Compliance Challenges for Title IV Eligibility in Online and Hybrid Programs

Regular and Substantive Interaction (RSI) is the cornerstone of keeping online (distance education) programs eligible for Title IV aid. Institutions that have failed to meet this standard in the past have been required to repay substantial amounts of previously disbursed federal funds after program reviews uncovered deficiencies. 

Challenge: Many online programs risk being classified as correspondence education, which may not be Title IV eligible at some institutions. Reclassification not only threatens current eligibility but can create retroactive financial liability. Some common pitfalls:

• Faculty may not consistently initiate interaction.
• Misunderstanding of what counts as "substantive" (e.g., auto-graded quizzes don’t count).
• Difficulty in documenting and auditing RSI across multiple courses and instructors.

Risk: Loss of Title IV eligibility for entire programs; potential return of disbursed funds.

Federal rules require that distance education courses include instructor-initiated, academically substantive engagement, such as direct instruction, facilitated discussions, and personalized feedback. Yet faculty may misunderstand the requirements, relying on activities like auto-graded quizzes or passive content delivery, which do not qualify. Proving RSI can also be difficult, as institutions must demonstrate that interaction was timely, instructor-initiated, and tied to course objectives. In decentralized environments, documentation is often spread across learning management systems, email, and other platforms, complicating the audit trail.

To mitigate this risk, institutions should invest in faculty training, standardized course design expectations, proactive monitoring, and centralized recordkeeping. Clear processes and consistent oversight not only help demonstrate compliance during audits or program reviews but also protect students’ access to aid and safeguard the institution from costly repayment obligations.

Challenge: Federal law requires that an institution offering distance education in a state (where it is not physically located) must meet that state’s legal authorization requirements or participate in a state reciprocity agreement (like SARA). Navigating different state requirements for offering online education and ensuring compliance with professional licensure disclosures has varied challenges:

• Not all states are in NC-SARA.
• Even SARA institutions must track where students are located and disclose licensure compatibility for each state.
• Failure to disclose can result in Title IV findings and financial penalties.

Risk: Violations of state authorization under 34 CFR 600.9(c) or disclosure regulations under 34 CFR 668.43 and possible federal or state sanctions.

A core challenge in distance education is navigating the patchwork of state requirements for offering online programs and ensuring compliance with professional licensure disclosures. While NC-SARA streamlines authorization in many states, needed under 34 CFR 600.9(c), not all jurisdictions participate, and even SARA- participating institutions remain responsible for tracking student location, providing state-specific disclosures as necessary, and must comply with state- specific rules. In addition it is important to remember that some states maintain their own requirements for out-of-state learning placements, mandatory notifications, or physical-presence determinations that apply regardless of SARA membership.

The risks are significant. Operating without proper authorization, allowing students to engage in placements in a state without required approval, or failing to adhere to state-specific rules can result in state enforcement actions, institutional sanctions, and findings in a federal program review. To mitigate these risks, institutions must maintain reliable systems for tracking student location, monitor changes in state authorization and placement requirements, and coordinate all out-of-state activities through a centralized compliance office. Consistently determining each student’s ‘location’ at the time of enrollment, as well as having a documented policy for how this is determined, is critical for compliance. Robust processes not only protect compliance and eligibility for federal aid but also strengthen consumer protection and institutional credibility in the online learning marketplace.

Challenge: Institutions must publicly disclose and directly notify students whether a program meets educational requirements for licensure in the state where the student resides.

• Applies to both credit-bearing programs and certain workforce development or noncredit programs.
• Requires ongoing monitoring of licensure requirements across states and timely updates to disclosures.

Risk: Violations of 34 CFR 668.43(a)(5)(v) and 668.43(c) can result in federal or accreditor sanctions, student complaints or lawsuits, and negative audit findings.

Professional licensure disclosures are a critical compliance requirement in federal Title IV regulations. Under 34 CFR 668.43(a)(5)(v), institutions must publicly disclose whether each program meets educational requirements for licensure in every state where students are located. In addition, 34 CFR 668.43(c) requires direct, written notification to students when a program either does not meet, or when the institution has not determined whether it meets, state licensure requirements. These obligations extend beyond credit-bearing degree programs to certain workforce development and noncredit offerings designed to lead to licensed employment. 

A newer and often overlooked requirement appears in the Program Participation Agreement regulations at 34 CFR 668.14(b)(32). Institutions must obtain a student attestation before disbursing Title IV aid if the student is located in a state where the program does not meet licensure requirements. The attestation must acknowledge that the student understands the program will not qualify them for licensure in their state. If a student refuses to sign, the institution may not disburse Title IV funds and, effectively, cannot permit enrollment in that program under federal rules.

