Students taking Internet-based distance-learning courses would have a better chance of getting federal financial aid under a bill currently before a Senate committee.

The U.S. House passed the Internet Equity and Education Act on Oct. 10 on a bipartisan 354-70 vote. The bill would redefine courses offered online so they are no longer considered correspondence courses for federal financial aid purposes.

In the 1960s, Congress included restrictions on federal financial aid for distance learning in the Higher Education Act to prevent “diploma mills” and fraudulent correspondence courses from receiving taxpayer money.

“The rules were passed in a time when Web-based delivery of education wasn’t out there,” said Rep. Johnny Isakson, the Georgia Republican who authored the bill.

Decades later, the rules unintentionally harm Internet-based schools, said Robert Mendenhall, president of Western Governors University in Salt Lake City, at which students complete all classwork online.

“(The rules) essentially said, we’re going to give financial aid to traditional institutions but not to distance-learning or Internet-based institutions,” he said.

Isakson’s bill addresses the two regulations that proponents of Internet-based education say most hamper students attempting to use online schools – the so-called “50 percent” and “12-hour” rules.

“The 50 percent rule and the 12-hour rule were unintended inhibitors on the ability of students to get student loans for Internet classes,” Isakson said.

The 50 percent rule prohibits an institution from receiving federal financial aid if it offers half or more of its courses through distance learning or has half or more of its students enrolled through distance-learning classes.

Cornelia Ashby, who directs education research at the General Accounting Office, told a House committee in September that approximately 20 of the nation’s 6,000 schools eligible for Title IV financial aid have already reached the 50 percent limit or soon will.

Isakson’s bill would create an exception to the 50 percent rule for students whose schools participate in the federal guaranteed or direct student loan programs and have default rates below 10 percent.

The other rule of the act affecting online course offerings, known as the 12-hour rule, was instituted to guard against institutions artificially lengthening their academic terms to receive more federal aid, Ashby told the House.

The rule defines a week of instruction as 12 hours of class time for a course that does not fit a standard academic length, such as a quarter or semester.

Isakson said this rule does not work well with online courses, which often do not meet as regular classes, and Mendenhall said the rule does not apply at all to his institution, which graduates students based on skill competencies, not credit hours.

Isakson’s bill would adopt the “one-day rule” favored by the Department of Education, which would define a week of instruction as one in which at least one day contains scheduled instruction or exams.

But Mendenhall said Isakson’s bill would principally benefit traditional institutions as they offer more courses online.

“It still does nothing to address the new Internet-based universities,” he said.

Typical distance learning students – who are older and more likely to work full time than other students – must rearrange their schedules to attend traditional universities or forego taking classes entirely if they cannot get money elsewhere for an Internet-based school, Mendenhall said.

“What these students are losing out on are the Pell Grants and the federal subsidized loans,” he said, although his institution has its own financial aid program.

Isakson said the Senate would not have time to act on his bill before the end of its current session, but he said the regulations involved are already being changed.

“The Department of Education is moving quickly to amend the rules this act would have repealed,” he said.

Mendenhall said Congress is moving toward providing financial aid for Internet-based institutions.

“Congress is looking for a way to say, let’s recognize high-quality education no matter how it’s delivered,” he said.

Currently, approximately one-third of students taking all their classes through distance learning receive federal financial aid, Ashby told the House committee.

Approximately 1.5 million postsecondary students took a distance learning course in the 1999-2000 academic year, and the Internet is the most used distance education method.

The federal government is the nation’s largest provider of student financial aid, dispersing approximately $52 billion to postsecondary students in fiscal year 2002.