[Senate Hearing 107-752]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-752

INTERNET EDUCATION: EXPLORING THE BENEFITS AND CHALLENGES OF WEB-BASED 
                               EDUCATION

=======================================================================

                                HEARING





                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   ON



      EXAMINING THE BENEFITS AND CHALLENGES OF WEB-BASED EDUCATION

                               __________

                           SEPTEMBER 26, 2002

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions



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                            WASHINGTON : 2003
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

               EDWARD M. KENNEDY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut     JUDD GREGG, New Hampshire
TOM HARKIN, Iowa                     BILL FRIST, Tennessee
BARBARA A. MIKULSKI, Maryland        MICHAEL B. ENZI, Wyoming
JAMES M. JEFFORDS (I), Vermont       TIM HUTCHINSON, Arkansas
JEFF BINGAMAN, New Mexico            JOHN W. WARNER, Virginia
PAUL D. WELLSTONE, Minnesota         CHRISTOPHER S. BOND, Missouri
PATTY MURRAY, Washington             PAT ROBERTS, Kansas
JACK REED, Rhode Island              SUSAN M. COLLINS, Maine
JOHN EDWARDS, North Carolina         JEFF SESSIONS, Alabama
HILLARY RODHAM CLINTON, New York     MIKE DeWINE, Ohio

           J. Michael Myers, Staff Director and Chief Counsel

             Townsend Lange McNitt, Minority Staff Director

                                 ______

                                  (ii)

  
                            C O N T E N T S

                               __________

                               STATEMENTS

                           SEPTEMBER 26, 2002

                                                                   Page
Wellstone, Hon. Paul D., a U.S. Senator from the State of 
  Minnesota, opening statement...................................     1
    Prepared statement...........................................     2
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  prepared statement.............................................     4
Shank, Stephen, J.D., Chancellor, Capella University; Cornelia M. 
  Ashby, Director, Education, Workforce and Income Security 
  Issues, U.S. General Accounting Office; A. Frank Mayadas, 
  Ph.D., Program Director, Alfred P. Sloan Foundation; and Robert 
  W. Mendenhall, President, Western Governors University, Salt 
  Lake City, UT..................................................     5
    Prepared statements of:
        Mr. Shank................................................     7
        Ms. Ashby................................................    13
        Mr. Mayadas..............................................    26
        Mr. Mendenhall...........................................    32

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Response to questions from committee by GAO..................    21

                                 (iii)

  

 
INTERNET EDUCATION: EXPLORING THE BENEFITS AND CHALLENGES OF WEB-BASED 
                               EDUCATION

                              ----------                              


                      THURSDAY, SEPTEMBER 26, 2002

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:02 a.m., in 
room SD-430, Dirksen Senate Office Building, Hon. Paul 
Wellstone, presiding.
    Present: Senators Wellstone and Enzi.

                 Opening Statement of Senator Wellstone

    Senator Wellstone. The HELP Committee will come to order. I 
will put my full statement in the record, and I want to get 
started.
    Is this microphone on? No? I was apologizing for having to 
be in and out because of a hearing in the Senate Foreign 
Relations Committee on Iraq in a few minutes. I then went on 
and I explained that to me, education is a foundation of 
opportunity, and I also frankly think, as John Dewey did, that 
it is related to functioning democracy. We need citizens 
involved in the work of democracy.
    I think K through 12 is a silly definition of education. It 
should be pre-K through 65, and many of you that are involved 
with distance learning are working with a lot of the 
nontraditional students who I think have become the traditional 
students in that I think they have really essentially become 
the majority. And so I just want to thank you for your very 
fine work, and I think that the key question is going to be to 
make sure that with distance learning we have the highest 
quality education without onerous regulations that put you at a 
disadvantage. We have to find the balance here.
    Distance learning is terribly important. I speak to you as 
someone who very much believes in your mission and what you do. 
I just think we have to make sure that we also achieve 
intellectual rigor in education. And I don't think any of you, 
from looking at some of your testimony, disagree with me.
    Let me make introductions. Cornelia Ashby is Director of 
Education, Workforce and Income Security Issues at the U.S. 
General Accounting Office. GAO does some exceptional work, and 
I would like to thank you. Again, without going through a whole 
introduction that would go a long time, I think that Ms. 
Ashby's testimony is especially important for us because she 
directs studies that involve higher education, child welfare, 
child support enforcement, and adult and vocational education 
issues. So I think your testimony will be extremely important.
    Frank Mayadas--and I hope I have pronounced your name the 
right way. I want to welcome Dr. Mayadas, who is program 
director at the Alfred P. Sloan Foundation, which has done just 
fabulous work. It is a foundation that has made immense 
contributions, and your focus on areas of online education, 
globalization of industries, industry studies and career choice 
in technical fields, again, I think will be of immense benefit 
to us.
    And then, if I could, Senator Enzi, I apologize. I have to 
be in and out because of Iraq and a hearing that I have got to 
go to, but I want to give a special introduction to Steve Shank 
before you go to Mr. Mendenhall. He founded and is now 
chancellor of Capella University, which is based in 
Minneapolis. Steve began his career as an attorney with Dorsey 
and Whitney. There is much to go through in terms of some of 
his recognition as an outstanding CEO, but I just will say that 
under Steve Shank's leadership, Capella has received 
accreditation by the Higher Learning Commission of the North 
Central Association of Colleges and Schools. He won the Tekne 
Award, 2001 Tekne Award, which recognizes technology innovators 
who have made lasting contributions to technology development. 
And I especially want to thank him for stepping forward when so 
many LTV workers--around 1,300 taconite workers on the range--
were laid off. Steve offered $500,000 in scholarships to the 
families, and for that, as a Senator from Minnesota, I am 
especially grateful to you. Welcome, Steve Shank.
    [The prepared statement of Senator Wellstone follows:]

                Prepared Statement of Senator Wellstone

    I want to thank everyone for being here and I am 
apologizing in advance that I will have to leave exactly at 
10:30 for Iraq hearings. I have always said that education is 
not just for people aged 5 through 21 but really should be 
about people who are aged 0 to 65. There are very few 
innovations that have done more for non-traditional learners 
that internet education. Whether it is because it addresses the 
problems of travel, child care, work or other schedule 
concerns, on-line education has opened up higher education to 
so many people who would not otherwise have had access to an 
advanced degree.
    I am particularly hopeful that distance learning can and 
will benefit rural and economically distressed areas. I have 
met so many people who live in the Iron Range of Minnesota, for 
example, who have lost there jobs due to the LTV Mining Company 
closing. They tell me that they want to stay in their 
communities, but they also do not see any opportunities there. 
They are forced to decide between leaving their homes and where 
they grew up, and advancing their career. On-line education 
will offer many of them a solution. I thank all of you for what 
you are doing to reach traditionally underserved populations. 
In particular, I want to thank Steve Shank, whose Company 
offered $500,000 in scholarships to workers and their families 
who were negatively impacted by the LTV closing. His offer was 
very generous and I will talk more about his work in my 
introduction of him.
    I also am very cognizant of the importance of ensuring the 
quality of distance learning programs. We need to be very 
cautious about making changes to the law to be sure that 
nothing is done to diminish the quality of programs supported 
by Federal financial aid. We have representatives of high 
quality programs here today, but there are many programs that 
are not as good. It will be extremely valuable for this 
Committee to hear from all of you about how we can help grow 
distance learning programs, which have great potential, while 
at the same time ensuring that programs are the highest 
quality. Your advice will be quite useful as we approach the 
Higher Education Act Reauthorization next year. Thank you again 
for being here.
    Senator Enzi. Thank you, Mr. Chairman. I am very excited 
about these hearings today, and I am glad that we are able to 
do this. The issue of distance learning is extremely important, 
and we have a person here that represents the Western Governors 
University, Mr. Robert W. Mendenhall.
    I was at a Western Interstate Commission on Higher 
Education meeting in San Francisco when the Western Governors 
University was announced. I was impressed to learn that it 
would be a coalition of several different Western States so 
that people in rural areas would be able to get a college 
education and even degrees from home. Now, the Western 
Interstate Commission on Higher Education, WICHE, is composed 
of not only some nonuniversity people like myself, but also 
most of the university presidents, and as they announced, the 
biggest whisper that was going around the room is how will we 
charge for out-of-State tuition?
    [Laughter.]
    But they have worked through all of that, and we are very 
pleased today that Robert W. Mendenhall, the president and 
chief executive officer of the Western Governors University, 
can join us to present his unique perspective on online 
learning. The Western Governors University is a unique 
institution that was founded and supported by 19 Governors, 
including Wyoming's own Jim Geringer, as well as 24 leading 
corporations and foundations. It currently offers degrees at 
the associate's, bachelor's, and master's level in business, 
information technology, and in education.
    I am especially impressed by the Western Governors 
University Teachers College which allows paraprofessionals and 
uncertified teachers to gain teaching credentials. Mr. 
Mendenhall has more than 20 years' experience in the 
development, marketing, and delivery of technology based on 
education. Among his many accomplishments, he was previously 
the director of IBM's K-12 Education Division, as well as the 
founder, president, and CEO of Wicat Systems, Incorporated, a 
leading provider of computer-based curriculum, instructional 
management and testing and technology-based training for both 
Government and industry. And I thank you, Mr. Mendenhall, for 
being a part of this hearing today. This will probably be a 
very basic hearing that will have some real core information 
that we need to be able to cover this topic as we get into next 
year's reauthorization of the Higher Education.
    [The prepared statement of Senator Enzi follows:]

                   Prepared Statement of Senator Enzi

    Thank you Mr. Chairman. I would like to begin by thanking 
Senator Kennedy and his staff for agreeing to hold this 
hearing. I am pleased that we have been able to work together 
to investigate the potential that distance learning holds for 
our nation's students.
    As some of you may know, I have a very personal interest in 
the issue of distance education. I saw how effective it can be 
because my wife, Diana, received her masters degree in adult 
education by taking online classes through the University of 
Wyoming while living here in Washington. After witnessing the 
high quality of the course work, the responsiveness to 
students' needs, and the technological flexibility that enabled 
Diana's experience, I have become a strong advocate for 
distance learning.
    In an effort to make distance education more accessible to 
post-secondary students, I was pleased to sponsor S. 1445, the 
Internet Equity and Education Act of 2001 in the Senate. This 
important legislation, which is based on the findings of the 
bipartisan Web-Based Education Commission on which I served, 
will accomplish the critical goal of giving more students the 
opportunity to pursue post-secondary education by expanding 
access to financial aid for students who choose to further 
their education through distance education.
    I am especially pleased to be able to sponsor this 
legislation at a time when schools like the University of 
Wyoming are experiencing record breaking enrollments in their 
distance education programs. As some of you may know, the 
University of Wyoming has the daunting task of being the only 
4-year institution providing access to higher education for 
students spread across 98,000 square miles that make up the 
State of Wyoming, not to mention those who come from across the 
nation and the globe. Since the University of Wyoming launched 
``Online UW'' in 1999 class enrollments and course offerings 
have increased dramatically. It is my hope that Congress will 
be able to modernize the Higher Education Act so that distance 
education programs like those at the University of Wyoming will 
be able to expand even further to serve more interested 
students.
    I hope this hearing will allow this Committee to take a 
look at a variety of issues surrounding distance education as 
we move towards the reauthorization of the Higher Education 
Act. I look forward to working with my colleagues to find ways 
to hold distance education programs to the same financial aid 
accountability standards as those offered on a traditional 
semester or quarter basis while ensuring that Federal student 
aid programs are free from fraud and abuse.
    Thank you Mr. Chairman.
    Senator Wellstone. And Senator Enzi has been as engaged in 
this issue and has legislation, and I think will be definitely 
one of the key Senators working on this issue.
    Ms. Ashby, with your indulgence, can I ask Mr. Shank to 
start off just because I can't stay very long? And I apologize 
to the other panelists.
    Mr. Shank?

    STATEMENTS OF STEPHEN SHANK, J.D., CHANCELLOR, CAPELLA 
 UNIVERSITY; CORNELIA M. ASHBY, DIRECTOR, EDUCATION, WORKFORCE 
AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING OFFICE; A. 
    FRANK MAYADAS, PH.D., PROGRAM DIRECTOR, ALFRED P. SLOAN 
   FOUNDATION; AND ROBERT W. MENDENHALL, PRESIDENT, WESTERN 
            GOVERNORS UNIVERSITY, SALT LAKE CITY, UT

    Mr. Shank. Thank you, Senator Wellstone and Senator Enzi. I 
would express my appreciation for the opportunity to discuss 
with the committee the importance of online education in the 
context of the reauthorization.
    I would like to address three points. One is the role of 
online education in extending access particularly for the 
working adults who are so important to our social success; I 
would like to talk about the educational effectiveness of this 
instructional format; and, finally, a brief look at the future 
prospects for continuing innovation in technology-enabled 
teaching and learning.
    Online education has been one of the most promising and 
exciting innovations in higher education. It has become a 
widely used and accepted instructional method for both distance 
programs and on-campus programs. Eighty-four percent of 
American 4-year colleges and universities offer distance 
courses, much of that online. Currently, there are 2.2 million 
students enrolled in these distance courses.
    We at Capella University like to think that we are an 
example of what is going on here. We are recently accredited 4-
year university--or recently accredited virtual university, I 
meant to say. We serve 6,500 working adult students pursuing 
undergraduate and graduate degree programs residing in all 50 
States. And for these students, Federal financial aid is very 
important. Fifty-five percent of our students do use Federal 
financial aid because we are extending opportunities to people 
who need both economic assistance and educational support.
    The working adult population, as Senator Wellstone 
mentioned, is critically important in terms of providing 
educational opportunities, and we are talking about both the 
social and the economic success of our society.
    There are millions of people who have continuing education 
needs in the form of work-related knowledge requirements, 
changes imposed by technology all the time. It is almost a 
majority of Americans now that are enrolled, adults in the 
higher education programs, and that will soon become a 
majority. This is a population that has been underserved by 
campus-based education. We are talking about busy people who 
don't have 2 hours a night 3 nights a week to drive back and 
forth.
    The other thing that might be of interest to the committee, 
we estimate that there are currently 120,000 students, again, 
primarily adults, enrolled in fully online degree programs. We 
estimate that this will grow steadily throughout the decade and 
we will get to a point where there will be in the range of 1.5 
million enrollments by 2010. So this is not a minor trend in 
education.
    It is not only access that leads adults to choose to study 
online. For many people, this becomes their preferred method of 
study because it is so effective in addressing the way adults 
learn. It allows for experience-based active learning, high 
levels of interaction in the classroom, and also the ability to 
have real interaction on a professional level with peers and 
with faculty. This is an effective form of education.
    Senator Wellstone and our State of Minnesota has had a lot 
of vision in recognizing the role of technology as a bridge 
that can bring economic opportunity and educational 
opportunities to people in out-State Minnesota, particularly in 
economically impacted areas. We are proud of the role we can 
play. We think the opportunities are immense.
    We absolutely agree that we need to talk not only about 
extending access, but talk about standards and talk about 
quality. Because if we could clear the air on the standards 
issue, the ability to take this powerful form of education to 
its full potential will be really tremendous.
    There is a ton of academic research which shows that well-
designed online learning produces academic outcomes as 
effective as traditional campus-based methods. Our plea would 
be, as we talk about educational effectiveness, that we focus 
on the real results, the learning outcomes and that we move 
away from our sort of shop-worn tendency to focus on 
educational inputs like contact hours or seat time or 
educational processes.
    This is a form of education which takes place on a computer 
platform. We can measure what goes on, we can analyze results, 
and we can use it as basis for continuing improvement of 
education.
    My final point would have to do with what does the future 
look like for continuing education. I would say there is good 
news here if we have a supportive Federal policy environment. 
Educators know a lot about delivering effective learning 
online. Now we face the real prospect of expanding public 
access to broadband connectivity. The numbers show about one-
quarter of American households now have access to broadband. 
What does this mean? It means that educators can incorporate 
powerful teaching tools, like rich media, embedded assessments, 
and computer-based assessments. This is potentially very 
powerful. It gives us the tools to improve access and quality 
not only for the adults I have been talking about, but for the 
younger students, and we really need to bear in mind over the 
next 10 years it is the younger students that are the most 
technology savvy, and they expect that the educational system 
will begin to look more like the real-life experience using the 
Internet.
    I would close with a plea. I think it is clear that the 
potential of Web-based learning is very strong and very 
powerful. That is what the Commission on Web-based Learning 
found and recommended. The current Title IV rules are overly 
restrictive as it impacts high-quality online education.
    We would hope that Congress in its role in fostering 
healthy educational innovation will create appropriate 
financial aid policies which allow the development of quality 
education, which does put the focus on real outcomes, which 
balances the need for integrity--and we absolutely agree with 
that--the need for quality with the very real need to make 
better progress in improving educational access in America.
    Thank you for this opportunity.
    Senator Wellstone. Thank you, Mr. Shank. Excellent 
testimony.
    [The prepared statement of Mr. Shank follows:]

                 Prepared Statement of Stephen G. Shank

    Mr. Chairman and Members of the Committee, thank you for this 
opportunity to testify about the importance of online learning in our 
system of higher education. I am Steve Shank, Chancellor and Founder of 
Capella University.
                                SUMMARY

    Online learning is one of the most exciting and promising 
developments in higher education over the past decade. This educational 
format leverages the power of technology to enrich learning and create 
new educational opportunities. Millions of students are enrolled in 
online courses offered by the full range of higher education 
institutions from virtual universities to traditional universities and 
public and private four and 2-year colleges. Online courses extend 
educational access to working adults, who have been previously 
underserved, and enrich instruction for traditional campus based 
students. A substantial body of research demonstrates that web based 
instruction produces quality learning outcomes comparable to 
traditional programs. As one of the pioneers in online education, 
Capella University can attest that we are just now beginning to realize 
the enormous potential of online education. In the future we can expect 
ongoing innovation and a further diffusion of technology-based learning 
which will improve access and quality across the entire spectrum of 
education in America. This is vital to the achievement of a well 
educated society and a productive workforce. The re-authorization of 
the Higher Education Act provides a critical opportunity for Congress 
to promote the continued growth of online education. We look forward to 
working with the committee and the Department of Education on the re-
authorization of the Higher Education Act to ensure that the student 
financial aid rules appropriately accommodate this important component 
of our educational system.

