Introduction

In July, U.S. Secretary of Education Betsy DeVos announced the formation of a negotiated rulemaking committee to develop regulations to expand access for students to “high-quality, innovative programs” by revising or rescinding a sweeping range of Department regulations. Among regulations slated for review as part of her self-described “rethink” of higher education, Secretary DeVos included rules governing how online programs are approved and operated, including the statutory requirement that they ensure instructors have “regular and substantive interaction” with students to maintain eligibility for federal financial aid.¹ But a look back at history reveals that the regulations that Secretary DeVos plans to rewrite or eliminate have their origins in abuses of federal aid dollars by an earlier form of distance education—correspondence programs, the precursor to today’s distance education.

Correspondence education dates back to the late 1800s, when schools and companies would send out lessons by mail to subscribers. But these programs didn’t become giant government-subsidized enterprises, in some cases with tens of thousands of postsecondary students, until after World War II, when Congress for the first time allowed veterans to use their GI Bill benefits to pay for correspondence courses.² The flow of federal funds to these programs attracted fraudsters, who charged hundreds of dollars to provide course materials in everything from writing, to cartooning, to starting correspondence schools in anything under the sun, even skydiving. From the 1950s on, policymakers spent decades trying to put the federal-subsidy genie back in the bottle through periodic crack-downs on the use of federal dollars by for-profit correspondence programs.

College-by-mail courses typically forced students to study and master the material themselves, without adequate support from instructors and experts in the field.

Blatant abuse of the federal financial aid system forever changed the post-war regulation of higher education in America. College-by-mail courses typically forced students to study and master the material themselves, without adequate support from instructors and experts in the field. In May 1970, the New York Times published a front-page exposé on correspondence programs that found “education-hungry Americans are quietly pouring hundreds of millions of dollars each year into an industry plagued by overblown advertising, fast talking salesmen, questionable instruction, and marginal results. By the uncounted thousands, people long on dreams but short on background and motivation pay the nation’s booming correspondence schools for painless learning and a ticket to surefire success.”³ A 1972 Government Accountability Office (GAO) study of veterans enrolled in correspondence courses found that three-fourths never graduated and just 6 percent found work in their fields of study.

A second wave of abuses occurred in the 1970s after Congress allowed students to use federally guaranteed student loans to pay for correspondence courses. With a new source of federal dollars, correspondence schools had a much larger constituency of students beyond veterans to target for enrollment, and the schools began to swell into postsecondary behemoths, with some enrolling tens of thousands of students apiece. The same problems of aggressive recruitment, poor-quality educational outcomes, and waste of taxpayer dollars that Congress had begun to tamp down with the veterans’ programs returned with a vengeance through the federal student aid system. Once again, Congress spent years cracking down on the programs while it continued to pour money into them, before sharply curtailing federal grants and loans from the Education Department to correspondence programs in 1992.

Today, that same cycle of increased access to federal funding, followed by abuses of students and taxpayers, appears set to repeat itself. Secretary DeVos has proposed weakening the restrictions on distance education programs, allowing them to operate more like the correspondence courses of yesteryear, where students are left to learn on their own—all in the name of innovation. Virtually every argument made now in favor of deregulating online learning to enhance innovation was previously made in favor of deregulating the correspondence, or “home study” schools that delivered courses by mail.

To take one example, supporters of deregulation in higher education argue now—as they did then—that the government role in higher education should be largely limited to maximizing educational choice, with students themselves bearing the primary responsibility for taking out federal loans and using grants to advance their career goals. Market-based “accountability” would substitute for federal accountability guardrails for protecting consumers and taxpayer dollars, or so the argument has gone. Deregulation advocates today, just like their predecessors, maintain that, to the extent that the educational quality of programs is subject to independent review, private accrediting agencies alone should bear the responsibility for assessing and certifying program quality, not government agencies. And they insist that federal laws and regulations that restrict online learning will only impede quality innovation, not nurture it.

As history shows, providing taxpayer dollars with few safeguards to new and untested distance education programs has consistently produced poor quality programs, excessive consumer costs, and unfair recruiting practices.

Yet as history shows, providing taxpayer dollars with few safeguards to new and untested distance education programs has consistently produced poor quality programs, excessive consumer costs, and unfair recruiting practices. In particular, the perverse financial incentives in for-profit higher education to make a buck by cutting corners in educating students⁴ underscores the vital role that government regulation plays in saving the for-profit industry from its worst excesses. And the risks of poor-quality distance-education programs today extend beyond the for-profit sector, where half of students are enrolled in entirely online courses. Nearly three million students are enrolled in exclusively online courses in the larger public and private nonprofit sectors, more than three times as many as in the for-profit sector.⁵ As colleges across sectors struggle to maintain enrollment and revenue, the dangers of a race to the bottom are real. It is only by imposing regulations and laws that Congress and the executive branch have periodically succeeded in curbing abuses and provided incentives for quality education and innovation. When done well, regulation has been both the salvation and necessary corrective of the higher education sector, as the cautionary saga of correspondence schools illustrates, time and again.