Government Accountability Goes Unaccountable: Chilling WGU’s Innovation Engine

For the last two decades, Western Governors University (WGU) has led the nation in creating and scaling an innovative, high-quality educational model that today helps roughly 90,000 enrolled students make progress in their lives and careers.

Last month, the Department of Education’s Office of the Inspector General spilled cold water on this record of success with a faulty audit that found WGU ineligible to participate in federal student-aid programs. The report said the University should repay Uncle Sam over $700 million.

Even if Education Secretary Betsy DeVos and the Department of Education ignore the audit’s recommendations—as they should—and allow WGU to continue to access federal aid, the report is not an innocent exercise in government oversight. First, it was a waste of time (over five years) and money—both the government’s and WGU’s—which distracted from the real need: making progress in higher education to better serve students, such as low-income ones, of whom only 8 percent graduate four-year college programs in six years. Second, it will further chill innovation across all colleges that can’t afford the scrutiny, cost, and risk of an audit. And third, as students research where to go to college, the audit will create confusion and cause some students to not enroll in WGU, one of the best universities in the world.

Founded by 19 U.S. governors, WGU is an online institution that uses a competency-based model. In competency-based learning, students make progress in their coursework as they master learning objectives, as opposed to a traditional credit-hour model in which students advance based on time regardless of how well they understand something.

The model has been fabulously successful at serving adult learners, who have needed to attend college to retool or get back on their feet. WGU boasts a one-year retention rate of 78 percent compared to a national average of 74 percent at public four-year institutions. Its six-year graduation rate is 49 percent and rising while serving a challenging population. Its 3-year student loan default rate is 4.8 percent, whereas the national average for all universities is 11.3 percent. And employers overwhelmingly report high satisfaction with the school’s graduates, as 95 percent of its graduates are employed, and 87 percent are employed in their degree field.

But WGU is also your classic round peg in a square hole. It is innovating within an antiquated federal regulatory structure that has historically prized access to higher education and tried to control quality based on a school’s inputs—does it look like a traditional college?—rather than student outcomes. WGU pushes that framework in all sorts of ways, not the least of which is that credit hours are the basis on which the federal government doles out student aid, not attainment of competencies.

This is the backdrop against which the Department of Education’s Office of the Inspector General (OIG) launched the audit of WGU several years ago. The goal was to ensure that WGU, as an innovative and novel model, isn’t acting out of compliance with federal laws and regulations.

The OIG takes pains to say that it did not “assess whether the school’s model was improving educational quality or expanding access to higher education”, only the school’s compliance. In its final audit, the OIG concludes that WGU is out of compliance in three areas, the most significant of which it says is that students do not engage in “regular and substantive interaction” with faculty in a majority of WGU’s courses—a requirement to receive federal aid as a “distance education” program, as opposed to a “correspondence program,” which is not eligible for federal student aid.

The audit ludicrously concludes this, however, on the basis of reviewing WGU’s course descriptions, not actually observing how students learned, interacted with instructors, and progressed through courses. The analysis is akin to the inspector general auditing a lecture class at Yale University by simply picking up a copy of a syllabus and noticing that students are not required to attend lectures nor does the syllabus describe any of the interactions that the instructor and students will have.

Had the inspector general spent any time observing, what it would see is that WGU uses a highly innovative faculty model, in which the faculty role is disaggregated into curriculum developers, course instructors, student mentors, and evaluators, such that students receive far more interaction and support than they would in practically any traditional, brick-and-mortar college, let alone an online one. Even if student mentors are not counted as instructors—as the inspector general claims—students interact in regular and substantive ways with course instructors. They just aren’t at prescribed times, instead occurring on a just-in-time basis when the interaction is most critical for student success—something that doesn’t happen in any correspondence course.

What’s clear is that WGU has crafted a highly innovative model that complies with both the spirit and letter of the law. The only helpful thing the inspector general has done is lay bare that it’s well past time for Congress to update the Higher Education Act so arcane interpretations of it can no longer stifle the innovation that higher education needs sorely and WGU has produced consistently.

— Michael B. Horn

Michael B. Horn is co-founder and distinguished fellow at the Clayton Christensen Institute, a principal consultant at Entangled Solutions, and executive editor at Education Next.

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