                         BACKGROUND ON CAPELLA

    Based in Minneapolis, Minnesota, Capella is a fully online, 
regionally accredited university. Our mission is to use modern 
technology to create educational access for working adults who need to 
advance their education, but who might not otherwise be able to do so 
because of job or family commitments. We serve 6,500 online degree 
students who reside in all 50 States. Capella offers Bachelor of 
Science completion programs in Business and Technology, and an array of 
Master's and doctoral programs in the fields of Education, Human 
Services, Information Technology, Management and Psychology.
    Capella is accredited by The Higher Learning Commission, member of 
the North Central Association of Colleges and Schools. Throughout our 
university's development, our experience has been that the 
accreditation process has provided helpful and effective challenges to 
us with respect to developing our institutional capabilities and 
assuring effective learning outcomes for students.
    Fifty-five percent of our students receive Federal student 
financial aid as a result of Capella's participation in the Department 
of Education's Distance Learning Demonstration Program which waives 
certain statutory and regulatory provisions relating to Title IV 
funding.
    Our online courses provide a good example of the types of web-based 
instructional formats now being used throughout higher education. They 
are faculty-led, highly collaborative, and based on an active learning 
approach grounded in the extensive research about effecting adult 
education. Capella's students are challenged to apply their learning 
immediately to their responsibilities at work. The typical course is 
divided into eight to ten weekly learning units, delivered over a 
standard 12 week quarter term.
    The e-course room is the central point for interaction among 
students and the instructor. The courses are led by qualified faculty 
instructors who have the terminal degree in their field and extensive 
experience teaching in both traditional and online higher education 
environments. The faculty instructor serves as a content expert, guide 
to the development of expected academic and professional capabilities 
and facilitator of discussion among students. The average faculty to 
student ratio for a course is 1:12.
    The weekly course materials may include offline reading, online 
materials and streaming media, case studies and problem-based team 
assignments. Every student is required to participate substantively in 
the week's assignments, which may include required discussions and/or 
team projects. The student participation occurs via asynchronous 
postings in a ``threaded'' (or schedule-independent) discussion format. 
This structure enables active participation in a social learning 
environment, where students can process, integrate and reinforce 
learning with their peers. At the same time, it creates the scheduling 
flexibility which is so important to giving working adults real access 
to higher education.
    Each learning unit specifies clearly established unit learning 
objectives. We are midway through the development of a competency-based 
educational model. The unit learning outcomes must be related to 
specified professional competencies. We require student demonstration 
of the achievement of the learning outcomes and related competencies. 
An outcomes assessment requirement is built into the curriculum at the 
course and program levels. Generally applicable assessment guidelines 
are provided to the faculty to insure consistency of learning outcomes.

                     OVERVIEW OF DISTANCE LEARNING

    The 10-year period of our university's development has been one of 
fruitful innovation in technology-enabled education. There has been 
steady growth in the use of online instruction by institutions of 
higher education. The Internet has become a quasi-universal information 
and educational media--54 percent of Americans are now online.
    This includes a growing Internet usage by ethnic minority 
Americans. Capitalizing on this important development, educational 
institutions across the country--both traditional and non-traditional--
have implemented online instructional formats which are highly 
interactive and which effectively enable achievement of the intended 
learning outcomes.
    Web-based education has grown to a point where it is an accepted 
method of academic instruction in both distance and on-campus programs. 
Eighty-four percent of 4-year colleges reported that they expect to 
offer distance education courses in 2002. The Web-based Education 
Commission notes that 2.2 million students are expected to enroll in 
distance courses, up from 710,000 in 1998. Traditional ``brick and 
mortar'' institutions frequently find that when they offer an online 
version of a campus-based course, on-campus students compete for the 
right to enroll. The trend in distance education technologies is toward 
internet-based technologies. In 1995, 22 percent of institutions 
offered Internet courses using asynchronous delivery. By 1998, this 
grew to 60 percent.
    Of particular relevance for student financial aid policy, we 
estimate that there are currently 120,000 learners enrolled in fully-
online degree programs. These enrollments are expected to grow steadily 
through 2007 where it is estimated that 10 percent (or roughly 1.5 
million) of higher education enrollments will be online-only.
    Another important trend is the continuing growth of adult 
enrollments in higher education. The adult segment has grown much more 
rapidly than the traditional college age student population. In 2002, 
adults account for 43 percent of all enrollments in undergraduate 
programs. It has been projected that by 2010, there will be 6.8 million 
students who are 25 and over.
    These trends--increased Internet use, growth in the quantity and 
quality of online education, and increased enrollment of adult 
students--converge to address compelling economic and social needs for 
improved access to education. Department of Education statistics 
clearly demonstrate that higher levels of educational achievement 
result in higher income for all groups regardless of gender, race or 
ethnicity. Moreover, in our knowledge-based economy, millions of 
working individuals face continuing education needs which are driven by 
such forces as technology changes, global competitive pressure, and 
mandatory job-related continuing education.

            MEETING THE EDUCATIONAL NEEDS OF WORKING ADULTS

    I am emphasizing the educational needs of working adults, because 
it is this population which is primarily enrolled in fully online 
degree programs. There are several compelling reasons why adult 
students are increasingly choosing to study online.
    The first reason is access. Online education solves the logistical 
problems faced by working adults who have multiple commitments and 
responsibilities, and limited free time and scheduling flexibility. A 
very typical example is a student living in Chicago. She has a full 
time job and is the mother of 2 children. She spent 7 years earning an 
Associates degree in a traditional program. She then tried to continue 
her education in a traditional Bachelor's program, but had to drop out 
because of commuting hassles. Now, 2 years after enrolling online, 
she's about to complete her Bachelors degree.
    Beyond the benefit of educational access, online learning may, in 
fact, become the preferred method of learning for many. Adults benefit 
from an education model based on participation, mutual respect, and 
small group work. They need socialization with peers and engaged 
faculty, and education that is timely and experience-centered. Online 
learning offers the flexibility to address these varied educational 
needs.
    This learning environment can be particularly welcoming to many 
students from a variety of diverse backgrounds. When participating 
online, personal attributes such as age, gender, and ethnicity do not 
get in the way of how one is perceived by colleagues and faculty. 
Capella University is very proud that our minority enrollment figures 
meet or exceed those of most traditional universities.
    As an example of the potential of online education to address 
socially important lifelong learning needs, I am very proud that in our 
home State of Minnesota our university has been able to respond to a 
challenge from Senator Wellstone to create educational opportunities 
for dislocated Iron range workers in northern Minnesota. Senator 
Wellstone has been a great champion of the working adult. In response 
to his challenge, Capella has allotted $500,000 in scholarships and 
grants for the benefit of dislocated Iron range workers and their 
families. In connection with this initiative, Senator Wellstone 
facilitated cooperative relationships between our university and 
community colleges in rural Northern Minnesota. This, in turn, has led 
us to relationships with many community colleges across the country 
that want to train their faculty in online instruction and to give 
their alumni better access to opportunities to complete a 4-year 
degree. While continuing to work, these students live in communities 
which are often not conveniently served by traditional higher education 
programs.

             EDUCATIONAL EFFECTIVENESS OF ONLINE EDUCATION

    I have discussed the benefits of online learning. What about the 
educational effectiveness of this model of education?
    Research on distance and online learning is being conducted at 
universities throughout the world. There have been a wealth of research 
findings that demonstrate that well designed online instruction 
produces learning outcomes comparable to traditional classroom-based 
instructional approaches.
    We should expect that online learning meet the same standards of 
educational effectiveness as traditional learning models. In assessing 
educational effectiveness, the focus should be on achievement of 
intended outcomes as opposed to the more widely used approach of merely 
evaluating educational inputs such as seat time or contact hours. 
Online learning provides an excellent environment for demonstrating the 
achievement of both knowledge and performance-based learning outcomes 
because the learning is delivered on sophisticated information 
infrastructure. At our university, all of our programs and courses must 
specify learning outcomes what learners must know and be able to do 
upon completion of the instruction. Those learning outcomes must be 
measurable, with assessment embedded as a core element of the courses.
    We can demonstrate quality educational outcomes. Capella's 3-year 
persistence rate of 61 percent is comparable to traditional programs 
for adult learners. We intend to benchmark our learning outcomes 
against outcomes of traditional programs. However, there is currently 
insufficient data available for educational outcomes for the working 
adult population as a discrete student segment. This is something the 
higher education community needs to address. As we gain additional 
years of experience with the Title IV student financial aid program, we 
expect that our default rate will remain much lower than the national 
norm.

        KEY ISSUES FOR THE HIGHER EDUCATION ACT RE-AUTHORIZATION

A. The Importance of Financial Aid
    Federal financial aid is as important to creating educational 
access as is web-based educational delivery. While the vast majority of 
adult students are employed, the added expense, the deferred income, 
and time commitments related to their education impose additional 
economic burdens. Research on adult student persistence toward degree 
completion has shown that ability to pay (including financial aid) has 
a direct effect on adult students' completion of their education. 
Fifty-five percent of online students at our university rely on Federal 
financial aid.
    Unfortunately, the current Title IV financial aid rules penalize 
students studying online. It is critical that the Title IV rules be 
modified to permit participation by quality online education programs. 
The Distance Education Demonstration Project, which provides a limited 
exemption to the Title IV prohibition against online education, will 
expire on June 30, 2004. As a participant in the Demonstration Project, 
we respectfully request that the selected waivers granted under the 
demonstration project be extended until the re-authorization of the 
Higher Education Act is completed.

B. The Need for Modification of the Title IV 50 Percent Rules to 
        Accommodate Quality Online Education Programs
    The ``50 Percent Rules'' contained in the Title IV student 
financial aid legislation require institutions participating in Title 
IV programs to offer at least 50 percent of their instruction in a 
classroom based instructional format. Under these rules institutions 
which offer more than 50 percent of their instruction in an online 
format are excluded from Title IV financial aid participation.
    Congress adopted the 50 Percent Rules in the Higher Education 
Amendments of 1992. At that time a primary Congressional focus was to 
address financial aid abuse, much of which related to correspondence 
schools offering vocational programs. The 50 Percent Rules were adopted 
before the development of faculty-led interactive online education and 
before this educational format became an accepted method of academic 
instruction.
    In the Higher Education Amendments of 1998, Congress recognized the 
potential of online education. Congress mandated a Distance Learning 
Demonstration Project to facilitate an evaluation of financial aid 
delivery to students enrolled in online or other distance education 
programs. Pursuant to the Demonstration Project, the Secretary of 
Education was authorized to grant waivers of the 50 Percent Rules and 
other Title IV restrictions to permit Title IV financial aid 
participation by online and other distance learning institutions. The 
Secretary has granted waivers of the 50 Percent Rules to approximately 
15 institutions and consortium groups.
    As a fully online institution, Capella University has participated 
in the Federal student financial aid program since 1998 and 
subsequently due to the 50 Percent Rule waivers. The Demonstration 
Program will expire on June 30, 2004. After that expiration date, 
institutions that deliver instruction primarily in an online format 
will no longer be eligible for Title IV financial aid participation 
without Congressional action.
    The Fifty Percent Rules have the effect of discriminating unfairly 
against students who choose to pursue their education at online 
institutions. They also penalize those schools that specialize in 
online instruction. The application of these provisions is anomalous 
and inconsistent. It depends on whether the institution offering the 
online program offers a majority of its instruction in the traditional 
classroom teaching format and on the Department's specific methodology 
for calculating the fifty percent requirement. The rules do not 
generally prohibit financial aid to students pursuing a degree program 
online. They only prohibit participation by institutions which 
primarily teach online.
    As online instruction becomes more and more important in higher 
education, the current 50 Percent Rules will have several counter 
productive effects. First, they will unfairly penalize the category of 
academic institutions, such as Capella University, which specialize in 
online education. This discriminatory effect is unrelated to quality 
assurance concerns. Because these institutions specialize in online 
instruction, they have developed a substantial body of experience and 
expertise in delivering high quality online education. Such 
institutions also tend to be among the most innovative in higher 
education in continuing to improve and extend online educational 
delivery capabilities. Second, the programming choices made by 
institutions which offer both online and traditional instructional 
programs will be artificially constrained by the rigidity of the 50 
Percent Rule requirements, no matter what the needs of their students 
may be. These counter productive effects have no relationship to the 
originally intended objective of preventing correspondence program type 
abuse.

C. Reform of Fifty Percent Rule
    The Federal student aid program has achieved great progress over 
the past 10 years in reducing abuse and defaults. No serious 
institution wants to reopen the door to the types of financial-aid 
abuse experienced previously. The policy objective should be to refine 
the financial aid participation rules to accommodate quality online 
education programs while retaining appropriate safeguards against 
abuse. This can be done by creating a limited exception to the 50 
Percent Rules to permit participation by quality online educational 
programs. We look forward to working with the Committee during the re-
authorization of the Higher Education Act on this issue.
    At present an institution must be accredited by an accrediting 
agency recognized by the Secretary. We believe that any reform to the 
50 Percent Rules should include the following key concepts: (a) The 
online instructional program is offered by an institution authorized to 
grant academic degrees at the level of AAS or higher; (b) The courses 
are faculty led; (c) The courses require a specified level of learner 
interaction with the class per measurement period; and (d) The 
institution regularly assesses course and program learning outcomes, 
including persistence and graduation rates. Such outcomes are reported 
annually to the Secretary.
    A limited exception to the 50 Percent Rules should be flexible 
enough to allow participation by legitimate online degree programs. At 
the same time, such an exception would limit participation to academic 
programs that are faculty led and which require measurable student 
participation in courses. The requirement of institutional 
accreditation by a recognized accrediting agency provides appropriate 
assurance as to faculty credentials, institutional capability and 
student support services. The accrediting bodies have developed 
specific guidelines for evaluating the quality of online education 
programs.
    These core concepts would serve Federal policy interests issues of 
promoting quality, choice and innovation in higher education while 
preserving safeguards against abuse.

                               CONCLUSION

    I would like to conclude with some comments about the future 
outlook for technology-delivered learning. This is particularly 
important since the Higher Education Act re-authorization will 
influence higher education over the next decade.
    Higher education is not a static world. It's experiencing exciting 
innovation. Over the next 10 years we will see ongoing technology-
enabled innovation which will have a profound effect on educational 
quality and access, and will benefit all sectors of American education 
from K-12 through graduate and professional schools.
    Educators know a lot about delivering effective online instruction. 
We can now look forward to increasing public access to high band-width 
connectivity via DSL and cable modems. Increasingly, this will enable 
educators to incorporate such instructional enhancements as rich media, 
computer-based simulations, learning communities and embedded 
assessments. These instructional tools will be used in both in purely 
online programs and in traditional campus-based programs. They will 
broaden educational opportunities for both adult students and younger 
students, who are the most technology-savvy segment of our population 
and who expect that the web will be integrated into their educational 
experience.
    We will see expanding cooperation among educational institutions as 
they seek to leverage their technology resources. I've mentioned our 
growing relationships with 2-year colleges. We are now beginning to 
explore opportunities to help K-12 schools take better advantage of 
technology-enabled education.
    Web-based education is effective. It is playing an increasingly 
important role in improving educational access and quality in America. 
We urge Congress to craft student financial aid rules in the re-
authorization legislation which accommodate this valuable instructional 
model and which also accommodate ongoing educational innovation. Such 
innovation is squarely within the tradition of educational 
experimentation and adaptation in response to changing social and 
economic needs in our society.
    Thank you for this opportunity to appear before the Committee. I am 
pleased to answer any questions that the Committee may have.

    Senator Wellstone. Ms. Ashby?
    [Pause.]
    Senator Enzi. [presiding]. Someday we will be able to turn 
those on by computer.
    [Laughter.]
    If that one is not working, maybe we can trade a microphone 
here for the moment. There you go.
    Ms. Ashby. Senator Enzi, I appreciate the opportunity to 
testify on distance education and its implications for the 
student financial aid programs authorized in Title IV of the 
Higher Education Act. Distance education is not a new concept, 
but in recent years, it has assumed markedly new forms and 
greater prominence. At the same time, it has posed challenges 
with regard to the prevention of fraud and abuse in the Title 
IV programs.
    Title IV aid is an important consideration for many 
students who take distance education courses. For the 1999-2000 
school year, about 40 percent of the students who took their 
entire program through distance education applied for Title IV 
aid, and 31 percent received such aid.
    As you know, your committee asked us to assess the current 
status of distance education. Today, I will briefly discuss the 
early results of our work. Specifically, I will provide 
information on the characteristics of distance education 
students and postsecondary schools that offer distance 
education; Title IV aid issues related to distance education; 
the use of distance education in minority-serving 
institutions--that is, historically black colleges and 
universities, Hispanic-serving institutions, and tribal 
colleges; and, last, the role of accrediting agencies in 
reviewing distance education programs.
    About 1.5 million of 19 million postsecondary students took 
at least one distance education course in the 1999-2000 school 
year. Compared to other students, the distance education 
students tend to be older and are more likely to be employed 
full-time and attending school part-time. They have higher 
incomes and are more likely to be married. Most students take 
distance education courses at public institutions, with more 
taking courses from 2-year schools than from 4-year schools. 
The Internet is the most common mode of delivery for providing 
distance education.
    Several distance education issues related to Title IV have 
surfaced. One such issue, known as the 50-percent rule, 
involves students who attend institutions that provide half or 
more of their course work through distance education 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 for Title IV aid. Our initial work 
indicates that students enrolled in about 20 Title IV-eligible 
institutions may face this problem soon.
    Another issue, the 12-hour rule, involves the amount of 
instructional time that must be provided for students to 
qualify for Title IV aid. The 12-hour rule defines each week of 
instruction in a program that does not have a standard course 
length as 12 hours of instruction, examination, or preparation 
for examination. Some distance education courses do not 
necessarily fit this model.
    While our work involving the use of distance education at 
minority-serving institutions is not yet completed, the 
preliminary data indicate that MSIs, and, more specifically, 
minority students at MSIs, make less use of distance education 
than students at other schools. We will send questionnaires to 
officials at all three MSI groups to gain a better 
understanding of their use of distance education technology.
    In the meantime, the available data show that about 6 
percent of undergraduates students at HBCUs are enrolled in at 
least one distance education course, and about 1 percent took 
their entire program through distance education. These rates 
are lower than those for students at nonMSIs.
    About 51 percent of the undergraduates at Hispanic-serving 
institutions are Hispanic, but they comprise only about 40 
percent of the undergraduate students enrolled in distance 
education classes at those institutions. We were unable to 
develop data on the extent that tribal college students use 
distance education. However, officials at several tribal 
colleges told us that distance education is an appealing way to 
deliver college courses to potential students who live in 
communities dispersed over a large geographical area.
    Accrediting agencies play an important role in reviewing 
distance education programs. They and the Department of 
Education are the gatekeepers with respect to ensuring quality 
at postsecondary institutions, including those that offer 
distance education. We plan to look at how accrediting agencies 
are reviewing distance education programs and the standards 
they are using. We also plan to do work that will enable us to 
identify any improvements needed in Education's oversight of 
accrediting agencies.
    In conclusion, distance education has grown rapidly over 
the last few years, and our work indicates that it might 
present new educational opportunities for students. However, 
Congress and the administration need to ensure that changes to 
the Higher Education Act and regulations do not increase the 
chances of fraud and abuse in the Title IV programs. The work 
we have yet to complete for our final report will examine in 
more detail whether additional actions are needed to enhance 
access to higher education while maintaining the integrity of 
the Federal financial aid programs as it relates to distance 
education.
    This concludes my statement, and I would be happy to answer 
any questions.
    Senator Enzi. Thank you very much.
    [The prepared statement of Ms. Ashby follows:]

