The Century Foundation‘s website reflecting on the WGU ruling and how DeVos’s proposed shifts may impact higher education more broadly. As Shireman rightly notes, “WGU is not trying to scam anyone, and there are not throngs of former students claiming they were misled or provided an inadequate education.” But this doesn’t mean others won’t jump on the current ruling to support forms of higher education that may be subpar. In fact, according to Shireman, some institutions are already going just that.

“Sadly, some have exploited the audit’s penalty recommendation with calls to do away with the regular-and-substantive interaction requirement altogether,” explains Shireman. “In a new bill, Rep. Virginia Foxx, the chair of the House Education Committee, is proposing to allow unlimited federally funded creation and expansion of schools without teachers. Lobbyists say that the WGU situation shows that the law is preventing innovative computer-mediated learning. Their argument is unfounded, and following it would create a dangerous invitation to fraud and abuse.”

Shireman’s message is clear: Just as all brick-and-mortar schools aren’t the same, neither are all online schools. WGU’s model appears to be supporting students, making it a good candidate for federal funding, but this doesn’t mean that all online competency-based programs are producing the same outcomes. Shireman also cautions that as fully automated learning looms on the horizon, connecting funding to demonstrated learning outcomes will likely become even more important.

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