Federal audit: Utah-based Western Governors University should repay more than $700 million in financial aid

Classes offered in online university’s catalog meet definition of ‘correspondence courses,’ which are ineligible for federal Title IV funding; school spokesperson says report isn‘t binding.

(Steve Grifffin | Tribune file photo) The Western Governor's University building in Salt Lake City on Monday, Oct 19, 2009.

Western Governors University may have to write a $712 million check to the federal government, based on recommendations in an audit report that says the online school’s offerings are “correspondence courses.”

Released Thursday, the report by the U.S. Department of Education’s Office of Inspector General has found that most courses within WGU’s largest degree programs fall short of financial aid eligibility under Title IV of the Higher Education Act — and recommends the repayment of $712,670,616 awarded to students since July 2014.

“None of these 69 courses [out of 102] could reasonably be considered as providing regular and substantive interaction between students and instructors,” the report states. 

At issue is the legal distinction between correspondence courses and WGU’s “distance education” model, which under the Higher Education Act requires student and faculty interaction to be enabled by technology.

The audit reviewed the school’s operations between July 2014 and June 2016. In addition to the roughly $713 million repayment, auditors also recommend that the Education Department’s chief operating officer for federal student aid determine whether WGU violated regulations prior to July 2014, which could lead to additional penalties against the university.

WGU spokeswoman Joan Mitchell said Thursday that the report does not impose binding sanctions on the university.

“It’s a recommendation from the Office of the Inspector General, who has no enforcement authority,” Mitchell said.

Moreover, according to Scott Pulsipher, president of the Utah-based university, the findings are based in a misinterpretation and narrow application of federal law.

“Obviosly we very much disagree with their opinion and perspective on these things,” Pulsipher said.

WGU’s model enrolls students in a full degree program rather than a series of individual classes, Pulsipher said, with a team of curriculum writers, mentors and instructors taking the place of a lone professor leading a course.

The school’s structure does not fit traditional molds, Pulsipher said, but WGU remains fully accredited and has long enjoyed bipartisan support since its founding in 1997 by 19 U.S. governors, including then-Utah Gov. Mike Leavitt.

“We have every expectation that this will be resolved favorably for WGU,” Pulsipher said, “and that we’ll continue to be able to innovate on behalf of our students.”

Following the release of the audit report, U.S. Sen. Mike Lee, R-Utah, tweeted that he was confident the Office of Inspector General’s recommendations would be rejected by the U.S. Department of Education. 

Lee’s spokesman, Conn Carroll, reiterated the senator’s support of WGU.

“Sen. Lee has every confidence that the Department of Education will see the true value that Western Governors University provides students,” Caroll told The Salt Lake Tribune, “despite antiquated and misinterpreted federal regulations.”

The report also dinged WGU for failing to meet minimum instructional time requirements for course participation and for inaccurately calculating repayments of financial aid after students withdrew from the school. 

“One student never attended during the payment period,” the report states. “But the school did not return any Title IV funds.”

Pulsipher denied those claims as well, saying a range of recommendations offered by federal auditors stemmed from a similar misreading of the Higher Education Act’s intentions.

Western Governors University operates on a so-called “competency-based education” model, in which students are awarded credit based on mastery of course content instead of completion of a specified term.

“We would reject any of their opinions,” Pulsipher said. “They have their perspective and just because they have one doesn’t mean its right. We are supremely confident in our model.”

WGU posted a video response to the audit on the school’s web page, including a video from Pulsipher assuring students that their financial aid and the school’s accreditation remain intact.