                Prepared Statement of Cornelia M. Ashby

    Mr. Chairman and Members of the Committee: I appreciate the 
opportunity to testify on issues related to distance education \1\ and 
implications for the Federal Government's student financial aid 
programs. Increasingly, the issues of distance education and Federal 
student aid intersect. About 1 in every 13 postsecondary students 
enrolls in at least one distance education course, and the Department 
of Education (Education) estimates that the number of students involved 
in distance education has tripled in just 4 years. As the largest 
provider of financial aid to postsecondary students, the Federal 
Government has a considerable interest in distance education.
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    \1\ The Higher Education Act defines distance education as an 
educational process where the student is separated in time or place 
from the instructor.
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    Mr. Chairman, as you know, your Committee and the Ranking Member 
and two members of the House Committee on Education and the Workforce, 
asked us to assess the current status of distance education. We will 
issue our final report in September 2003. Today, I will discuss the 
early results of our work. My testimony will provide information on (1) 
the demographic characteristics of distance education students and the 
institutional characteristics of postsecondary schools that offer 
distance education; (2) Federal student financial aid issues related to 
distance education; (3) the use of distance education at Minority 
Serving Institutions; \2\ and (4) the role of accrediting agencies in 
reviewing distance education programs. A major part of my testimony 
today is based on our analysis of data from the National Postsecondary 
Student Aid Study (NPSAS),\3\ an Education database covering more than 
19 million postsecondary students. We did our work from April through 
September 2002 in accordance with generally accepted government 
auditing standards.
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    \2\ We are examining three types of Minority Serving Institutions: 
Hispanic Serving Institutions, Historically Black Colleges and 
Universities, and Tribal Colleges. Hispanic Serving Institutions are 
defined as having at least 25 percent of its full-time equivalent 
students Hispanic, of which no less than 50 percent are low-income 
individuals. Historically Black Colleges and Universities are defined 
as, among other things, any historically Black college or university 
that was established prior to 1964 and whose principal mission was, and 
is, the education of Black Americans. A tribally controlled college or 
university is an institution which is formally controlled, or has been 
formally sanctioned, or chartered, by the governing body of an Indian 
tribe or tribes.
    \3\ The NPSAS is conducted approximately ever 3-4 years by the 
National Center for Education Statistics in the Department of 
Education. It is a nationwide survey designed to collect demographic 
information on postsecondary students, as well as information on how 
postsecondary students fund their education. The most recent NPSAS 
covers students attending over 6,000 Title IV eligible institutions 
during the 1999-2000 school year. NPSAS defines distance education as 
courses delivered off campus using live, interactive television or 
audio; prerecorded television or video; CD-ROM; or a computer-based 
system such as, the Internet, e-mail, or chat rooms. NPSAS does not 
cover correspondence students.
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    A decade ago, when distance education was largely the province of 
correspondence schools, concerns about fraud and abuse by some schools 
led the Federal Government to place restrictions on, among other 
things, the percentage of courses an institution could provide by 
distance education and still qualify to participate in the Federal aid 
programs authorized under Title IV of the Higher Education Act (HEA). 
Now, however, with distance education growing rapidly and becoming more 
a part of mainstream higher education through courses taught by 
Internet or videoconferencing, the Congress is reexamining these and 
other distance education rules to deternnine if changes are warranted. 
The Congress has also expressed an interest in knowing how Minority 
Serving Institutions are using distance education technology. Minority 
Serving Institutions offer postsecondary opportunities to nearly 2 
million students and many of these students are first generation 
college students.

                               IN SUMMARY

    Overall, about 1.5 million out of 19 million postsecondary students 
took at least one distance education course in the 1999-2000 school 
year. These 1.5 million distance education students differ from other 
postsecondary students in a number of respects. Compared to other 
students, they tend to be older and are more likely to be employed 
full-time and attending school part-time. They also have higher incomes 
and are more likely to be married. Most students take distance 
education courses at public institutions, with more taking courses from 
2-year schools than from 4-year schools. The Internet is the most 
common mode of delivery for providing distance education.
    Many students who take distance education courses participate in 
Federal student aid programs. About one-third of undergraduates and 
graduate students who take all their course work through distance 
education receive Title IV financial aid. As distance education 
continues to grow, several major aspects of Federal laws, rules, and 
regulations may need to be reexamined. Certain rules may need to be 
modified if a small, but growing number of schools are to remain 
eligible for student aid. Students attending these schools may become 
ineligible for student aid because their distance education programs 
are growing and may exceed statutory and regulatory limits on the 
amount of distance education an institution can offer. Other issues 
involve how to account for student participation in distance education 
and differences in student aid between some distance education students 
and classroom students.
    In general, students at Minority Serving Institutions use distance 
education less extensively than students at other schools. For example, 
undergraduates at Historically Black Colleges and Universities use 
distance education at a lower rate than students who attend non-
Minority Serving Institutions. Also, undergraduate Hispanic students 
attending Hispanic Serving Institutions use distance education less 
often than other students at these institutions.
    Accrediting agencies play an important role in reviewing distance 
education programs. They, and Education, are the ``gatekeepers'' with 
respect to ensuring quality at postsecondary institutions--including 
those that offer distance education programs. The HEA allows 
accrediting agencies to develop their own standards for ensuring the 
quality of education provided by the institutions they accredit. It 
also gives Education the authority to recognize those accrediting 
agencies it considers to be reliable authorities on the quality of 
education provided by the institutions they accredit. Critical issues 
include how well the accrediting agencies and Education are carrying 
out their responsibilities and whether changes are needed in HEA.
    The work that we have yet to complete for our final report will 
examine in more detail whether additional actions are needed to enhance 
access to higher education while maintaining the integrity of the 
Federal student aid programs as it relates to distance education.

                               BACKGROUND

    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 4-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.\4\ 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.
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    \4\ Title IV of the HEA makes a distinction between students who 
enroll in correspondence courses and those who enroll in 
telecommunications courses. For example, students enrolled in 
correspondence courses cannot be considered more than half-time 
students for student financial aid purposes, even though they may be 
taking a full credit load.
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 characteristics of distance education students and institutions that 
                        offer distance education
    Our analysis of the NPSAS showed that the estimated 1.5 million \5\ 
postsecondary students who have taken distance education courses have 
different demographic characteristics when compared with the 
characteristics \6\ of postsecondary students who did not enroll in 
distance education. These differences included the following.
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    \5\ Of the 1.5 million distance education students, 1.26 million 
were undergraduates and 272 thousand were graduate students. In total, 
there were an estimated 19.2 million postsecondary students, or 16.5 
million undergraduates and 2.7 million graduate students in the 1999-
2000 school year.
    \6\ When we cite differences in student characteristics between 
distance education students and students who did not take any distance 
education courses, the differences are statistically significant at the 
95 percent confidence level.
---------------------------------------------------------------------------
    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.\7\ 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.
---------------------------------------------------------------------------
    \7\ The design for NPSAS involves selecting a nationally 
representative sample of postsecondary education institutions and 
students within those institutions. NPSAS data come from multiple 
sources and includes a limited amount of data on institutional 
characteristics. This information is useful in developing some limited 
insights on institutions that offer distance education programs.
---------------------------------------------------------------------------
    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 \8\ 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.
---------------------------------------------------------------------------
    \8\ Of the 85 percent of undergraduate students who took at least 
one distance education course at a public institution, about 55 percent 
did so at 2-year or less institutions and 30 percent did so at 4-year 
institutions.
---------------------------------------------------------------------------
    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 
\9\), 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.
---------------------------------------------------------------------------
    \9\ Proprietary schools are for-profit postsecondary institutions. 
They can include traditional 2- and 4-year colleges and universities as 
well as trade and technical schools.
---------------------------------------------------------------------------
    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).

 GROWTH OF DISTANCE EDUCATION AFFECTS FEDERAL STUDENT AID POLICIES ON 
                             SEVERAL FRONTS

    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.\10\
---------------------------------------------------------------------------
    \10\ Students who took their entire program through distance 
education courses received an estimated $763 million in Federal student 
aid in the 1999-2000 school year. Students who took at least one 
distance education course may have also received Federal student aid; 
however, the data sources used by NPSAS do not distinguish between aid 
awarded for distance education courses and traditional classroom 
courses.
---------------------------------------------------------------------------
    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.\11\ 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.
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    \11\ ``The Congress created the Distance Education Demonstration 
Program in the 1998 amendments to the HEA to study and test possible 
solutions to Federal student aid issues related to distance education. 
The program has authority to grant waivers on certain statutory or 
regulatory requirements related to distance education and Federal 
student financial aid programs, such as the 50 percent rule.
---------------------------------------------------------------------------
    To deal with this issue, the House passed the Internet Equity and 
Education Act of 2001 (H.R. 1992) in October 2001. The House proposal 
allows a school to obtain a waiver for the 50 percent rule if it (1) is 
already participating in the Federal student loan program, (2) has a 
default rate of less than 10 percent for each of the last three years 
for which data are available, and (3) has notified the Secretary of 
Education of its election to qualify for such an exemption, and has not 
been notified by the Secretary that such election would pose a 
significant risk to Federal funds and the integrity of Title IV 
programs. The Senate is considering this proposal.
    Federal student aid policies treat living expenses differently for 
some distance education students. Currently, students living off-campus 
who are enrolled in traditional classes or students enrolled in 
telecommunications classes at least half-time can receive an annual 
living allowance for room and board costs of at least $1,500 and 
$2,500, respectively. Distance learners enrolled in correspondence 
classes are not allowed the same allowance. Whether to continue to 
treat these distance education students differently for purposes of 
Federal student aid is an open policy question.
    Regulations Relating to ``Seat'' Time. Institutions offering 
distance education courses that are not tied to standard course lengths 
such as semesters or quarters have expressed difficulty in interpreting 
and applying Education's ``seat rules,'' which are rules governing how 
much instructional time must be provided in order for participants to 
qualify for Federal aid.\12\ In particular, a rule called the ``12-hour 
rule'' has become increasingly difficult to implement. This rule was 
put in place to curb abuses by schools that would stretch the length of 
their educational programs without providing any additional instruction 
time. Schools would do this to maximize the amount of Federal aid their 
students could receive and pass back to the school in the form of 
tuition and fees. The rule defined each week of instruction in a 
program that is not a standard course length as 12 hours of 
instruction, examination, or preparation for examinations. Some 
distance education courses, particularly self-paced courses, do not 
necessarily fit this model. Further, the rule also produces significant 
disparities in the amount of Federal aid that students receive for the 
same amount of academic credit, based simply on whether the program 
that they are enrolled in uses standard academic terms or not. In 
August 2002, Education proposed replacing the 12-hour rule with a ``one 
day rule,'' \13\ which would require one day of instruction per week 
for any course. This rule currently applies to standard term courses, 
and as proposed, it would cover, among other things, nonstandard term 
courses. Education plans to publish final regulations that would 
include this change on or before November 1, 2002. Some institutions 
that might provide nonstandard distance education courses remain 
concerned, however, because Education has not identified how the ``one-
day rule'' will be interpreted or applied.
---------------------------------------------------------------------------
    \12\ Under HEA, a student must receive at least 30 weeks of 
instructional time in order to be considered a full-time student for 
financial aid purposes. For students operating under standard terms 
such as semesters, this is relatively easy to translate into semester 
hours. A full-time undergraduate attending a school that operated on 
the semester system, for example, would need to complete 24 semester 
hours to be considered a full-time student.
    \13\ ``The Internet Equity and Education Act (H.R. 1992) includes a 
similar definition for a week of instruction.
---------------------------------------------------------------------------
    In considering changes in policy that are less restrictive but that 
could improve access to higher education, it will be important to 
recognize that doing so may increase the potential for fraud if 
adequate management controls are not in place.

   MINORITY SERVING INSTITUTIONS TEND TO USE DISTANCE EDUCATION LESS 
                     FREQUENTLY THAN OTHER SCHOOLS

    While our work examining the use of distance education at Minority 
Serving Institutions (MSIs) is not yet completed, the preliminary data 
indicate that MSIs--and more specifically, minority students at MSIs--
make less use of distance education than students at other schools. 
NPSAS includes data for a projectable number of students from 
Historically Black Colleges and Universities and Hispanic Serving 
Institutions, but it only includes one Tribal College. We plan to send 
a questionnaire to officials at all three MSI groups to gain a better 
understanding of their use of distance education technology. In the 
meantime, however, the available NPSAS data showed the following:
    Students at Historically Black Colleges and Universities tend to 
use distance education to a lesser extent than non-MSI students. About 
6 percent of undergraduate students at Historically Black Colleges and 
universities enrolled in at least one distance education course and 
about 1.1 percent took their entire program through distance education. 
These rates are lower than students who took at least one distance 
education course or their entire program through distance education at 
non-MSIs.
    Hispanic students attending Hispanic Serving Institutions use 
distance education at a lower rate than their overall representation in 
these schools. About 51 percent of the undergraduates at Hispanic 
Serving Institutions are Hispanic, but they comprise only about 40 
percent of the undergraduate students enrolled in distance education 
classes. This difference is statistically significant. Similarly, our 
analysis also shows that the greater the percentage of Hispanic 
students at the institution, the lower the overall rate of distance 
education use at that school.\14\
---------------------------------------------------------------------------
    \14\ Hispanic Serving Institutions can have between 25 percent and 
up to 100 percent Hispanic students. Our analysis compares 
undergraduate Hispanic Serving Institutions with less than 50 percent 
Hispanic students and Hispanic Serving Institutions with 50 percent or 
more Hispanic students. Those institutions with 50 percent or more 
Hispanic students had a 4 percent participation rate in distance 
education; those institutions with less than 50 percent Hispanic 
students had a participation rate of 9.6 percent.
---------------------------------------------------------------------------
    Since NPSAS includes data from only one Tribal College, we were 
unable to develop data on the extent that Tribal College students use 
distance education. However, our visits to several Tribal Colleges 
provide some preliminary insights. Our work shows that distance 
education may be a viable supplement to classroom education at many 
Tribal Colleges for a number of reasons. Potential students of many 
Tribal Colleges live in communities dispersed over large geographic 
areas--in some cases potential students might live over a hundred miles 
from the nearest Tribal College or satellite campus--making it 
difficult or impossible for some students to commute to these schools. 
In this case, distance education is an appealing way to deliver college 
courses to remote locations. Additionally, officials at one Tribal 
College told us that some residents of reservations may be place-bound 
due to tribal and familial responsibilities; distance education would 
be one of the few realistic postsecondary education options for this 
population. Also important, according to officials from some Tribal 
Colleges we visited, tribal residents have expressed an interest in 
enrolling in distance education courses.

    EFFECTIVENESS OF ACCREDITING AGENCIES IS AN IMPORTANT DISTANCE 
                            EDUCATION ISSUE

    The HEA focuses on accreditation--a task undertaken by outside 
agencies--as the main tool for ensuring quality in postsecondary 
programs, including those offered through distance education. The 
effectiveness of these accreditation reviews, as well as Education's 
monitoring of the accreditation process, remains an important issue.
    To be eligible for Federal funds, a postsecondary institution or 
program must be accredited by an agency recognized by Education as a 
reliable authority on quality.\15\ Education recognizes 58 separate 
accrediting agencies for this purpose, of which only 38 are recognized 
for Title IV student aid purposes. The 58 accrediting agencies operate 
either regionally or nationally, and they accredit a wide variety of 
institutions or programs, including public and private, non-profit 2-
year or 4-year colleges and universities; graduate and professional 
programs; proprietary vocational and technical training programs; and 
non-degree training programs. Some accrediting agencies accredit entire 
institutions and some accredit specialized programs, departments, or 
schools that operate within an institution or as single purpose, 
freestanding institutions.
---------------------------------------------------------------------------
    \15\ Institutions or programs which have not yet been accredited by 
a recognized accrediting agency are also eligible to apply for Federal 
funds if Education has satisfactory assurance that the institution or 
program will meet the recognized accrediting agency's standards within 
a reasonable time. Such institutions or programs are said to hold 
``preaccreditation'' status.
---------------------------------------------------------------------------
    The HEA and regulations issued by Education establish criteria 
under which Education will recognize an accreditation agency as a 
reliable authority regarding the quality of education.\16\ The HEA 
states that accrediting agencies must assess quality in 10 different 
areas, such as curriculum, student achievement, and program length. 
Under the HEA, an accrediting agency is required to include distance 
education programs when assessing quality. In doing so, an accrediting 
agency must consistently apply and enforce its standards with respect 
to distance education programs as well as other educational programs at 
the institution.
---------------------------------------------------------------------------
    \16\ The regulations are contained in 34 CFR Part 602.
---------------------------------------------------------------------------
    Our analysis in this area is not as far along as it is for the 
other topics we are discussing today. We plan to review a number, of 
accreditation efforts to determine the way in which accrediting 
agencies review distance education programs. We expect that our work 
will address the following issues:
     How well accrediting agencies are carrying out their 
responsibilities for reviewing distance education. The HEA does not 
contain specific language setting forth how distance learning should be 
reviewed. Instead, it identifies key areas that accrediting agencies 
should cover, including student achievement and outcomes, and it relies 
on accrediting agencies to develop their own standards for how they 
will review distance education programs. We will look at how 
accrediting agencies are reviewing distance education programs and the 
standards that are being used.
    How well Education is carrying out its responsibilities and whether 
improvements are needed in Education's policies and procedures for 
overseeing accrediting agencies. Under the HEA, Education has authority 
to recognize those agencies it considers to be reliable authorities on 
the quality of education or training provided. Accrediting agencies 
have an incentive to seek Education's recognition because without it, 
students at the institutions they accredit would not be eligible to 
participate in Federal aid programs. We will conduct work to identify 
what improvements, if any, are needed in Education's oversight of 
accrediting agencies.
    In closing, distance education has grown rapidly over the past few 
years and our work indicates that distance learning might present new 
educational opportunities for students. Congress and the Administration 
need to ensure that changes to the HEA and regulations do not increase 
the chances of fraud, waste, or abuse to the student financial aid 
programs. At the request of this Committee, and members of the House 
Committee on Education and the Workforce, we will continue our study of 
the issues that we have discussed today.
    Mr. Chairman, this concludes my testimony. I will be happy to 
respond to any questions you or other members of the Committee may 
have.

                      CONTACT AND ACKNOWLEDGMENTS

    For further information, please contact Cornelia M. Ashby at (202) 
512-8403. Individuals making key contributions to this testimony 
include Jerry Aiken, Neil Asaba, Kelsey Bright, Julian Fogle, Ellen 
Habenicht, Chris Hatscher, Jill Peterson, Stan Stenersen, and Susan 
Zimmerman.

