The Education Department has left room for online colleges to innovate while maintaining eligibility for federal financial aid. But the lack of clarity carries some risk that colleges could run afoul of unarticulated rules. Only online colleges that provide “regular and substantive interaction” between faculty members and students are considered distance education providers; those that fall short are in the business of correspondence education. The regulation is intended to prevent bad actors from gaining access to federal financial aid funds for courses that are devoid of human interaction.
