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ED Unveils New Initiative to increase Federal Financial Aid to Nontraditional Programs

Jen Ortega serves as a consultant to EDUCAUSE on federal policy and government relations. She has worked with EDUCAUSE since 2013 and assists with monitoring legislative and regulatory proposals across a range of policy areas, including cybersecurity, data privacy, e-learning, and accessibility.

On October 15, the U.S. Department of Education (ED) unveiled a new pilot program that will make federal financial aid dollars available to a limited number of nontraditional providers of postsecondary education, such as short-term certificate programs and massively open online courses (MOOCs). The new program, called the Educational Quality through Innovative Partnerships (EQUIP), will allow higher education institutions eligible to participate in federal financial aid programs to partner with nontraditional providers to offer academic programs supplied mostly or completely by the nontraditional provider; students in programs supported by these experimental partnerships will have access to federal student aid via the traditional college or university participating. ED is hoping that pairing nontraditional providers with accredited institutions will allow it to evaluate the effectiveness of programs from nontraditional providers – particularly in serving low-income students – while ensuring appropriate quality assurance.

Many nontraditional providers of education are not currently accredited, so students who participate in their programs cannot access federal financial aid to help cover the costs. However, these programs are growing substantially. An estimated 16,000 students are expected to complete nontraditional programs in 2015; in 2014, that number was 6,740. Federal financial aid regulations limit the extent to which higher education institutions can partner with nontraditional providers and still maintain the eligibility of students in relevant programs to participate in student aid programs. For example, colleges and universities can only source less than 50% of an academic program from a nontraditional provider and still make federal student aid available to the program’s students. The small number of institutions that participate in the EQUIP experiment will see this and related restrictions waived. As a result, they and ED will have the chance to assess the extent to which programs from nontraditional providers can successfully serve students while protecting the public’s investment, as well as which quality assurance mechanisms will most effectively ensure such outcomes.

An institution must work with its accrediting body to confirm that an experimental program complies with the accreditor’s standards, although the program won’t be subject to separate review by the accreditor. In addition, the institution must use a quality assurance entity  (QAE) to evaluate student learning outcomes and overall program effectiveness. ED envisions the QAE role as something beyond traditional accreditation, since traditional accreditation standards often don’t apply to nontraditional providers. The notice announcing the experiment includes a section that specifically discusses the intended nature of QAEs and a set of specific questions that their quality assurance processes should address. The notice indicates that a range of different organizations could potentially fill this role, with one of the experiment’s goals being to see the types of QAEs that institutions engage in relevant programs and which are most effective:

“QAEs could be any of a number of kinds of organizations, including employer associations, new entities created for this specific purpose, existing accreditors (as long as the proposed quality assurance process is new, meets the stated requirements, and does not create conflicts of interest), accounting firms, or others.”

The notice also states that ED will consider proposals for program partnerships that either limit the student aid involved to Pell Grants or encompass a range of federal student aid programs, including direct subsidized and unsubsidized loans and campus-based aid in addition to Pell Grants.  The focus of the programs, though, must align with the goals indicated by ED’s gainful employment regulations: “Eligible programs will lead to a degree or certificate, build students’ transferable academic credits, and provide students with the ever-changing skills they need for today’s economy.”

ED has released a Fact Sheet and Blog Post on EQUIP. Letters of interest to participate in the pilot program can be submitted to ED until December 14.