              RESPONSE TO QUESTIONS FROM COMMITTEE BY GAO

           United States General Accounting Office,
                                      Washington, DC 20518,
                                                  November 6, 2002.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, D.C. 20510-6300.
    Dear Mr. Chairman: Thank you for the opportunity to respond to 
additional questions for the September 26, 2002 hearing on distance 
education. If you have any questions concerning my responses, please 
feel free to contact me on (202) 512-8403, or my assistant director, 
Kelsey Bright, on (202) 512-9037.
    Question 1. The GAO report provides great detail on the 
demographics of who is in distance education. One of the common 
arguments used over on the House side during their debate on H.R. 1992 
was that distance education helps individuals in rural areas. Do you 
have any data supporting or disputing, this claim?
    GAO Response 1. No, we do not. We used the National Postsecondary 
Student Aid Study (NPSAS) to develop data on the demographic 
characteristics of distance education students. While NPSAS has data on 
the characteristics of distance education students, it does not contain 
data on where distance education students reside (urban or rural).
    For Tribal Colleges--many of which are located in rural settings--
it appears that distance education may be a viable alternative to 
classroom education. Based on our visits to several such colleges, we 
found that some potential postsecondary students live in remote 
locations--away from the Tribal College making it difficult for them to 
attend classes offered on campus. For example, Dine College serves the 
residents of the Navajo Nation--a reservation that covers a geographic 
area of 26,000 square-miles. According to officials at Dine College, 
distance education could be one way to serve Dine's student population 
because of the large area that it covers.

    Question 2. The issue of minorities participating in distance 
education has also been used as a means of promoting distance learning. 
The report indicates that minorities at minority institutions are not 
using this mode of learning. Do you have data on minority participation 
at other institutions?
    GAO Response 2. As we reported in our written testimony, our 
preliminary analysis indicates that, in the 1999-2000 school year, 
minority students at Minority Serving Institutions (MSI) make less use 
of distance education than students at other schools. For example, 
students at Historically Black Colleges and universities tend to use 
distance education to a lesser extent than non-MSI students.
    In contrast to the above, most black and Hispanic students at non-
MSIs took distance education courses in proportion to their overall 
representation at these schools. As Table 1 shows, black undergraduates 
comprised 10.8 percent of the total population at non-MSIs and 13.2 
percent of the students who took their entire program through distance 
education. This difference is not statistically significant. The only 
category for which there is a statistically significant difference is 
Hispanic undergraduate students, who made up 6.6 percent of the student 
population at non-MSIs, but only 3.8 percent of students who took all 
of their courses through distance education.



    Question 3. The amount of financial aid given to those in distance 
education programs is shown to be nearly $800 million. Does this amount 
include funds given to students attending institutions who are 
participating in the demonstration program?
    GAO Response 3. We cannot determine the amount of funds given to 
students attending institutions that are participating in the Distance 
Education Demonstration Program. NPSAS is based on a methodology that 
involves a sample of about 1,000 (out of over 6,000) Title IV eligible 
institutions and a sample of over 60,000 students (out of about 19 
million) students who attended those institutions. The sample results 
are then projected to the entire universe of postsecondary students who 
attended Title IV eligible schools. As could be expected, many of the 
24 participating institutions in the Distance Education Demonstration 
Program were not selected as part of the NPSAS survey. Therefore, it is 
not possible to determine through NPSAS the precise amount of Title IV 
funds that participating institutions received.

    Question 4. Along the same lines do you have data that would 
provide us with a breakdown by institution type, of exactly where the 
financial aid is going? The report indicates that a majority of the 
students are at public institutions, I am just wondering if the Federal 
financial aid money follows this path.
    GAO Response 4. Based on NPSAS data, in the 1999-2000 school year, 
of undergraduate students who received Federal financial aid and who 
took their entire programs through distance education, 76 percent 
attended public institutions. These students received 71 percent 
(approximately $415.8 million) of the total financial aid awarded to 
undergraduate students who took their entire programs through distance 
education. In the same year, and for the same group of students, 20 
percent attended private not-for-profit institutions, and they received 
25 percent (approximately $147.4 million) of the total financial aid 
awarded to undergraduates who took their entire programs through 
distance education. Lastly, 4 percent attended proprietary 
institutions, and received 4 percent (approximately $21.8 million) of 
the financial aid. See Table 2 below. Because the numbers of graduate 
students in the NPSAS sample for each type of institution was too 
small, we were unable to calculate similar statistics for graduate 
students.



    Question 5. Your report indicates that lifting the 12-hour and 50 
percent rules will have to be coupled with good management of 
institutions. Do you believe there is a way we can help promote this 
good management from the Federal level?
    GAO Response 5. Yes, we believe that good management can be 
promoted from the Federal level. The 12-hour rule and the 50 percent 
rules were put in place to help safeguard Federal student aid funds for 
certain distance education programs. With the lifting of these rules, 
other safeguards will likely be needed. Using student loan default 
rates could be one means of attempting to control fraud and abuse. As 
an example, Senate Bill 1445 would allow institutions to have more than 
50 percent of their classes as correspondence or telecommunication 
classes if they can maintain a cohort default rate of 10 percent or 
less for each of the most recent three fiscal years for which data are 
available. Also, as the Congress continues to hold executive agencies 
accountable for results of major Federal programs such as the student 
financial aid program, an emphasis on outcomes, such as student 
retention rates or program completion rates, could be another way to 
help assure the integrity of the Federal student aid programs. 
Additionally, as I discussed in my statement, the accrediting agencies 
play an important role in reviewing distance education programs and 
might offer another avenue to help ensure the integrity of the Federal 
student aid programs. Our future work on this assignment will focus on 
what improvements, if any, the Department of Education can make to 
promote good management and assure the integrity of Federal student aid 
programs as it relates to distance education programs. We plan to issue 
a report on the results of our work in September 2003.

    Question 6. Obviously the 12-hour and 50 percent rules were put in 
place because of very real threats to our Federal financial aid system. 
Protecting the already limited resources should be our goal as well as 
ensuring quality. Would it be fair to say that based on the past 
experiences, that we should proceed with caution with respect to 
lifting the 50 percent and 12-hour rules?
    GAO Response 6. The Congress imposed the 50 percent rules and 
Education developed the 12-hour rule in the early 1990's to deal with 
problems of fraud and abuse at certain correspondence schools. We 
believe that lifting or modifying either of these rules needs to be 
done in a way that maintains adequate management controls so the risk 
of fraud and abuse does not rise. Education's Distance Education 
Demonstration Program has issued waivers on the 50 percent rules to a 
number of institutions that participate in the Program. According to 
the Director, Distance Education Demonstration Program, about five or 
six of the participating institutions really need the waiver and 
several may need it in the future. Since, thus far, only a small number 
of Title IV eligible schools are having problems with the 50 percent 
rules, there may be time to evaluate alternative solutions to modifying 
the rules in a way that maintains integrity of the student financial 
aid programs.
    Although GAO is not taking a position, at this time, on how to 
modify, the 50 percent rules, several options are available. Should the 
Congress decide to extend the Distance Education Demonstration Program 
in the next reauthorization of the Higher Education Act of 1965, the 
Program could continue to be one means of evaluating the effect of 
issuing waivers of the 50 percent rules to improve access to 
postsecondary education while maintaining adequate management controls 
to reduce the risk of fraud and abuse. We plan to conduct additional 
work at several of the participating institutions in the Program to 
gain a better understanding of what the preliminary results have been 
at institutions that have received the waiver for the 50 percent rules. 
We will discuss the results of our work in the report that we plan to 
issue next year. Senate Bill 1445 would also provide a means of 
modifying the rules. For example, it would revise the current rules 
that call for a telecommunications course to be considered a 
correspondence course if the sum of telecommunications courses and 
correspondence courses equaled or exceeded 50 percent of the total 
number of courses offered by the institution. It does so by stating 
that, in such instances, courses offered via telecommunications shall 
not be considered to be correspondence courses for an institution that 
(1) is currently eligible for the Federal student loan program and (2) 
has less than a 10 percent cohort default rate for each of the three 
most recent fiscal years for which data are available.
    The 12-hour rule was a Department of Education regulation that was 
replaced by the ``one-day rule'' on November 1, 2002. However, whether 
a ``one-day rule'' will be an improvement over the 12-hour rule is 
uncertain because ``one-day'' has not been defined by Education.
            Sincerely yours,
                                         Cornelia M. Ashby,
         Director, Education, Workforce and Income Security Issues.
                                 ______
                                 

    Senator Enzi. The next testimony is from Mr. Mayadas from 
the Sloan Foundation. Mr. Mayadas?
    Mr. Mayadas. Thank you, Senator Enzi. I appreciate the 
opportunity to be here.
    Since late 1992, even before there was a commercial 
Internet, our foundation has had a program in what is now 
called online learning or e-learning, through which we have 
provided over $45 million to over 65 institutions of higher 
education. These and others who have voluntarily joined our 
consortium now in the past academic year enrolled about 500,000 
students, and they offer over 400 full-degree and certification 
programs which can be accessed through the Sloan consortium 
website.
    We at Sloan believe that online learning represents one of 
the most important developments of the past 100 years for 
higher education, for it affords access to quality education 
for many, many individuals who would, for reasons of proximity, 
age, or other circumstances, not have the opportunity. We plan 
to continue our support for this area.
    The kind of online education I will be talking about is 
what I call the interactive model, that is, classes begin on a 
particular day with a class taught by a faculty member who 
interacts with individuals through a learning management system 
and interaction with the instructor and other students is not 
incidental or occasional but continuous. The student-faculty 
ratio for these is about the same for online classes as it is 
for equivalent campus courses.
    We think this model is particularly good because it 
resembles in some ways the kinds of quality elements that we 
associate with our campuses, for on campuses, we provide 
students with three things: we provide them with learning 
materials; we provide them with more, a professor; and, 
finally, we provide them with other students.
    In most of our projects, these three elements--learning 
materials, the professor, and other students--are preserved for 
the off-campus learner as well. We believe that the kind of 
quality learning associated with campuses is now possible for 
everyone and available in a multiplicity of environments--the 
home, the desktop at work, hotel rooms, and quite likely 
airplanes as well. Such learning environments operate 24 hours 
a day, 7 days a week, though they generally begin and end on 
specific days.
    Today, I just would like to touch on four topics: one, what 
is going on in the field; two, quality; three, workforce 
education; and then a short statement about policy 
recommendations.
    Although much is reported about new kinds of learning 
organizations being made possible through online learning, most 
online education is, in fact, provided through our conventional 
campus-based organizations. For instance, the major State 
institutions and, Senator Enzi, in your own State, the 
University of Wyoming has a very active program to convert 
their excellent continuing education program into an online 
version.
    In urban environments, we see hybrid or blended courses 
appearing alongside entirely online courses. In more rural 
environments, where learners are widely geographically 
separated, fully online courses are preferred. It is quite 
clear, however, that online education equally well serves the 
needs of rural as well as urban learners. We estimate that in 
the academic year just passed, our estimate is that 3 million 
learners enrolled in online courses intended for the off-campus 
population. This number does not include the much higher number 
of enrollments in traditional campus courses which have some 
kind of a Web component to them.
    The for-profit education sector is growing. It is a small 
part of the total picture, but it is growing and will be 
important.
    Quality. Many people ask just what kind of quality is there 
in online education. The answer, in my opinion, is this: over 
many years we have come to recognize that quality is not a 
constant, but it depends very much on the institution offering 
the degrees and courses. The quality of a particular community 
college may differ from that of a State university. The 
offerings from a State university may differ in quality from 
those of a private institution. Therefore, we at Sloan have 
adopted the following view of quality: the quality of the 
online offerings of an institution should be about the same as 
the traditional classroom on-campus offerings of the same 
institution. The appropriate comparison of a degree program 
being offered by any institution should, therefore, be with the 
equivalent or similar degree program being offered online.
    To join Sloan's-C, or the Sloan Consortium, an institution 
must be accredited and must be able to assert and to 
demonstrate that their online program is equivalent in quality 
to their traditional classroom version. We need not try and we 
do not try and meet any arbitrary standard of quality.
    Just a short description of workforce education. We believe 
that online learning has a very significant role for our 
workforce. The model in each case that we have promoted is that 
we have organized a governing board for each project for 
workforce education with members from companies within the 
industry and unions representing the workers. The governing 
board sets curriculum standards and content in a general 
fashion. An educational institution then provides the courses 
online and provides the degree.
    So, for example, our telecommunications project, called 
NACTEL, involved Verizon, SBC, Qwest, and Citizens on the 
company side and the CWA and IBEW on the workforce side. The 
education provider from this project is Pace University in New 
York, which has developed an online telecommunications 
associate's degree for telephone technicians. Students are 
located all across the country as far away as Hawaii and 
Alaska. Thousands have enrolled in the program, and some are 
now receiving their degrees.
    The NACTEL experience has shown two other striking things:
    About 40 percent of those enrolled in NACTEL are women--a 
surprise since women do not represent anywhere near that number 
in the existing workforce for this position. Their comments 
tell us that women see this as an opportunity to move to a 
higher-paying position, often moving away from dead-end office 
positions.
    Another striking result has been the overall success rate 
of the learners who, on average, complete--90 percent of them 
are completing the rigorous curriculum at a 90-percent 
completion rate. The result is a clear indication of the desire 
and motivation of the learner population and of the quality, 
content, and services provided by Pace University.
    We should think of these efforts as only a beginning. 
Industry-specific offerings are an important way to ensure 
workforce training and offered in asynchronous fashion, 
anytime, anyplace, they are a solution to the need for more 
family-friendly ways for workers to acquire education and 
training.
    Just a word about policy. My overall recommendation here is 
that our experience with the interactive model of online 
learning shows that this way of teaching works and it works in 
many disciplines for many segments of our population. It 
enables quality education to reach out to vast numbers of 
people that otherwise would be denied education and training. 
The Government, whether in tuition support, fellowships, or 
support of training, should support quality online learning as 
it does traditional classrooms. Learning quality, not mode of 
delivery, should become the criterion for aid, recognition, and 
support.
    Thank you.
    Senator Enzi. Thank you very much.
    [The prepared statement of Mr. Mayadas follows:]

                 Prepared Statement of A. Frank Mayadas

    My name is Frank Mayadas, I am a Program Director with the Alfred 
P. Sloan Foundation. Since late 1992, before there even was a 
commercial internet, our Foundation has had a program in what is now 
called online learning or eLearning, through which we have provided 
over $45 million in grant support to over 65 institutions of higher 
education. These institutions plus others who have voluntarily joined, 
are members of Sloan-C or the Sloan Consortium for Online Education. We 
estimate that approximately 500,000 learners enrolled for courses 
offered by Sloan-C institutions in the academic year just completed. 
Over 400 complete degree and certificate programs are offered by Sloan-
C members, and can be accessed at the Sloan-C website (www.sloan-
c.org).
    We at Sloan believe that online learning represents one of the most 
important developments of the past 100 years for higher education, for 
it affords the prospect of access to quality higher education for many, 
many individuals who would, for reasons of proximity, age or other 
circumstances, not have this opportunity. We plan to continue our 
support for this area.
    Today, I propose to touch on four points:
     First, I will briefly discuss the range of options that 
fall under the general terms: Online Education or eLearning.
     Second, I will take up the question of ``quality'' for 
online education.
     Third, I will provide some perspective on the kinds of 
institutions that are involved in online education.
     and finally, I would like to discuss applicability of 
online learning to workforce development, and how this is likely to 
change the character and reach of teaching institutions.

                ONLINE LEARNING COMES IN DIFFERENT FORMS

    Teaching online can be done in many ways, and is being done in many 
ways today. However there are two basic models, and all others fall 
somewhere in between. One is a self-study, or ``broadcast'' model in 
which materials, which may be quite sophisticated multimedia, but self-
study materials nonetheless, are posted on the web, and these are 
perused and studied by learners at their own pace. This model can also 
be thought of as a form of online publishing. I remind you that self-
study, mainly through books, but more recently augmented by videotapes 
or broadcast TV, has been available for over a century, and unusually 
disciplined individuals have been able to learn and earn credentials on 
their own.
    The second model, the ``interactive'' model is one where 
``classes'' begin on a particular day with a cohort group, are taught 
by a faculty member who interacts with individuals or the cohort 
through group e-mail and chat tools, generally referred to as Learning 
Management Software (LMS). Interaction with the instructor is not 
occasional or incidental, rather it is regular and continuous, as is 
interaction among students. The student/faculty ratio is about the same 
for these online classes as that for equivalent campus classes. The 
``class'' also ends on a particular day, i.e., when the ``term'' is 
completed. This interactive model is the basis for most of the grants 
made by Sloan, because we believe it most closely parallels the 
learning environments associated with for-credit quality learning. Here 
is why:
    For a very long time, quality education has been associated with 
education on campuses. Campus education has many elements, but there 
are three that stand out:
     First, students have access to learning materials. These 
might include books, classroom handouts such as notes, or special kinds 
of educational software, which may be commercial products or developed 
and distributed locally by faculty. These learning materials are often 
used in self-study fashion.
     Second, the student has access to a professor. The 
professor determines overall content for the course and the pace of the 
course. He/she may add thoughts and insights to what is in the learning 
materials, and has the task of assessing how well a student has 
learned.
     Campuses offer a third important element for learning: 
other students. Students turn to friends and colleagues for many 
reasons on many occasions, usually informally to seek help for instance 
in understanding the particulars of a lecture, or assistance with a 
problem set.
    We at Sloan constructed our program around the idea that these 
three important elements of campus education . . . learning materials, 
the professor and other students . . . could be provided through the 
Internet to learners at remote locations. In other words, the kind of 
quality learning associated with campuses is now possible for everyone 
and available in a multiplicity of environments . . . the home, the 
desktop at work, hotel rooms, and quite likely on airplanes as well. 
Such learning environments operate 24 hours a day, and 7 days a week, 
though they generally begin and end on specified days. They allow 
anytime, anyplace, ``asynchronous'' learning.
    Successful grant applicants in our program have proposed projects 
to us that involve an appropriate balance in these three important 
educational elements, and all have gone on to implement successful 
projects, many of which today are offering full degrees, and in some 
cases, multiple degrees. In our projects, as in classroom courses, 
students are expected to purchase learning materials such as books and 
CD-ROM's. Notes and other materials are usually available as web 
postings, and pre-recorded lectures, in a number of cases are made 
available as streaming media.
    Our online learning model envisions the Internet as primarily a 
communications facilitator, between instructor and students, and 
students and students, and secondarily as a medium for distribution of 
learning materials. To emphasize again: nothing is ``canned'' or pre-
recorded in an interactive course other than the self-study learning 
materials which are about the same as the ``canned'' materials used in 
campus education. Interactivity here means interactivity with the 
instructor and other students and this is all time-elapsed 
conversations very similar to e-mail exchanges. The online publishing, 
or broadcast model, primarily envisions the Internet as a fast, 
efficient distribution medium for learning materials. In the decades to 
come, both models will see widespread adoption, as will models that 
combine aspects of the two. The broadcast and interactive models have 
different economics and consequences.
    The broadcast model generally requires expensive efforts and longer 
time, to create learning materials, basically multimedia software, 
simulations, and video. These expenses might be several hundred 
thousand dollars per course, but there really is no limit, and I know 
of courses costing over a million dollars. The interactive model 
requires relatively little start-up funding, maybe $10,000 or so to 
create a college course. Typically, we at Sloan, support projects at a 
level of about $150,000 for a full masters degree, and we require that 
courses be delivered to learners through very conventional PC's costing 
under $1000, and very conventional modem connections to the Internet. 
Because student/faculty ratios approximate those on campus, the 
interactive model does not lead to a reduction in faculty (in fact, if 
total enrollments increase because courses are accessible to more 
learners, the need for new faculty also increases).

