St. Mary-of-the-Woods College should refund $42 million in federal financial aid dollars that it disbursed to students over a five year period.  That is the finding of the U.S. Department of Education’s Office of the Inspector General, which found that many “distance education” courses should have been classified as “correspondence” courses.

From the recently-released Final Audit Report: “According to Section 102(a)(3)(B) of the HEA, an institution is not eligible to participate in the Title IV programs if 50 percent or more of its students were enrolled in correspondence courses during its latest complete award year.”

What does that mean for the rest of us? I’ll get to that.

Have You Heard of St. Mary-of-the-Woods?

St. Mary-of-the-Woods is a small, Catholic college located very close to the Illinois state line in (where else?) St. Mary-of-the-Woods, Indiana.  Founded in 1840, it is the oldest Catholic liberal arts college in the U.S.  The college’s website includes “frequently asked questions” about the audit and a “business as usual” response from President Dottie King.

Photo of a row of postal boxes.
 Without the proper technologies used or appropriate interaction, courses could be declared as correspondence courses…with financial aid implications.

While it would be fun to write a blog piece about the nasty feds traipsing out to wilds of Indiana to beat up on a bunch of nuns who only want to teach innocent young women, I won’t do that.  While an interesting mental picture, that’s not how the Department works.

The Audit Report includes reasoning, citations, and evidence from both parties. I found problems with the arguments on both sides.  I think I need more information and expertise to make a final determination…and making a ruling is not my role.

An aside…In full disclosure, St. Mary-of-the-Woods College participates in WCET’s State Authorization Network.  We also work with their attorney, Michael Goldstein, and his firm, Dow Lohnes, recently became a supporting member of WCET.  The reason I wrote this blog is that I was asked by a representative of another small college to review the audit and wanted to share my thoughts broadly.  I have not talked to Mr. Goldstein or anyone from the College about this audit report.

Lessons, Observations, and Take Aways

Below, I have briefly extracted points that you, as a distance education professional, will need to watch.  Before reaching for the aspirin, remember that most of your courses probably clearly fit the “distance education” definition.  Also, more than 50% of your enrollments must be classified as correspondence for your institution to lose its Title IV funding.  But, it’s good to understand the difference and think about how the definitions apply to your classes.  WCET does not want others to be caught short.

Practical Considerations

The U.S. Department of Education is applying the definitions of a “correspondence” course when it performs audits.  WCET had received questions about whether these definitions were actually being used by the Department.  This is evidence they are.

The definitions changed in 2010 and it would be good to be informed on those definitions. The current definitions of “correspondence” and “distance education” can be found in section § 600.2 of the Electronic Code of Federal Regulations.  These current definitions are also copied at the end of this blog post.  These definitions came into effect on July 1, 2010.  Prior to that, courses were classified as either “correspondence” or “telecommunications.”  You can find those definitions in the Audit Report on page 6.  The Department is supposed to use the definition that was in place at the time the course was offered.  St. Mary’s questioned whether this was the case.  If you think your college might have problems with the current definition, you might also want to look at the older definition for course prior to July 1 of last year.

The Department seemed to focus primarily on two elements: the technologies used and faculty-student interaction. To NOT be a correspondence course, you have to use one of several technologies listed.  While St. Mary-of-the-Woods courses and faculty had access to a learning management system and online discussions, the Department said that these were rarely used in practice.  For distance education (or telecommunications) courses, they also expect “regular and substantive interaction between these students and the instructor.”  The Audit found that “instructors did not deliver lectures or initiate discussions with students. Tutoring and other instruction resources were provided at the student’s discretion.”  The College disputed these assertions.  How do your classes stack up?

We’re still left with the question of how much interaction is “regular and substantive.”  Part of the current correspondence definition is that interaction is primarily initiated by the student. I think that gives us a good guideline and it may be difficult to ever develop an absolute definition.  We were contacted earlier this year with a question from someone who was told that students had to participate in a discussion every 48 or 72 hours.  I asked them to point me to the regulation or interpretation and they could not.  Please don’t go overboard in forcing interaction.

Be careful in how you describe what you do.  On page 33 of the Audit is a chart that compares the wording used to describe the Woods External Degree (WED) Program and the Woods Online Program.  One of the pieces of evidence used to declare the WED Program to be comprised of correspondence courses was the wording used to describe it.

The U.S. Department of Education is applying the “last day of attendance” for reimbursing financial aid criteria.  For students who withdraw without notifying the institution, a financial aid refund date needs to be determined based upon the last academically-related activity.  WCET has been following this issue for some time.  A few years ago, the Department was applying stricter standards for distance education without openly defining those standards.  With Dow Lohnes and other organizations, we asked them to do so.  Those regulations were provided and were put into effect on July 1, 2010.  Not surprisingly, now that the regulation is public, they are applying it.