                      QUALITY IN ONLINE EDUCATION

    The question of quality is an important one. It is important for 
the providing institution and for the learner to know just what kind of 
education is being offered and received. However, educational quality 
is not tied to any fixed standard. Over many years we have become 
comfortable with the idea that educational quality is in fact a 
variable that depends very much on the nature of the institution 
offering the courses and degrees. The quality of a particular community 
colleges courses and degrees might be different from the quality of 
another community college with similar courses and degrees; the quality 
of offerings from a community college may be different from the quality 
of a particular State university which in turn may be different in 
quality from the offerings of an ``elite'' private college. Therefore, 
we at Sloan have adopted the following view of quality: the quality of 
the online offerings of an institution should be about the same as the 
traditional classroom ``on-campus'' offerings of the same institution. 
The appropriate comparison of a degree program being offered by any 
institution should therefore be with the equivalent, or similar degree 
program being offered on campus.
    Consistent with that view of quality, we ask those institutions 
receiving Sloan grants to work within a quality framework that has the 
following five elements:
    ACCESS: Any online offering should expand access to education 
beyond what might have been possible with older methods (i.e., 
correspondence). The institution should make an effort to understand 
and measure this expansion of access.
    LEARNING EFFECTIVENESS: Learning effectiveness should be about 
equivalent to learning effectiveness for campus students.
    FACULTY ATTITUDES: The institution should have about the same range 
of faculty involved in online program as in the equivalent campus 
program, and should strive to get a large number of faculty interested 
in, and motivated to teach online, so that programs can be expanded as 
demand increases.
    COST EFFECTIVENESS: The institution should strive to put its online 
programs on a sound financial basis so that these programs can be 
scaled up in response to demand.
    OVERALL STUDENT SATISFACTION: Overall student satisfaction should 
be typical of what that institution strives for in its campus programs. 
One measure for this is retention of students for courses and 
persistence towards a degree. One challenge here for institutions is to 
ensure that off-campus learners receive the same quality of student 
services as provided for the campus population.
    (Recent papers from Sloan-C members on each of these areas are in 
the book series ON-LINE EDUCATION, v.1, 2 and 3, John Bourne, Ed., 
which are available from Amazon.com or directly from John Bourne, 
[email protected])
    All projects are different in the details of their pedagogical 
approaches, delivery technology and student services, and so 
understandably, results tend to vary. In particular, results for a 
specific course depend greatly on the teaching ability, motivation and 
experience of the faculty member. We know this is also the case for 
classroom courses. Nevertheless, based on our considerable experience, 
and based on experience with classes that are taught on campus and on 
the internet by the same instructor giving the same examinations, on 
balance, we do not find any significant variation in learning 
effectiveness between classroom and on line courses taught in the 
interactive mode.

                          THE CURRENT PICTURE

    Although much is reported about new kinds of online learning 
organizations, consortia, and for-profit educators, the fact is that 
most for-credit, degree-oriented online learning today is provided by 
traditional institutions which have a campus base, i.e., community 
colleges, comprehensive 4-year colleges and many State universities. 
Northern Virginia Community College (serving the Washington D.C. 
metropolitan area), Rio Salado Community College in Phoenix, AZ., and 
Bismarck State College in N.D. are examples of community colleges with 
large and thriving online education programs. Among State universities, 
leaders include University of Maryland (University College), State 
University of New York, the University of Massachusetts (particularly 
the Lowell campus), the University of Illinois, and the University of 
Washington. The State systems in the mountain States have also 
developed strong programs. In urban environments we see ``hybrid'' or 
``blended'' courses appearing alongside entirely online courses. In a 
hybrid course, a learner may only have to come to campus for an evening 
class say, once a week instead of three times a week, doing the rest 
online. In rural environments where learners are widely geographically 
separated, fully online courses are preferred. It is quite clear 
however, that online education equally well serves the needs of rural, 
as well as urban learners.
    We estimate that in the academic year just past (2001/2002), 3 
million learners enrolled in online courses intended for the off-campus 
population. This number does not include the much larger number of 
enrollments in traditional campus courses which might incorporate some 
kind of ``web-component''.
    The for-profit education providers are still a small part of the 
picture. They are growing quickly and some of them will become a 
significant presence. University of Phoenix is the leader in this 
group. A large number of courses and learning modules, for which I do 
not have an estimate, are also provided through the broadcast model. 
These are mainly of the non-credit variety and they are proprietary 
(within a corporation for example) and many training companies make 
these available to the public and to industrial firms.

                          WORK FORCE LEARNING

    We believe online learning has very large significance for our 
workforce. The workforce of tomorrow will have to be better trained, 
and better able to access education, training and other knowledge 
resources. The Internet provides the ideal mechanism for this access. 
Some of the necessary courses, certifications, degrees and other kinds 
of knowledge modules are available today, but not many and not enough. 
Many more are needed.
    A convenient way of conceptualizing workforce learning is to think 
in terms of ``industries'', and to further inquire if industry-specific 
learning resources are widely available online for access by workers in 
that industry, or for those who seek skilled positions in that 
industry. I would like to describe some Sloan projects that aim for 
impact by industry.
    In 1998, supported by a Sloan Foundation grant, the Council for 
Adult and Experiential Learning (CAEL), convened a series of meetings 
with representatives of the major telecommunications service providers 
(due to mergers, the original six companies are now down to Verizon, 
SBC, Qwest, and Citizens) and representatives of the unions for the 
telecommunications industry (CWA and IBEW) to agree on a curriculum, 
governance structure, and an education institution to provide an A.S. 
degree for telephone network technician workers and those who wish to 
enter the industry. These meetings were successful in their purpose. A 
curriculum was agreed to and Pace University in New York was selected 
to develop all courses, and to deliver them online and to be the degree 
provider. A governance structure was also agreed to (the informal 
industry/unions committee was re-constituted as NACTEL, the National 
Coalition for Telecommunications Education and Learning, and NACTEL 
oversees all aspects of the program, now in place). In this task, 
NACTEL is assisted by CAEL and by the Sloan Foundation, which provided 
initial project funding to Pace and CAEL. The first classes under the 
NACTEL program were given in 1999 (see www.nactel.org). This program 
has now enrolled several thousand so far, and has begun graduating a 
number of these. In spite of the difficult circumstances of the 
telecommunications industry, enrollments continue to grow. The NACTEL 
experience has shown two other striking results: about 40 percent of 
those enrolled are women, a surprise since women to not represent 
anywhere near that number in the existing workforce for this position. 
Comments gathered by program staff clearly indicate that women see this 
as an opportunity to move to a higher paying position, often moving 
away from dead-end office positions. Another striking result has been 
the overall success rate of these learners: on average, we see about 90 
percent course completion rates in a rigorous curriculum that includes 
math, electric circuits etc. This result is a clear indicator of the 
desire and motivation of this learner population, and of the quality 
content and services provided by Pace.
    More recently, Sloan funding has supported development of two other 
industry-specific programs: one for the Electric Power Industry (EPCE 
or Energy Providers Coalition for Education) and the other for 
Healthcare (H-CAP or Healthcare Career Advancement Program). The 
country's energy needs will require new power plants to be constructed 
and the power distribution system to be upgraded. This will increase 
the demand for skilled workers in that industry. The EPCE program, also 
managed by CAEL and funded by Sloan, offers three Associates degrees 
through Bismarck State College for workers in electric power (power 
generation, distribution, and system management). The Healthcare 
project initially focuses on education towards an R.N. and provides 
opportunities for those in the industry to move up to better-paying 
positions. Education is provided through a partnership between 
University of Phoenix and a consortium of 2-year schools, which provide 
the hands-on aspects of the nursing education and confer the Associates 
degree. As with NACTEL, the governance of these projects is through 
boards that comprise industry and labor representatives (IBEW in the 
case of EPCE and SEIU in the case of H-CAP).
    The industry programs described above are one example of the way 
that online education will change educational institutions themselves. 
Bismarck State College, at one time enrolled only local learners. Now 
it counts among its students, electric power technicians in Florida, 
Wyoming and Texas. It is in some ways, beginning to resemble a national 
institution and with growing expertise in online education for electric 
power workers, it could become a preeminent institution for education 
in this segment. We should think of these efforts as only a beginning. 
Industry-specific offerings are an important way to ensure workforce 
learning, and offered in asynchronous online fashion, anytime, 
anyplace, they are a solution to the need for more family-friendly ways 
for workers to acquire education and training.
    Before I leave the subject of online education for specific 
segments, I should note that many government agencies are themselves 
installing online programs for their personnel. A particularly good 
example here is the U.S. Army's successful eArmyU program, which today 
enrolls almost 30,000 enlisted personnel from 11 bases, and it is 
growing quickly. Soldier students have a choice of courses and 
certificate and degree programs from over 20 institutions listed in the 
eArmyU catalog. This number too is growing.
    As other, new government units are created, for example the 
proposed Homeland Security Department, it seems clear that the 
requirement to rapidly educate and train a large, geographically 
dispersed workforce, will, at least in part, have to be met through 
online methods.

                         POLICY RECOMMENDTIONS

    Overall Recommendation: Our experience with the interactive model 
of online learning shows that this way of teaching works, and it works 
in many disciplines for many segments of our population. It enables 
quality education to reach out to vast numbers of people that otherwise 
would be denied education and training. The Government, whether in 
tuition support, fellowships, or support of training should support 
quality online learning as it does traditional classroom learning. 
Quality, not mode of delivery should become the criterion for aid, 
recognition and support.

    Senator Enzi. Now, Mr. Mendenhall, from the Western 
Governors University.
    Mr. Mendenhall. I think that is working.
    Senator Enzi, I appreciate the opportunity to testify as to 
the value of distance learning. Let me begin by saying that 
distance education is not for everyone. It is not for every 
student or for every subject. Students must be self-disciplined 
and self-motivated, and some subjects lend themselves better to 
this mode of learning than others.
    But for an increasingly large segment of our population, 
distance learning is the only option for them to pursue an 
ongoing education. For those who live in rural areas at a 
distance from traditional education, distance learning 
represents simply the only opportunity they have to pursue an 
education.
    We have also found that for those living close to 
universities but working full-time, they very often cannot fit 
the traditional class schedule into their work schedule, and, 
again, distance learning becomes the only option for these 
individuals.
    As a result, distance learning is the fastest-growing 
segment of higher education in the United States, and this is 
being driven by at least three factors:
    The first is the changing demographic of learners. Our 
university system was created on the idea that education was a 
one-time event that happened between ages 18 and 24 as a 
transition from high school to the working world, and that 
individuals would go to college, be trained for a career that 
they would then work in for the rest of their working lives. 
This is simply no longer the case. On average, a working adult 
needs to be retrained and re-educated every 7 years today to 
stay current in workforce skills. As a result, now more than 
half of the students in higher education represent adults that 
are working full-time and trying to increase their skills and 
education.
    The other driving force is the Internet, which now provides 
the opportunity for a much richer distance learning experience 
than what was available in the past. Distance learning is no 
longer the old correspondence school with which you are 
familiar that simply sent out print materials to be read and 
exams to be mailed back, but has, as others have testified, a 
rich interaction between faculty and between students. And, in 
fact, there are many studies that suggest that that interaction 
is actually richer over the Internet at a distance than occurs 
in many classroom-based campuses.
    There have been numerous studies that show that distance 
learning is just as effective as classroom-based education. As 
in classroom-based education, some distance learning is good 
and some is bad. It is also true in the classroom. Some 
teachers are good and some are not very good. But there is 
nothing inherent in the mode of delivery that suggests a lower 
quality or that distance learning should be discriminated 
against in Federal financial aid policies or in other policies 
and Government regulations.
    I would just add here that there is still a tendency in 
education to measure distance learning programs against 
classroom counterparts. Even the accreditation agencies tend to 
look at distance learning programs and ask if the functions are 
the same as in the classroom, if the faculty has the same role, 
if the students have the same role. I would suggest that when 
you change mode of delivery, other things may change as well, 
and that it would be more important not to look at how distance 
learning parallels classroom education but, rather, are the 
outcomes as effective as classroom education and to measure it 
by the learning outcomes that come from distance learning as 
opposed to the methodologies that go into the education.
    In fact, at Western Governors University, we have changed 
significantly the role of the faculty and the role of the 
institution. And yet, as a competency-based institution, we 
ensure through rigorous assessments that students have learned 
those things that are required to graduate with a degree.
    A great example of the value of distance learning is the 
WGU Teachers College, which we created not to train high school 
students who think they may want to be teachers someday. That 
is the role of traditional universities. And one of the things 
we found from high school students is that 40 percent of those 
who graduate in education 3 years later are no longer teaching 
in our schools because they have moved in a different 
direction.
    We instead are reaching out to the paraprofessionals 
already in our schools, to the uncertified teachers in our 
schools, which in urban and rural areas are as many as 40 
percent of our total teaching population, and to current 
teachers who need to upgrade their skills. These individuals 
all work full-time and all have families and would not be able 
to access traditional education and yet, through online 
education, can enhance their skills and abilities. We know that 
the most important factor in K-12 education is the quality of 
the teacher, and we know that if we can improve that quality, 
we will make a significant difference in K-12 education.
    In conclusion, I would suggest four policy recommendations 
for Federal policy.
    The first would be to eliminate the 50-percent rule in 
Federal financial aid, which basically restricts financial aid 
to those institutions that are mostly campus-based, that is, 
more than 50-percent campus-based, and specifically rules out 
new institutions that do distance learning. I believe that new 
institutions may be able to better perform distance learning 
functions than existing institutions because they don't have 
the infrastructure of the existing institutions.
    Second, I would authorize the Distance Education Training 
Council as an accrediting body for distance education, as those 
that have the most experience in distance education. And our 
experience with them is that they are as rigorous as any 
accreditation we have gone through.
    Finally, I would continue the demonstration program for 
Federal financial aid that allows the Department of Education 
to modify rules for distance learning institutions. And as part 
of the Higher Education Reauthorization Act, I would explicitly 
suggest that Congress include distance education as an 
important component of higher education in the United States 
and not discriminate on the mode of learning but, rather, on 
quality of learning.
    Thank you very much.
    [The prepared statement of Mr. Mendenhall follows:]

               Prepared Statement of Robert W. Mendenhall

    Mr. Chairman, and Members of the Committee: I am pleased to be here 
today to discuss with you the value of distance education as a key 
component of our national higher education landscape. I wish to share 
with you that distance education is the fastest growing sector of U.S. 
higher education, and is an essential element in our national 
competitiveness. Driving this expansion are three primary factors.
    1. The changing demographics of students--the majority of students 
are now adults working full time and providing for a family.
    2. The pace of change--technological and otherwise--in the 
workplace which requires ongoing adult education.
    3. The advent of the Internet which provides powerful new ways to 
deliver and mediate instruction at a distance.
    It is important that the Congress recognize and support distance 
education as a key component and growing proportion of U.S. higher 
education. Numerous studies have shown that distance education is 
equally effective as classroom instruction. In my testimony I recommend 
that Congress end the current bias against distance learning in Federal 
financial aid programs and encourage innovation and new models in 
higher education.
    Western Governors University (WGU), of which I am President, offers 
competency-based degree programs nationally through online distance 
education. We are a private, non-profit institution founded and 
supported by governors of 19 western States to share distance education 
resources and expand access to higher education. We have been funded in 
part by Congress and the U.S. Department of Education, as well as 24 
national corporate and foundation partners. WGU has from the beginning 
been part of the demonstration program for Federal financial aid for 
distance learning. WGU is accredited by DETC--the Distance Education 
and Training Council--and has regional accreditation as a candidate 
institution.

                      VALUE OF DISTANCE EDUCATION

    Distance education is by far the fastest growing component of U.S. 
higher education. Over 2 million students are now enrolled in distance 
education, up from approximately 700,000 students just four years ago. 
Driving this transformation is the changing demographic of higher 
education--more than half of those enrolled in higher education are 
older working adults. No longer is the typical student an 18 to 25-
year-old, fresh out of high school, and needing a college education for 
preparatory work skills and socialization into adult life. Rather, 
today's student is an adult 25 to 50 years old, already established in 
the world of work, with home and community responsibilities as well as 
demands to stay current in his or her field of endeavor or re-career 
into a new vocation of interest. Driving forces such as technological 
change and globalization exacerbate this adult educational imperative. 
These working adult students simply cannot attend traditional higher 
education that is place-bound, time-restricted, and invests too heavily 
in a campus life that is removed from their needs. The facilities and 
organizations built for traditional students simply don't fit--such 
things as dormitories, student unions, sports complexes, cafeterias, 
and museums. Adult students enroll voluntarily and have a clear focus 
on the ends they wish to achieve; they are more experienced, motivated, 
and task-oriented than their younger counterparts. Although traditional 
institutions of higher education are trying to meet the needs of this 
new student population, their design is still upon the conventional 
undergraduate populations coming from high school. This can be seen in 
the preponderance of 8 a.m. to 5 p.m. instruction and administrative 
services, the requirement of in-person attendance, and their use of 
technology to support a classroom-based approach.
    Increasingly these adult students turn to distance education as an 
important, viable alternative. Foremost, distance education provides 
instruction ``24 hour by 7 days a week'' that is not time- or place-
bound. Students can access their courses from home or work when studies 
are convenient to them, without having to commute miles away to a 
campus classroom with a fixed schedule that may not meet their own. One 
student commented: ``I truly doubt it would even be possible for me to 
be pursuing another degree while [working] if it wasn't for the 
flexibility and availability of the WGU program.'' Another one said: 
``I would have to drive to campus, park, walk to class, spend time in 
class and then do my studies . . . twice or three times a week after 
[working]. Distance education . . . took out all of the tedium, solved 
the travel requirements, and enabled me to tailor the specific time 
schedule to my personal needs. I did a significant amount of my study 
and writing in the midnight hours because those were the most 
convenient to me.'' These adult students are familiar with a workplace 
that heavily relies on telecommunications and the information 
technology of the Internet. As such, they have no difficulty using 
these technologies in pursuit of a distance degree. The demand for 
distance learning will continue to grow, and the students attracted to 
the method are older, working, and in need of Federal assistance to 
help pay for their education.
    Distance education is particularly beneficial to adults living in 
rural areas, locations that are remote from college campuses. They need 
a viable option to upgrade their skills to continue employment in these 
communities; without distance learning options, getting a higher 
education would not be possible. One of our students commented: ``I am 
a high school teacher working in a school with a student body of 400 
students in grades 9-12 located in a semi-rural community . . . The 
nearest college is located 55 miles away--one hour travel time away. 
The reason I have not been able to obtain a graduate degree until now 
is due to time constraints. Colleges don't like to offer classes in a 
time frame I could attend--when children are in bed and the day's work 
has been completed. About 2\1/2\ years ago I heard about [WGU's 
distance program]; this meant that I could study and complete projects/
assignments when I have the time.'' Through online distance education 
these students are able to stay gainfully employed and engaged in the 
economic and social development of these small communities while still 
being able to advance their expertise through a college degree. Taking 
courses via the Internet allows them to upgrade their technology 
skills, ensuring that rural America is not left behind with the 
expansion of the information superhighway.

               ENCOURAGING INNOVATION IN HIGHER EDUCATION

    Distance education is a new force in a country whose economy 
demands more knowledge workers. At no period in our country's history 
has there been the same imperative to encourage innovation, initiative, 
and responsiveness in higher education. The workplace demands a greater 
responsiveness from higher education to meet its needs for 
technologically skilled and adaptable employees who can work in 
distance collaborations with their peers in other States and nations 
through telecommunications in the competitive global economy. However, 
traditional modes of education are not equipped to create these kinds 
of workers, simply because they don't provide instruction that fits 
this model.
    Increasingly higher education requires new types of organizations 
dedicated to innovation and access, such as the dozens of distance 
education institutions that have sprung up in the past decade. These 
virtual institutions propose new models of education that fit the needs 
of these adult students. The faculty role has changed from the ``sage 
on the stage'' to that of mentor who guides and facilitates 
individualized learning. Distance courses are frequently provided with 
an open start date (i.e., students can begin their studies throughout 
the year), and open exit (i.e., they can move through the course at 
their own pace, finishing early if they have met all the requirements).
    Many scholars posit that distance education provides important 
advantages over the traditional classroom. Obviously access is high on 
the list--providing 24 by 7 access to online courses wherever the 
Internet is available--a delivery mode that is neither time nor place 
bound. Further, distance education provides access to a wealth of Web-
based information resources, as well as full-text articles and book 
services of a campus-free virtual library. Online instruction is far 
different than the passive correspondence education of the past; there 
are more frequent and in-depth interactions with peers and the 
instructor made possible through web-based communications, threaded 
discussions, and ``live'' technology-mediated conversations. 
Telecommunications can provide immediate feedback and responsive 
turnaround of assignments and assessments. Usually distance education 
courses have undergone a more systematic design and development than 
their classroom counterparts. The educational experience is enhanced by 
the multi-media of streamed audio and video in addition to text, and 
these courses are able to incorporate computer-based examinations in 
ways not possible without such technology. A student commented: ``My 
online instructors have provided not only adequate textbook materials, 
but they also offer Internet links, online video lectures, and 
interactive discussions. I can have immediate feedback from fellow 
students as well as timely feedback from my professors. Grades are 
available for viewing [online] so students know exactly where they 
stand.'' Finally, the research on satisfaction and performance finds 
that distance education is equal to or exceeds that of traditional 
higher education instruction.

             AN EXAMPLE OF THE NEED FOR DISTANCE EDUCATION

    A concrete example of the importance of distance education is found 
in teacher education. WGU has created an online Teachers College to 
address the critical shortage in the U.S. for two million new qualified 
K-12 teachers in the next 10 years, as well as the need to upgrade the 
education of current teachers. It is now clear that new ways must be 
found to educate and qualify new teachers effectively and efficiently. 
WGU has been funded by the Department of Education to develop online 
competency-based degrees and teacher certification programs.
    WGU's Teachers College provides a unique opportunity for 
paraprofessionals and uncertified teachers currently in schools to 
demonstrate their competencies and gain teaching credentials. There are 
half a million paraprofessionals currently in schools and perhaps an 
equal number of uncertified teachers. In addition, only 42 percent of 
the current three million teachers in our schools currently have 
master's degrees, and the Teachers College will give many of these 
individuals an opportunity for further education and higher pay. The 
national impact will be a higher level of teaching proficiency in our 
K-12 schools, which is the single most important determinant of 
educational quality. While traditional schools of education may fill 
much of the need for new teachers, WGU's national program will: (1) 
reach valuable adult workers, including a significant number of 
minorities, who otherwise will be left outside the system, and (2) 
reach existing teachers at times and places convenient to them to 
upgrade their skills and earning potential.
    Currently, there are three significant groups of working adults 
that can immediately begin to meet the shortage of teachers, given a 
flexible and accessible way to obtain the required education 
credentials. These are: (1) paraprofessionals who currently assist 
classroom teachers; (2) uncertified teachers who are provisionally 
hired; and (3) professionals from other fields who want to enter the 
teaching profession. I will briefly explain the situations of each of 
these groups and the appeal of distance education through WGU.
    The first group consists of 500,000 paraprofessionals currently 
working in schools that have classroom experience and are already 
dedicated to K-12 education. The best place to fill the need for new 
teachers is not by educating brand new teachers. Nearly one half of the 
graduates of our schools of education are not teaching 3 years later, 
either because the classroom was not what they expected or because they 
were offered better jobs outside the classroom. These 
paraprofessionals, culturally diverse and eager for advancement, are 
seeking careers in our schools and inherently have many of the 
competencies they need to become teachers. But for a variety of 
reasons--including time, accessibility, and the need to maintain a 
full-time job--they have not been able to finish their degree. WGU's 
educational model gives these individuals the opportunity to gain the 
competencies they are lacking to become teachers. Extending this 
educational opportunity to paraprofessionals will facilitate an 
increase in the population of minority teachers--currently under-
represented in the teaching community--to provide important role models 
for minority students in the American school system.
    The second group includes all of the current uncertified teachers 
that are currently teaching in grades K-12. Because of a national 
shortage of certified teachers, school districts are hiring uncertified 
personnel under emergency certification. In some urban districts and in 
rural areas, as many as 40 percent of all teachers lack certification, 
amounting to hundreds of thousands of teachers nationally. If these 
teachers do not certify within 2 years (in most cases), they will be 
let go, even though new uncertified teachers will take their place. 
There are few programs in place to allow these individuals to gain the 
necessary education and certification while teaching.
    The third group consists of thousands of retired business and 
military personnel who are ready to give back to society by teaching in 
our schools, but who do not want--or need--to go back to school for 4 
years to make this vital contribution. Many of these second-career 
individuals already have significant competencies in key areas like 
math, science, and technology, and most provide excellent role models 
of success for students. In recognition of this potential, the Federal 
Government has started a multimillion-dollar ``Troops to Teachers'' 
program to encourage retired military personnel to teach in urban 
school districts. WGU competency-based degrees and certificates offer a 
unique opportunity to qualify these individuals as teachers while 
allowing them to gain the competencies they lack in an efficient way.
    These programs at WGU are funded by the U.S. Department of 
Education. The University and its degrees are accredited by both DETC 
and regional accreditation. States have their own separate approval 
process to recognize teacher certification and endorsements. With all 
of these safeguards on quality, it would be wrong to exclude qualified 
individuals in these programs from Federal financial aid simply because 
the programs are delivered at a distance.

 RECOMMENDATION: PROVIDE DISTANCE EDUCATION WITH FEDERAL FINANCIAL AID 
              ON AN EQUAL BASIS WITH TRADITIONAL EDUCATION

    The 1992 Higher Education Act in effect put a ban on the use of 
Title IV student aid for distance education institutions. This was in 
reaction to the student loan default scandals of the 1980's, but it can 
be argued that in today's world we have effectively thrown out the baby 
with the bath water. Today, the growth in distance education is in 
degree granting institutions rather than the vocational schools that 
created the problems of the 1980's. Academic degree programs, whether 
campus-based or at a distance, have certain inherent quality controls, 
including accreditation, admissions screening, prior academic 
attainment, tighter academic standards, and high level of faculty 
involvement in teaching. New distance education programs, spawned by 
the power of computers and telecommunications, particularly the 
Internet, have been created with quality equal to that of campus-based 
institutions. The ban on Federal financial aid has unfairly penalized 
legitimate accredited distance education institutions and colleges that 
have only recently entered the distance learning field. Federal funding 
and personal tax incentives for education currently depend on which 
mode of education a student uses rather than the academic quality of 
the learning involved. Recent proposed changes to the fifty percent 
rule don't go far enough as they limit Federal financial aid for 
distance learning institutions that are not already part of Title IV. 
Limiting providers of distance education to schools already 
participating in Title IV discourages innovation and the new models of 
higher education based around the new paradigms of learning.
    There are already sufficient safeguards to mitigate the potential 
for student aid fraud and abuse without disenfranchising an entire 
class of institutions and hundreds of thousands of deserving students. 
Correspondence schools were singled out in 1992 as major perpetrators 
of fraud, but such problems were not unique to that segment. 
Congressional ``fixes'' such as requiring completion and placement 
percentages and forbidding high defaults have reduced problems with 
Federal financial aid, and will serve the same purpose if applied to 
distance education. In fact, student loan defaults are now at historic 
lows, even while usage of aid is at all time highs. It is time for 
Congress to act for all of the students and potential students in 
distance education.
    The following are submitted as recommendations for Federal policy 
relating to distance education:
    1. Eliminate the 50 percent rule in Federal financial aid, which 
basically restricts Federal financial aid for distance learning to 
institutions that are mostly campus-based. Thus new institutions formed 
specifically around distance learning models are locked out of being 
able to offer Federal financial aid. This includes many fine accredited 
institutions.
    2. Authorize the DETC--Distance Education Training Council--as a 
Title IV accreditor. DETC is a rigorous, recognized accreditation 
agency, with the most experience in distance education, and could play 
a significant role in assuring quality in distance education programs.
    3. Continue the demonstration program for Federal financial aid. 
The demonstration program is showing effectively that the Department of 
Education can adapt its rules and regulations to allow distance 
education programs, including very innovative programs such as WGU's 
competency-based degrees, to participate in Federal financial aid.
    4. As a follow-on to the demonstration project, with the Higher 
Education Reauthorization act in 2 years, explicitly provide for the 
participation of distance education students and institutions, and give 
the Department of Education the ability to adapt its rules and 
regulations as needed to allow for innovation in higher education.

        APPENDIX: WGU STUDENT TESTIMONIALS OF DISTANCE EDUCATION

    I am a student with Western Governors University. I started my 
masters program in education in February of 2001. I am now half way 
through with the program. I chose WGU because of the freedom of doing 
the work on my own time and at my own pace. In the past, I had started 
masters programs twice through regular universities and found the class 
schedules impossible to fit into my schedule. This included night 
classes. It would have taken me three to 4 years to finish either 
program. I was almost going to give up working towards my educational 
goals when I discovered WGU. The work is demanding, but I am able to 
fit it into my spare hours and I am encouraged by my progress.
    With the demands of our society on education, it only makes sense 
to have available the opportunity to advance through distance learning. 
These programs may not be for everyone, but they have a place in our 
world. I know there are others with an extremely busy life that need to 
have a program that fits in today's high pressured life style. I would 
recommend this program to anyone needing to work at an independent 
rate.

Dennis W. Nalder
    Speaking as an administrator for a community college district, I 
feel as though WGU is accomplishing something far beyond the obvious. 
The ability to access curriculum and work with colleagues from across 
the country in the pursuit of an advanced degree is a far more time 
efficient and productive process than traditional classroom 
environments are able to offer for professionals in the field. In our 
personal on-line education programs, we encounter, first hand, the 
experiences we will eventually be developing for our own students. The 
perspective gained through our own direct experiences in programs such 
as those at WGU will better prepare those of us in higher education to 
meet the challenges of education in the future.
Wesley H. Wingfield
    I am a Western Governors University distance-learning student. I am 
also a tenured secondary science teacher working on my Masters degree 
through this wonderful networked university. I truly doubt it would 
even be possible for me to be pursuing another degree while teaching if 
it wasn't for the flexibility and availability of the Western Governors 
program.
    My workweek usually entails a ten-hour day with grading and lesson 
planning at home. This is not very conducive to extracurricular 
studying, or personal goal attainment. I am becoming more convinced all 
the time that technology is the answer to limited resources and time 
that adult learners face. I am even coming to suspect that online 
learning could be an answer for adolescent learners who are absent, 
non-conventional learners, or home-schooled.
    I have attended college and university courses for a total of 
nearly 8 years. I can honestly say I feel the level of personal 
instruction is greater via e-mail and online guidance than I ever 
received in an impersonal classroom setting.
    As for the quality of instruction, my online instructors have 
provided not only adequate textbook materials, but they also offer 
Internet links, online video lectures, and interactive discussions. I 
can have immediate feedback from fellow students as well as timely 
feedback from my professors. Grades are available for viewing so 
students know exactly where they stand, and revisions on papers is 
offered by most instructors because they have the time to read them 
electronically.
    I appreciate your efforts to support distance-learning initiatives. 
If our country is going to continue to be a leader in producing 
critical thinkers with strong communication and technological skills, 
then education must continue to develop and expand online programs like 
Western Governors University.

Penny L. Hood
    There are many advantages to distance learning for the 
professional. I appreciate not having to drive to an institution of 
learning, find parking, take the time to walk to class, sit in class, 
then repeat the transportation process home. Besides this, I am able to 
``take my classes'' during whichever part of the day works best for me. 
I have spent many hours at my computer doing coursework between 2AM and 
6AM. I have never found professors' office hours to be instantaneous, 
but with electronic mail, I have received responses from my course 
professors (as well as my mentor) within twenty-four hours of sending 
an electronic question. Sometimes I have even been on a chat line with 
my professor(s), and this has been unbelievably helpful.
    This method of pursuing a higher education degree is the only way I 
would have been able to accomplish the goal of graduate degrees, and I 
am very grateful for Western Governors University.

Kathryn Schlendorf
    It has always been my desire to complete a Master's Degree Program. 
For various reasons, I have been unable to obtain my advanced degree. I 
have taken many graduate level courses delivered in many different 
formats while living in Montana, Colorado, and now Wyoming. When I 
learned about WGU, I realized that I would now be able to complete a 
Master's Degree. The convenience of learning at home via the Internet 
and access to excellent resources without leaving my home, are 
certainly strengths. With this format, I have also been able to 
increase my skills and abilities to utilize technology, which I feel is 
a very beneficial skill regardless of a person's career. WGU has opened 
up doors for me that I would not have been able to access without an 
extreme inconvenience for my family, my career, and myself. I would not 
be considering an advance degree at this time if it weren't for Western 
Governors University.

Connie Keogh
    I am a high school teacher working in a school with a student body 
population of 400 students in grades 9-12 located in a semi-rural 
community. I teach five classes each day on a six period schedule. Most 
of the time, I have five different classes, which means five different 
preps daily. I also advise two student organizations, Future Business 
Leaders of America and National Honor Society.
    I am also a mother with three children ages 5 (Kindergarten), 7 
(2nd Grade), and 10 (6th Grade). In order to provide parental care for 
our children, my husband works nights and cares for the children during 
the day. Our youngest child is now in Kindergarten for a half-day. I am 
the caregiver in the evenings.
    I have been teaching for 15 years. I am now at a point in my career 
where I need to earn a graduate to move up on my district's salary 
schedule. If I don't get the degree, I will stay at the same level for 
the rest of my teaching career with only salary increases if the salary 
schedule is adjusted for cost of living increases.
    The nearest college is located 55 miles away--one hour travel time 
away. The reason I have not been able to obtain a graduate degree until 
now is due to time constraints. Colleges don't like to offer classes in 
a time frame I could attend--when the children are in bed and the day's 
work has been completed. About 2\1/2\ years ago I heard about a program 
at a place called Western Governors University, that was by distance 
learning. This meant that I could study and complete projects/
assignments when I have the time.
    Since my study time is flexible and my progress through the program 
is totally geared to meet my schedule, I have been able to meet other 
life challenges and still continue with my studies. I am now looking 
forward to obtaining a master's degree in Learning and Technology 
through WGU. This has been somewhat harder than simply attending a 
class and completing the assignments. I feel that I am learning a great 
deal more than I would in a traditional program. I know that I would 
not have been able to make this much progress toward my graduate degree 
if it were not for WGU.

Mineta Wilde
    I am writing this letter to express appreciation to all the people 
responsible for making my graduation from Western Governors University 
in September a reality.
    Four years ago I began looking into masters' degree programs in 
educational technology. At the time I was teaching sixth grade, raising 
a family, and teaching technology professional development classes to 
supplement our family income. This left me very little time for 
scheduling classes to each a master's degree. Online distance learning 
was just starting to be an option, and I remember thinking at the time, 
``If only I could find a program that would allow me to stay home and 
earn my degree through the Internet.'' I decided to put my masters on 
hold for a few years until my children were older, and I could save 
money for tuition. However, three months later I received a letter 
inviting me to apply for a master's degree in ``Learning and 
Technology'' through WGU.

Karren Perry
    I am starting my fifth year as a public educator in rural Utah. I 
am very busy with my teaching and coaching, not to mention my family 
and other responsibilities. Also, as an educator, funding a Master's 
degree on my own would really have presented many problems financially 
for my family. Furthermore, I do not live near a university where I 
could pursue my Master's degree.

Eric Mortensen
    Since enrolling at WGU, I have learned to appreciate the value of 
an online education. While working toward my master's degree in 
Instructional Technology, I have been able to work full-time, as well 
as fulfill my family and civic responsibilities. A traditional 
education would not allow that freedom.

Lynn Sorensen
    I am sitting in a very familiar place as I type this letter . . . 
my computer den. This tiny, cluttered room is where I have diligently 
labored over the past 3 years on my Masters of Learning and Technology 
degree from Western Governors University. Sometimes I have felt lonely 
and isolated, sometimes overwhelmed and weary. But I have always always 
felt grateful--grateful for the chance to pursue an advanced degree 
that will benefit my personal life and enrich the students who share my 
professional life.
    As I near the proverbial finish line with only my Capstone Project 
to fine tune and an oral defense to prepare, I look back on what I have 
accomplished. I have learned about the different hardware and software 
options available to examine and procure for my classroom; I have 
learned how to research in a scholarly and systematic manner those 
topics pertinent to education today; I have developed a training 
program to teach my student newspaper editors the ins and outs of 
desktop publishing and its use in the larger context of an Internet-
connected journalism lab, including such issues as privacy, security, 
and fair use policies for materials found on the Web; I have discovered 
the importance of careful curriculum planning and evaluation and how to 
integrate technology in its myriad of forms into my teaching style, 
strategy, and media; in short, I have become a better teacher.

Arna L. Clark
    My previous university experience included training at Brigham 
Young University and at the University of Grenoble, France, as an 
undergraduate, as well as graduate studies at the University of New 
Mexico in Albuquerque, NM. With the commitments that now faced me, I 
had postponed any further graduate work because of the time 
requirements. I would have to drive to a campus, park, walk to class, 
spend time in class and then do my studies independently. This would be 
necessary twice or three times a week after teaching school, and I did 
not see how I could take care of my family and pursue a Masters degree 
in the traditional setting.
    Distance learning, particularly ``Western Governor's style,'' took 
out all the tedium, solved the travel requirements, and enabled me to 
tailor the specific time schedule to my personal needs. I did a 
significant amount of my study and writing in the midnight hours 
because those were the most convenient for me. It was wonderful. I 
could get online at any hour. I could send e-mail questions to the chat 
line of students or to any of my professors at any time, and they would 
answer whenever it was convenient for them. Often I received answers 
within a few hours. I was awed by how distance learning expedited the 
communication process. In fact, as I compare my educational experience 
at WGU with the other school I attended, I had never experienced such 
support.