Philosophical Considerations

Do the correspondence definitions make sense anymore?  This is a rather confusing basket of criteria about how someone is taught, what technologies are used, and who interacts with whom.  The Audit says that the “50 percent rule” on correspondence courses was established by Congress in 1992 “to address numerous instances of abuse.”  Telecommunications courses were exempted from the 50 percent rule in 2005, but there has been some talk of bringing it back.  Does the 50 percent rule really curb abuse?  I’m all against misuse of funds, but is there a better way?

Does the part residential rule make sense?  The current correspondence definition states: “If a course is part correspondence and part residential training, the Secretary considers the course to be a correspondence course.” I can make a case where that would make sense in some courses where the face-to-face session is not meaningful.  Couldn’t a series of residential experiences provide the “substantive interaction” desired?

Does using a list of technologies in the definition make sense?  What happens if an unforeseen technology becomes popular?


My goal is to inform and not to unnecessarily alarm you.  Most courses will pass these definitions. However, I imagine there is some other college out there that needs to review its practices and is not interested in a $42 million penalty.


Russ Poulin
Deputy Director, Research & Analysis
WCET – WICHE Cooperative for Educational Technologies

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Photo credit:  From Morgue File.


Current Correspondence and Distance Education Definitions

Correspondence course: (1) A course provided by an institution under which the institution provides instructional materials, by mail or electronic transmission, including examinations on the materials, to students who are separated from the instructor. Interaction between the instructor and student is limited, is not regular and substantive, and is primarily initiated by the student. Correspondence courses are typically self-paced.

(2) If a course is part correspondence and part residential training, the Secretary considers the course to be a correspondence course.

(3) A correspondence course is not distance education.

Distance education means education that uses one or more of the technologies listed in paragraphs (1) through (4) of this definition to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between the students and the instructor, either synchronously or asynchronously. The technologies may include—

(1) The internet;

(2) One-way and two-way transmissions through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite, or wireless communications devices;

(3) Audio conferencing; or

(4) Video cassettes, DVDs, and CD–ROMs, if the cassettes, DVDs, or CD–ROMs are used in a course in conjunction with any of the technologies listed in paragraphs (1) through (3) of this definition.

23 replies on “Is Your Distance Education Course Actually a Correspondence Course?”

Thank you, Russ for the clarifications on this issue, I have heard of St Mary of the Woods as I was born in Indiana and have a sister who did some nursing related correspondence with them toward her RN a LONG time ago.

The issues you bring up — does the 50% rule make any sense and do the residential rules make any sense — are valid and it is scary that a $42 million penalty may be involved. Distance learning — and the rules that apply to it — have changed so radically in the last 20 years. Thanks for haing the patience to tackle untangling this issue,

One thing for certain…a $42 million fine will certainly get ones attention. It is unfortunate that a single institution has been given the opportunity to help the rest of us understand how the regulations translate.

I understand how the 50% rule plays out. But I’ve lost track . . . is there another dimension at the course level? Can students use federal aid for correspondence courses? Our institution would be in no danger on the 50% rule, but what about at the single course level?

Peg –
Thank you for the question.

As I understand it from the audit:
The 50% rule comes into effect if 50% of the institution’s overall enrollments (for the institutions) are in correspondence courses. Then the institution loses the ability to offer federal aid.

But first…they need to determine if a course is correspondence course. There is no 50% rule…just the criteria I cited in the article about a) the courses using one or more of the technologies listed; and b) the course has “regular and substantive interaction.”

I believe that it is possible to give aid for correspondence courses, but I believe that there are several conditions that must be met.

[…] First posted in April 2012, this one has been listed in syllabi and resource lists. It looks at the criteria used by the Department of Education in ruling that one institution’s courses were actually correspondence courses.  The institution was asked to repay  a large amount of federal financial aid funds.  This was one of our top posts for the third straight year. […]

UPDATE JANUARY 12, 2016: I confirmed today that this issue between the Department of Education and the St. Mary-of-the-Woods has yet to be resolved.

UPDATE JANUARY 23, 2016. I heard from a second hand source that the Department of Education has now offered a reduced settlement to St. Mary-of-the-Woods. Unfortunately, even that amount would bankrupt the college.

I am currently taking an online course at our university to gain a better understanding of teaching online and making the process “worthwhile” for the students. I taught in the WED program at Saint Mary of the Woods College some years ago and know what a sturggle it was to do so for those of us who wanted to deliver meaningful content. For me the problem was that the students I had were not committed to their own education. With that said I find this occurs in the classroom setting also. I am interested in engagement – that is discovering a method to engage students.

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