Kathy Schlendorf
    Without the flexibility offered by Western Governors University, it 
would not be possible for me to earn my masters degree. I work full 
time and then some at a professional job, have two preschool aged 
children and manage a household. My new career requires I earn a 
masters in the next few years. I had no idea how I would manage that 
until I learned about Western Governors University.
    The beauty of the program lies in its flexibility. I work on my 
degree when I can. For me, it's an ideal situation.

Denise Dowling
    The ability to work on degrees and obtain credit via distance 
learning programs fills a vital niche in the college world. In a 
society where many people work long hours and spend much of their time 
juggling work commitments and family, distance learning allows 
individuals a chance to earn a degree when the standard path to a 
college education fails them.
    I am one of those people that have been helped by distance learning 
programs and in particular Western Governors University. My job 
requires that I work odd hours at random times. Many days start at 
seven in the morning, come with a couple of hours off in the afternoon 
and finish with a stint of teaching until 9 at night. With such a 
varied schedule, I would never be able to attend normally structured 
classes. Because I am also supporting a family, including a wife who is 
attending a local college, quitting work or cutting back is not an 
option. Western Governors University's competency based degree program 
has finally allowed me to work towards a degree. After 3 years of 
working at my pace with the time I have available, I will at last have 
my 2 year degree done and will start working towards my bachelors. My 
dream of getting a college degree will be fulfilled because of distance 
learn programs like WGU's.
    I cannot stress enough how important distance learning 
opportunities are to working people in the United States. It is of the 
utmost importance that these programs continue to get the support and 
funding needed to provide college opportunities to those individuals 
who can't attend a normal two or four year institution.

Greg Marshall
    Being from Cokeville, WY my opportunities for pursuing a master 
degree without relocating to a college town was not an option. WGU has 
enabled me to pursue one of my life goals. WGU's program is also 
allowing me to expand my career choices and earn a higher income in my 
chosen field of education. As a father of a young and growing family of 
three sons, these things are important and add security for my family.

Brian Toomer
    I would like to reassure you of the positive experience that WGU 
has provided for me.
    All of my classes provided instruction where work was completed and 
transferred via the Internet. At times, I could interact with on-line 
chat classes where we would discuss, and plan assignments with other 
students around the State and country. Our classes were not restricted 
to specific time schedules. Many of the interactions with my classmates 
occurred at night due to most of us having teaching positions during 
the day.
    I have to say this program gave me the opportunity to accomplish 
this personal goal. I could not have done so without the opportunity to 
still teach for an income, but it also has allowed me to complete my 
work at times when my family was not at home or my children were 
asleep.
    This program may not be for everyone. Students need to be self-
motivated and ready to learn. The program was by no means easy but I 
feel I have learned a great deal from this experience and accomplished 
a great amount.

    Senator Enzi. Thank you very much for your testimony today, 
and I would mention that your complete testimony will be part 
of the record, and I have some questions that I am going to ask 
here in a moment, which will also be part of the record. I 
probably won't have time to ask all of them, so I will be 
submitting some of them in writing, as will other members of 
the committee, because this is our opportunity to build a 
record for when we do the Higher Education reauthorization.
    I am just so pleased with the comments that you have had. 
You have gone into some of the very basic things that we will 
have to explain again and again, I am sure, as we go through 
the process. But you have given me some good clues on how to do 
that.
    The Internet has definitely changed our lives. I think it 
has changed the way that kids have to be taught. I have a 
daughter that was a 7th-grade English teacher in Gillette, 
Wyoming, for a long time, and that involves doing research 
assignments. And she has found that that had to change because 
it is so much easier to do research now.
    One of the things we want to do is encourage that easier 
research, but make students more efficient at it and make sure 
that the data that they are getting is very good.
    She is now the principal at Chugwater School, which is K-
12, 126 students. It is one of those rural schools, and the 
kids receive German by Internet there. So they are getting some 
of the instruction and have an opportunity even to take some 
college courses while they are in high school.
    So there is some new potential out there that some of us 
who have been around a while can't quite envision. I would add 
that I am the one that is trying to get computers on the floor 
of the Senate, and I have run into quite a bit of resistance. 
On September 11th, we had a little communication problem and 
found out that the Internet was the only way they could keep 
track of us. So we have all been issued BlackBerrys now, which 
I point out to them is a computer that works on wireless, and 
have asked for them to revise the rule again. They have assured 
me the next time the Rules Committee meets, that will be first 
on the agenda. That assured me that the Rules Committee is not 
meeting again this year.
    [Laughter.]
    But I have a real appreciation for the distance learning. 
Wyoming is distance. We have miles and miles of miles and 
miles. Our towns are spread out, and they are relatively small. 
But there are some tremendous opportunities, and I have begun 
to recognize some of those opportunities because my wife 
travels back and forth with me. She is out here when I am out 
here, and in Wyoming traveling when I am out there almost every 
weekend. And she wanted to get a master's degree, and she did 
that by distance learning. She could get her courses sometimes 
when we were in an airport. Usually, she was able to do the 
planning so she was here or there. But I got to see some of the 
value of being able to utilize distance education--and also 
some of the disadvantages. She didn't have the social 
atmosphere that you have if you go to a college. But she was 
able to get the education and the degree. It gave her the 
flexibility that she would not have had otherwise.
    I have been pleased to sponsor S. 1445, which is the 
Internet Equity and Education Act of 2001. It is important 
legislation which is based on the findings of the bipartisan 
Web-based Education Committee that I and a number of other 
Congressmen serve on. And it will accomplish the critical goal 
of giving more students the opportunity to pursue postsecondary 
education by expanding their access to financial aid for 
students who choose to further their education through distance 
learning. And I am pleased that the University of Wyoming--that 
is our only 4-year institution in Wyoming, public or private--
is making use of it and experiencing record-breaking 
enrollments in their distance learning.
    We have a State that is 98,000 square miles, and as I 
mentioned, the towns are a long ways apart. So it is my hope 
that Congress will modernize the Higher Education Act so that 
the distance education programs like the University of 
Wyoming's and the Western Governors University's will be able 
to expand even further to serve more interested students. And I 
know that most of those are adults and nontraditional. So this 
hearing has helped to bring out a lot of that. You have given 
some excellent testimony. I do want to ask a few questions.
    Ms. Ashby, on page 10 of your written testimony, you State 
that financial aid is not as great a concern for students who 
take distance education courses as it is for other students. 
Could you expand on that a little bit or clarify it a little 
bit for me?
    Ms. Ashby. Yes, let me clarify. We did not mean that 
financial aid was not as important. What we found is that 
distance education students have applied for and are receiving 
it to a lesser extent than other students. But we suspect that 
that might be for a number of reasons, including the fact that, 
as you just said, most distance education students are 
nontraditional students. They are older than other college 
students. They are part-time students and full-time workers. 
Many are married. So it might very well be that they have their 
own resources and don't need financial aid. If they are part-
time students, it is costing them less than it would cost a 
full-time student to go to school.
    We have not been able to look into this issue to this 
extent, but these are speculations given what we know about the 
nature of the distance education learner.
    Senator Enzi. Your statistics show that distance education 
students apply for financial aid at a lower rate than other 
students. Is it possible that fewer distance education students 
apply for that because they know that they are not eligible to 
receive it? Is that knowledge among them?
    Ms. Ashby. Well, actually, distance education students are 
eligible to receive financial aid as long as they are attending 
an institution that is eligible. Other than the reasons I gave 
you earlier, the nontraditional student versus the traditional 
student, I really can't speculate further as to why that is.
    Senator Enzi. Well, you mentioned the 50-percent rule, so 
they would know they are not eligible from that in some 
instances.
    Ms. Ashby. If they were attending a school--right, if they 
were attending a school that had more than 50 percent of its 
courses or 50 percent of its students in distance education, 
they would know that. I presume they would know that.
    Senator Enzi. OK. Do you have any idea what percentage of 
the students would be eligible then for financial aid? They are 
not applying for it, but how many would be eligible?
    Ms. Ashby. I don't know.
    Senator Enzi. Mr. Mayadas, in your written testimony, you 
talk about five elements that should be used to ensure quality 
distance education. Most of these elements link distance 
program performance with that of on-campus instruction. Do you 
have any ideas on ways that a distance-only institution can 
ensure quality?
    Mr. Mayadas. Yes, I think it is much easier if you have a 
campus base, of course, and even some of the fast-growing for-
profits like University of Phoenix have started that way. And 
they still are mainly a classroom-based institution with a new 
online version.
    If you are an entirely online institution, then one way to 
evaluate quality is to compare that institution with some other 
known institution that is approximately equivalent in its goals 
that may have a campus base. So that is the kind of comparison 
that could be made between entirely online institutions. 
Perhaps they could be asked which institutions do you compare 
yourselves to, and so that is one way to do it. There may be 
other ways as well.
    Our five elements of quality I think would be pretty easy 
to apply to an entirely online institution. For example, we 
think if you are going to spend all this money on computers and 
so forth, you should be expanding access over and above what 
would have been possible with just correspondence and the older 
methods. I think an institution should be able to think of 
their program in that way and describe how they are doing that. 
Learning effectiveness simply says that they have got to be 
learning what you are teaching them, and you could do that by 
comparison with another institution.
    So I think in each of these we could rationalize a sensible 
approach to quality for an entirely online institution.
    Senator Enzi. Certainly a lot of information available out 
there. I know when I was going to college, I went to the George 
Washington University here in Washington, D.C., and one of the 
exercises they used to have us do is go up to the Library of 
Congress, pick a subject, and then, you know, do a bibliography 
on everything that was available there. And it was usually 
pretty impressive the number of books that were available, and 
it helped us to shorten our--to limit our topic a bit more.
    Today, kids would just need reams of paper to do that same 
thing in a few minutes. So we have changed.
    You talk about two distinct forms of online learning: the 
broadcast and the interactive. And one of the characteristics 
of the interactive model which you believe provides higher-
quality instruction is that the course begins and ends on a 
particular day. In your opinion, is it possible to have quality 
interactive online programs that are self-paced, or is that a 
conflict of terms?
    Mr. Mayadas. Yes, we started with the idea that if you had 
a cohort or a class and they began and ended on the same day, 
they would get to know each other; they would feel comfortable 
asking questions. They would interact much the way that we know 
that classmates interact on campuses and have for many years.
    If it is entirely self-paced--and we do have a few where it 
is anytime enrollment and when you complete the work it is 
done. And I think in some fields that works, and that certainly 
works for training. For for-credit education, it is just not 
used as much, and I think most institutions prefer to start 1 
day and end on a specific day because of the sort of reasons I 
have given, which is you kind of build a certain camaraderie. 
You seek help from your fellow students and so on. It is easier 
to do that when you know who they are.
    And interactivity, I think Bob Mendenhall may have 
mentioned this. Certainly we have found that interactivity with 
the instructor and with other students always ranks way at the 
top on student satisfaction surveys. It is the one thing they 
really value.
    Senator Enzi. Not to mention that we all kind of operate on 
deadlines, right?
    Mr. Mayadas. That is right. Exactly.
    Senator Enzi. You mentioned in your testimony the Army's 
program that allows members of the armed forces to continue 
their education while serving the country. Can you tell me a 
little bit more about that program?
    Mr. Mayadas. Yes, that program at this point consists of a 
consortium of schools, about somewhat more than 20, and it is 
due to be expanded. They haven't got the new list yet, but 
there will be a new number. I think it will exceed 30. A 
soldier can sign up for a program from any one of those 
institutions, and if the soldier is transferred, there is no 
problem. You continue to take your classes.
    The Army provides an attractive package for the soldier, a 
portable computer and an Internet connection, but requires 
progress toward a degree at a certain rate; otherwise, you have 
to pay for that stuff. So it provides a lot of incentive to 
finish your work.
    That program has over 30,000 enlisted personnel enrolled 
right now, and it is doing remarkably well. Considering the 
unusual circumstances that enlisted personnel can end up in, 
their completion rates are amazingly good.
    Senator Enzi. That probably has to do somewhat with that 
incentive of having to pay for it if they don't progress.
    [Laughter.]
    Mr. Mayadas. I think it does. It really does.
    Senator Enzi. That is good to keep in mind, too.
    Mr. Shank, you mentioned that online learning may be a more 
effective tool for adult students. Can you expand on that and 
tell us why it can be so beneficial for the nontraditional 
students?
    Mr. Shank. Yes, Senator Enzi. If you would indulge me, I 
would also like to make a couple comments on the exchange that 
you had with Mr. Mayadas about how an online school, purely 
online, measures quality, which I think is very important to 
the issues here. And, again, I will talk about our 
instructional model that we have developed at Capella 
University which is based entirely on a model of adult 
learning, and adults are different. They are very different 
than the traditional student who is able to be on campus, 
devote the individual's entire life to the educational 
experience, have a relatively leisurely period of time.
    What we know about adults is they learn most effectively if 
the learning can be active, if they can be actively engaged in 
the instruction as a peer, not a more traditional educational 
model where the faculty individual pretty much is the fount of 
information and the information is a one-way flow.
    It is also important that adults are able to interact with 
the faculty and interact with other peers engaged in similar 
life circumstances and work circumstances which enrich their 
particular interest at the moment, and they can take that work 
and they can apply it to what is relevant to them right now. 
That is how you get good learning.
    We know that a whole lot of learning going on in the 
workplace is not producing the desired results because this 
episodic approach to learning is not effective. Online 
education is very effective in that respect.
    In terms of measuring, as a purely distance institution, 
what we are doing is we are adopting a totally outcomes-based 
philosophy, and we are embedding in every course, in all of our 
programs, a specific set of learning outcomes. Those may be 
knowledge outcomes. They may be academic skills such as 
computer usage, research skills, etc. They are also doing 
skills.
    We have a philosophy that if we can describe this, we can 
measure this, and we can demonstrate whether or not we are 
meeting our stated learning outcomes; and if we are not, why 
not; and then the faculty is expected to engage in engage in 
processes of how we improve learning outcomes.
    Senator Enzi. You mentioned that adult students are better 
if there is some interaction. Can you explain that a little 
bit? We are not talking about programmed learning, are we?
    Mr. Shank. We are not talking about programmed learning. I 
would echo 100 percent the indicators of quality that Mr. 
Mayadas has communicated. By interaction--again, I will talk 
about our model. Our model is that on a weekly basis there are 
required participations in the class, learner-to-faculty, 
learner-to-learner. No one can sit in the back of the class and 
just listen and observe. It is only by active participation--
all the research shows--that adults learn and retain 
effectively. And that is what I mean by active participation.
    If you are going to be a Web designer, build a website. 
Don't read about building a website. Build a website and have 
people criticize it.
    Senator Enzi. I know from my wife's courses, too, that they 
had the ability to talk back and forth while they were in 
class.
    Now, you mentioned in your testimony that 55 percent of the 
Capella University students receive Federal financial aid. What 
will happen to these students if Federal financial aid laws are 
not amended or the demonstration program is not renewed?
    Mr. Shank. In the case of our university, we are a fully 
online university. These students would not be able to 
participate in Federal financial aid.
    Again, if I could make one other comment about the 
significance of this, I stated that our studies indicate there 
are 120,000 students studying online now. And while traditional 
campus-based universities are providing online programs, I 
would very strongly assert that probably the majority, more 
than a majority of those students are studying at schools like 
Western Governors, our school, or other schools which are 
either purely online or will soon be more than 50 percent 
online. So for the online degree-seeking population, the 50-
percent rule is very important.
    Senator Enzi. Thank you.
    Mr. Mendenhall, I appreciated your comment about or the 
explanation of how correspondence courses are different than 
the online courses. That was very helpful.
    Now, I have heard detractors claim that distance education 
isolates students and provides limited opportunities for 
meaningful interaction. Do you feel this is true?
    Mr. Mendenhall. I think it is true in some cases. It is 
probably true on-campus in some cases, too, where, you know, in 
your undergraduate courses you go to an auditorium with 200 
students and get lectured to by a faculty member who has an 
hour of office hours during the week.
    In both cases, it doesn't need to be true. I think in 
particular the advent of the Internet into distance learning 
has provided us the opportunity to establish very rich 
interactions, as both Mr. Shank and Mr. Mayadas have testified.
    We do not have students start and end at the same point at 
Western Governors University. It is start when they are ready 
and finish as they can. Nevertheless, every student is part of 
at least one learning community, mixed with students either in 
the same subject or from the same profession or from the same 
State, and several are in multiple learning communities. And 
they interact with other students via throughout discussion 
groups, live chat sessions. They exchange phone numbers and e-
mails. Similarly, we have faculty members who are not simply 
teaching a course but are mentoring students through their 
entire program, and so they have access to a faculty member 
essentially 24/7. Obviously, faculty may not respond for 24 
hours to a particular e-mail, but fairly fast response from 
faculty.
    And we have had a number of students--I believe some of the 
quotes are included in my written testimony--who have suggested 
that the found the interaction richer and more meaningful to 
them than other campus-based programs that they have attended.
    So I think it is dependent on the design of the program, 
but certainly we have the capability now to have rich 
interaction and collaboration in distance learning.
    Senator Enzi. OK. Thank you.
    One of the things, of course, that you touched on a little 
bit and that we are extremely interested in in this committee 
because of the No Child Left Behind Act that we worked on here 
and got passed, can you go into, in a little bit more detail, 
how the Western Governors University is helping teachers to 
meet the requirement of being highly qualified?
    Mr. Mendenhall. I think this is a great example of distance 
learning. The No Child Left Behind Act essentially asked that 
paraprofessionals in Title I schools gain an associate's degree 
to continue to be employed and that new paraprofessionals had 
to have an associate's degree to be hired, and that teachers 
would have to be fully certified to continue teaching in 
schools.
    We have 500,000 paraprofessionals in public education, most 
of whom do not have an associate's degree. They earn maybe 
$15,000 a year, have families that they are supporting, and the 
idea of them being able to quit work for 2 years and go gain an 
associate's degree at a traditional institution is simply not 
going to happen. We are either going to force them out of 
schools and out of the education system, or provide a much more 
flexible way for them to gain an associate's degree.
    WGU offers an online competency-based associate's degree to 
these paraprofessionals that they can do at their own time and 
pace and hours that make sense for them. For most of our 
students, that turns out to be between 10:00 at night and 2:00 
in the morning, where they do a lot of their studying.
    Similarly, up to 40 percent of our teachers in big urban 
districts and in small rural districts are not yet certified. 
They are required in most States to be certified within 2 or 3 
years, and yet there is no practical way for them to continue 
teaching and gain certification in a traditional classroom mode 
in that time frame, so, again, unless we can provide a more 
flexible online alternative to them, we are simply going to 
force these people out of the education system. And it is not 
clear who we would replace them with.
    So we are offering, again, online competency-based teacher 
certification programs to these individuals.
    Senator Enzi. Thank you. I would like both you and Mr. 
Shank to tell me a little bit more about some of the quality 
assurance measures that your school has in place and what the 
accrediting agencies that serve distance education ask for.
    Mr. Mendenhall. I appreciate that. WGU is somewhat unique 
in that, from the very beginning, we took a competency-based 
model to issuing degrees; that is, we do not measure student 
learning by how many courses a student takes or how many 
classes they sit through. We instead define the competencies we 
expect of a graduate and have developed assessments to measure 
that learning, which, as Mr. Shank said, are some combination 
of objective tests, performance tests, portfolios, doing as 
well as knowing.
    All of our students are required to pass those assessments 
at a certain cut score to demonstrate mastery and competency in 
order to graduate. So our quality measure, frankly, is very 
straightforward. Either they have the competencies or they 
don't.
    The accreditors have difficulty in that kind of a model 
simply because it is not the usual model. In general, the 
accrediting bodies have come in and looked at things like the 
governance of the university, the role of faculty, the 
development of courses, and, as I mentioned in my earlier 
testimony, sought to compare those with the way it is done in a 
campus-based institution.
    We would suggest that an institution that is created purely 
for distance learning has the opportunity to start with a clean 
slate and decide what would be of most benefit in distance 
learning to provide quality education. Our faculty have a very 
different role than traditional faculty. Our measure of 
learning is somewhat different than simply seat time and credit 
hours. But we have found the accreditors very willing to work 
with us, to understand our model. We also have been 
accommodating to fit within their model.
    I mentioned in my testimony that we have been accredited by 
both DETC, the Distance Education Training Council, and through 
a process of regional accreditation. And we found both to be 
equally rigorous. I suggest that if distance learning is going 
to be included as Title IV-eligible, that DETC ought to be a 
Title IV accrediting institution. They are not currently 
because they only accredit distance learning institutions, 
which aren't eligible for Federal financial aid. But they have 
a great deal of experience in that arena.
    We found them to be just as rigorous as regionals but, 
frankly, a lot more timely. Their process is a one-step, kind 
of 1-year process. Regional accreditation is a three-step, 5-
year process. And quite frankly, if you require a new 
institution to exist for 5 years without accreditation, you are 
going to do a lot to stifle innovation and creativity in higher 
education.
    We believe that you can measure learning now and that 
Federal financial aid ought to be based on the quality of 
learning which can be measured rather than on the mode of 
delivery, which the 50-percent rule currently requires.
    Senator Enzi. Thank you.
    Mr. Shank?
    Mr. Shank. Senator Enzi, our model is different than 
Western Governors in the sense that we have an academic model 
that looks much more traditional than Western Governors does. 
So when it comes to academic quality of the students' work, the 
context here is this is a learner who is enrolled in a 
multiyear academic program, a series of courses. That learner 
is required to participate over this multiyear series of course 
multiple times a week, and so there is demonstration of work on 
a course interaction basis, on a regular basis.
    In addition, every learned is required to submit a written 
demonstration of the learning outcomes, which may be papers, 
which may be class projects like an MBA course or an IT type of 
program. We do use some testing, but we tend to use less 
testing than is typical in an undergraduate program.
    But when you are talking about a distance environment, you 
need to talk in a different paradigm about quality because 
adults have different expectations of what quality is. One 
expectation about quality is I am out there at a distance and I 
expect the faculty member to respond to me. And if the faculty 
member is not giving prompt response to my interactions, it is 
not a quality experience.
    So we are monitoring, assessing, and working with our 
faculty about our expectations of the quality of participation, 
the responsiveness to the participation.
    There is a whole other element of quality when you are 
dealing with adults, and that is, student services are as 
important as the academic instruction going on. And, that is, 
can the access to financial aid be seamless? Because I don't 
have time to fool around with waiting in lines that happens in 
a traditional experience. We are providing all of that online, 
24 by 7.
    How good is the access to advising? If I get in trouble, 
how good is the university system to identify that I need help 
and reach out and help?
    So when you talk about quality in distance education, you 
have to look at the service component as well as the academic 
component.
    Senator Enzi. It must be quite a challenge for teachers in 
this, too, because a lot of the students have actual experience 
in the workplace. Some of the teachers may not.
    [Laughter.]
    Mr. Shank. If I could issue one----
    Senator Enzi. A bit challenging.
    Mr. Shank. If I could issue one plea--and we are talking 
about the important role of distance education in extending our 
teaching capability certainly in K-12. And as a result of 
Federal initiatives, we are spending billions of dollars, 
probably, on infrastructure and computers. We are spending 
peanuts on helping teachers teach effectively online. It is a 
terribly important subject for Federal policy.
    Senator Enzi. I think there is some resistance or 
reluctance on the part of the teachers, too, because they are 
sometimes of a different generation than the ones primarily 
using the computers. So, yes, there has to be some additional 
help there, too.
    For all of you, what are some of the safeguards--this is 
going to be a big topic when we get into the actual 
reauthorization--that are preventing student aid fraud and 
abuse. So what are some safeguards that are currently in place 
or ones that you would suggest for us to counter that with? Mr. 
Mayadas?
    Mr. Mayadas. Our thought there would be that an accredited 
institution--and, first of all, I agree with what has been 
said. Accreditors must move in the direction of more outcomes 
measurements. I think some input measurement is okay if it is 
written in such a way that it is equally applicable to the 
distance, and the campus environment can be worked through by 
either side. But then outcomes are very important. Accreditors 
want to do that. What they are doing right now is throwing it 
over to the universities and saying you tell us what are the 
appropriate outcome measurements, and I think some more effort 
on the parts of universities to create these outcome 
measurements will help drive that process.
    But I think an accredited institution and outcome 
measurements are a pretty good safeguard. If you are not 
accredited or on the list of approved accreditation agencies, 
you are not in business to get Federal aid. That is how we 
would look at it.
    Mr. Shank. In our submission, we proposed a criteria that 
there is required interaction and that there be faculty 
leadership in the courses. Now, the danger with this is--again, 
I am not knowledgeable enough to know how this matches up with 
a model like Western Governors. But we are not confident that 
we know enough about self-paced education right now to 
understand the effectiveness in a degree environment.
    We also have raised the concept--and, again, I will admit 
this is from our limited perspective--that much of the prior 
fraud in the financial aid assistance had to do with 
correspondence programs around vocational programs. And it does 
seem to us if you focus on accredited, degree-granting 
institutions, that will be an important safeguard that does not 
create broad windows for fraud.
    Senator Enzi. Ms. Ashby?
    Ms. Ashby. I would tend to agree that accreditation is very 
important. What we don't know yet is how well the accreditation 
process is working. And as I said in my statement, part of what 
we have been asked to do for your committee and for the House 
Committee on Education and the Workforce is to look at the 
accreditation process and see how well it is working and see if 
there are recommendations that GAO might offer to improve the 
process.
    If the process is working effectively, I think it is a 
powerful means of ensuring quality and accountability on the 
part of distance education institutions as well as other 
colleges and universities. Outcomes measures are very 
important, but outcome measures in the absence of some third 
party looking at how those outcome measures are determined, how 
the records are kept, internal control procedures within the 
institutions and so forth, is a lot less meaningful.
    So I would agree with accreditation may be an important 
part of the answer. I don't know if it is all of the answer.
    Senator Enzi. Thank you.
    Mr. Mendenhall?
    Mr. Mendenhall. The 1992 Higher Education Act in effect put 
a ban on use of Title IV student aid for distance education 
institutions, and that was a reaction to the fraud and abuse 
from correspondence schools and others in the 1980s. Since that 
time, there have been over 100 changes in the law and 
significant changes in the administration of financial aid, 
which we believe applied not only to distance learning but, 
obviously, to other institutions. And those same law changes 
applied now to distance learning ought to be sufficient as the 
law currently exists to curb that kind of abuse.
    I think the goal for Congress in the Higher Education 
Reauthorization Act is actually to encourage innovation and 
creativity in higher education, to encourage the use of 
distance learning and alternative forms of education.
    We would be concerned about regulations that basically 
dictate a method of learning or a mode of learning or certain 
attributes that have to be there as opposed to simply measuring 
the quality of learning that is taking place. To do otherwise 
is to suggest that we have figured out exactly what constitutes 
good learning and that no other model would be acceptable. And 
I think we are still learning a lot about what constitutes good 
learning.
    Accreditation, I agree, is also one of the safeguards. My 
feeling is that it needs to be more timely. If, in fact, again, 
it takes years and years for a new institution to be 
accredited, most of them will drop out of the race long before 
they can prove their success. But I think the inclusion of a 
group like DETC, which has experience in distance education and 
has a thoughtful and timely process would be an important 
addition to the accreditation process, particularly in distance 
learning and in curbing fraud and abuse in distance education.
    Senator Enzi. Mr. Mayadas?
    Mr. Mayadas. I would support Bob's comment that even though 
the four-credit degree-oriented education online in the country 
today is hugely tilted toward instructor-led cohort-style 
classes, as I described--maybe 98 percent of these programs go 
that way--that should not be a necessity. I think there may be 
different ways to do it. It is an economic question. Sometimes 
you can spend a lot of money to create a very good learning 
interface. Learning materials and so on may require less 
instructor interaction and all that. So we shouldn't rule that 
out. I think there is a real possibility that different ways of 
learning will emerge and we ought not to paint ourselves into a 
corner. I think the outcome measurements are the thing that 
remain constant.
    If I could just comment on one other thing that you had 
asked earlier about the learners who have financial aid right 
now, I just wanted to say that a number--in our experience, a 
lot of the distance education students are special cases, for 
instance, the Army case where their tuition is paid for; in the 
example I cited. The NACTEL example, the collective bargaining 
agreement between the companies and the union ensures that the 
companies pay the tuition in that case.
    So when you look at the average citizen, I think we will 
run into a wall with this 50-percent rule because we are 
beginning to see a certain number of traditional institutions 
that are getting their distance education, online education 
courses up around the 50-percent level. And that is going to be 
a problem over there.
    Senator Enzi. Thank you.
    Mr. Mendenhall, in your written testimony, you suggested 
that new institutions are better suited to distance learning 
than existing universities. Why do you believe that? Would you 
expand on that a little bit?
    Mr. Mendenhall. Well, I think there are some existing 
universities who are doing a great job of distance learning who 
have created separate units to go focus on distance learning. 
But, in general--I think this is true in every field, not just 
in education--if you look at industry in general, usually 
innovation requires new companies. Certainly in the technology 
field, the new innovations have spawned new companies. And the 
reason for that very simply is that existing institutions have 
an installed base to protect and, therefore, can't innovate at 
the pace of a new institution.
    In the case of education, no existing institution is 
developing distance learning programs without considering their 
effect on classroom enrollments. Each of the existing 
institutions has a faculty senate with a long history of we 
will not create new programs without approval of the faculty. 
And the faculty, therefore, have significant voice in we want 
these programs in certain formats and in certain directions, 
and we don't want it to change our traditional role or pay or 
other kinds of things.
    We have found, in creating a new institution for distance 
learning, that we are able to redefine the role of faculty. For 
example, at our institution, faculty are much more mentors of 
students through an entire program rather than instructors for 
a particular course. Their incentive is to help students learn, 
not to conduct research, which is an important part of many 
existing institutions.
    As Mr. Shank said, student services are very different on 
an online distance learning institution. We understand that 
these are adults who shop on the Internet, who use the Internet 
for a variety of things. They expect services to be available 
24/7. Traditional institutions are still very much a 9-to-5 
kind of effort.
    So I am simply suggesting that real innovation in every 
field generally results in new institutions who rethink the 
enterprise from the ground up and design it to maximize the 
delivery mechanism that they are using. And, in fact, we find 
that today in education, I think, with innovative programs from 
purely distance learning institutions.
    Certainly to cut out the pure distance learning 
institutions simply because they chose that mode of learning I 
think would be short-sighted and would discourage innovation in 
higher education.
    Senator Enzi. Another question I have to ask, too, is that 
I know that all the Governors that created the Western Governor 
University all have universities. We have less in Wyoming than 
anywhere else. But why did they create this? And what makes it 
different from the universities that they have in their States 
already?
    Mr. Mendenhall. I think if you talk to the founding 
Governors, it was primarily an economic development, a 
workforce development issue. They were disappointed, to some 
extent, in the responsiveness and innovation of State 
institutions. They were getting an earful from companies in 
their States about not being able to get the workers prepared 
and trained in a way that was adequate. And particularly the 
emphasis on competency-based education was an effort by the 
Governors to create an education system that would be 
responsive to the competencies that their businesses were 
asking for and prepare a workforce and re-prepare a workforce, 
that is, provide an education to adults that were not being 
well served by traditional education.
    The other clearly was the access issue in rural areas. 
These are Western Governors who understand that a large portion 
of their population lives an hour or 2 hours or more away from 
any traditional kind of university and simply wouldn't have 
access to education in any other way.
    And so WGU was really set up to share distance learning 
resources, to expand access, and to establish this competency-
based model of education that would be responsive to the needs 
of industry.
    Senator Enzi. Thank you.
    And for each of you, is there some question that I should 
have asked--now, I am going to leave the record open for 
another 7 days and my colleagues will be submitting questions 
that I hope you will share answers with, and I even have a few 
other questions here, too. But I will give each of you a chance 
to make an additional statement or to ask a question and answer 
it. So, Mr. Mayadas, do you----
    Mr. Mayadas. I just wanted to add a bit to what Bob 
Mendenhall had said about the new institutions perhaps being 
more creative in distance education than the existing ones. I 
would deviate a little bit from what Bob said in that I think 
it is a matter of motivation on the part of the institutions. 
The ones that are really motivated are going to do well, and I 
can tell you that in our looking around, we find community 
colleges to be--they have got their ears to the ground. They 
know what their customers want, and they do a great job on very 
skimpy resources.
    When you look at the highly elite institutions, you don't 
see them much in the picture. So it comes down to the 
particular economics and the particular motivation. State 
institutions tend to get motivated when their State Governments 
encourage that, and most of them have done that and have made 
it easier for them to get into this kind of thing.
    Some private institutions are very highly tuition-driven. 
That is how they exist. Those institutions are going to be 
creative and innovative because this is how they will survive. 
They need more enrollments. So it is going to be a very mixed 
picture, I think.
    Senator Enzi. Thank you.
    Ms. Ashby. There is no particular question that I would say 
you have not asked, but I will reiterate what we said in our 
formal statement and what I said in my opening statement and 
what I think you or Senator Wellstone said earlier. What we 
need is a balance. It appears that distance education provides 
a good opportunity for a lot of students who would not have 
access to higher education, and certainly access is one of the 
goals of not only the legislative and executive branches of 
Government but GAO recognizes the importance of access. And 
that is one of the things that we focused on for many, many 
years in terms of the student financial aid programs.
    But we also need controls, internal controls. They are a 
lot more boring than distance education, I know, but they are 
important. And I think in order for you to sell your programs 
more widely, the last thing you need is some institution to 
come along and commit fraud and make the headlines. So I think 
we all do agree and we all are working for the same thing, but 
in reauthorizing the Higher Education Act, please, take into 
consideration the importance of controls, the importance of 
accreditation. We will be able to give you more information 
about that later when we finish our work. That is, I think, 
right now the unknown from our perspective. We realize there 
are a lot of accrediting agencies. We are not certain to the 
extent that they have been able to apply their craft to 
distance education. And so that is a caution that I would put 
forth.
    Thank you.
    Senator Enzi. As the only accountant in the Senate, I 
appreciate that accountability factor that you just added.
    Mr. Shank?
    Mr. Shank. Two comments, and I don't know that you have not 
asked any questions that are important, but two comments: one 
about the role of traditional campus-based schools in extended 
distance education. I think do to some extent agree with the 
comments that Mr. Mendenhall made, but I would offer a little 
bit different perspective in that we are talking with 2-year 
colleges across the country and actually some 4-year colleges 
about joining in collaborative degree-granting relationships to 
work with those institutions to extend their reach.
    What we are finding is many of these schools know they need 
to do this to achieve their missions and to reach adult 
learners, but either they don't have the internal change 
environment but they don't have the technology resources or the 
financial resources.
    What I believe we are going to see happening here is 
growing collaboration with a virtual university like ourselves 
and some land-based universities. That could produce really 
good educational results.
    I think there are probably issues in the Title IV framework 
as to how easily that collaboration can take place if a student 
may be sharing an experience between a land-based and a virtual 
school, and that may be an important issue to look at.
    I would also say something about what Ms. Ashby just said. 
I really think that, in addition to the financial aid issue for 
distance education, the issue of recognition of quality is our 
most important issue to achieve the potential here. Frankly, 
the biggest question we get is not a question about fraud, but 
what will employers think of the degrees of the graduates? Will 
it be recognized?
    So if all of us could advance this subject, that real 
education and real learning is going on here, this will be a 
more and more powerful tool looking into the future.
    Senator Enzi. Thank you.
    Mr. Mendenhall?
    Mr. Mendenhall. I would like to comment in closing on the 
demonstration program that is being conducted by the Department 
of Education in terms of extending financial aid programs to 
distance education institutions. I think an interesting 
question for the Congress is how has that gone and what success 
has it found.
    We were one of the original institutions included in the 
demonstration program, and, again, financial aid is a very 
important component to our students. I think you will find our 
students as a whole use it as a slightly smaller percentage 
because many of our students are being paid for by their 
employers, as was mentioned earlier. But for those who are not 
being paid for by their employers, they need Federal financial 
aid as much as any of the other students in any of the other 
programs.
    We worked very closely with the Department of Education to 
define satisfactory academic progress, which is a measure of 
students' moving through the program, and limits the funds made 
available to students, to those who are making satisfactory 
academic progress. And I would just recommend that, as part of 
the reauthorization, the demonstration program not be continued 
but be made permanent in the sense that the Department be given 
the flexibility to adapt its rules and regulations to 
institutions that look a little bit different, that have a 
different methodology. We were very different because financial 
aid is typically based on credit hours, not on learning, and we 
were able to create it based on learning objectives.
    But I think that they have found in that program the 
ability to give Federal financial aid to distance learning 
students and not run significant risks of fraud and abuse. And, 
hopefully, those powers will be extended further to the 
Department.
    Senator Enzi. Thank you. I want to thank all of you for 
your excellent testimony and answers to the questions, and I 
want to assure you as we move on in this process that the 
information you have provided will be used, and you will 
probably hear some quotes in some of the debate because it has 
been that valuable. And you will also probably be receiving 
some additional questions so we can kind of fill in a few more 
of the blanks.
    Thank you very much for your participation today. The 
record will stay open for 7 days.
    [Whereupon, at 11:28 a.m., the committee was adjourned.]

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