The compliance challenge is significant: institutions must maintain up-to-date tracking of licensure requirements across all states, ensure disclosures and notifications are accurate, and implement a reliable process to collect and document student attestations when required. The risks of noncompliance include federal or accreditor sanctions, negative audit findings, student complaints or lawsuits, and refund of Title IV funds or financial penalties. To mitigate these risks, institutions should centralize licensure data collection, align their disclosures and attestation processes, and ensure that both admissions and financial aid staff understand the requirements before aid is disbursed.

Challenge: Title IV disbursements rely on evidence of academic attendance, which is harder to verify online.

• Simply logging in is not sufficient.
• Institutions must track meaningful engagement (e.g., submitting an assignment, discussion board participation, instructor interaction).

Risk: Incorrect disbursement, faulty Return of Title IV (R2T4) calculations, and audit findings.

A persistent compliance challenge in distance education is verifying academic attendance and engagement for purposes of Title IV disbursement and R2T4 calculations, if a student stops engaging with a course or program. Note: Schools are not federally required to take attendance in each class; however, if your institution or accreditor does require it, or if you choose to track attendance, you must use that data in R2T4 calculations (i.e., you become an ‘attendance-taking institution’ under ED rules). But when aid eligibility depends on whether a student has attended, institutions must have reliable evidence of “academic engagement” as defined in 34 CFR 600.2. Importantly, a student simply logging into the learning management system does not qualify. Instead, qualifying evidence must show that the student has participated in an academically related activity.

The 34 CFR 600.2 regulation defines academic engagement to include activities such as:

• Submitting an academic assignment.
• Taking an exam, interactive tutorial, or computer-assisted instruction.
• Attending a synchronous class, lecture, or field activity (in person or online) where interaction occurs.
• Participating in an assigned study group, online discussion, or interactive platform assigned by the institution.
• Interacting with an instructor about academic matters.

By contrast, actions such as logging into a course site without active participation, or engaging in non-academic activities, do not count as academic engagement.

The risk of inadequate verification is significant: incorrect disbursements, faulty R2T4 calculations, and audit or program review findings. Because online participation data can be scattered across platforms, institutions should implement standardized definitions of qualifying activities, clear documentation expectations for faculty, and systematic monitoring processes. Training instructors to recognize and track federally defined academic engagement—and designing courses to require such engagement at multiple points—helps ensure compliance and safeguard both Title IV eligibility and institutional financial stability.

Challenge: Online and hybrid programs often use nonstandard terms or modules, complicating R2T4.

• Determining official vs. unofficial withdrawals.
• Identifying the last date of academic activity.
• Accurately calculating earned aid when students complete some, but not all, modules.

Risk: Miscalculated R2T4 results in liability for returned funds and possible program review findings.

Return of Title IV (R2T4) compliance can be especially complex for distance education programs that operate in nonstandard terms or modular formats. Unlike traditional semesters, these structures require institutions to carefully track student enrollment patterns across shorter modules or overlapping courses. The key challenges include accurately determining whether a student has officially or unofficially withdrawn (i.e., did the student formally notify the institution of withdrawal or just stop attending?), establishing the last date of academic activity in online environments, and calculating earned aid when students complete some—but not all—modules within a payment period.

The risks are significant. If R2T4 calculations are incorrect, institutions may face liability for improperly retained funds, findings in a federal program review, and potential heightened cash monitoring. R2T4 errors are among the most common audit findings in programs. Distance education programs are particularly vulnerable because student activity may not align neatly with term dates, and documentation of participation can be scattered across learning management systems, proctoring tools, or email records. To mitigate risk, institutions should adopt clear withdrawal and attendance policies, standardized procedures for capturing last date of academic activity, and strong cross-office coordination between financial aid, registrar, and online learning units. Robust documentation and proactive monitoring not only ensure accurate R2T4 processing but also protect institutional Title IV eligibility and financial stability.

Challenge: Ensuring online courses meet the federal definition of a credit hour, particularly when instruction is asynchronous.

• Lack of oversight on course design to ensure instructional equivalence.
• Difficulty documenting instructional activity equivalent to in-person contact hours.

Risk: Findings of inflated credit hour assignment can affect institutional eligibility and Title IV funding levels.

A persistent challenge for distance education is ensuring that online courses—particularly asynchronous ones—meet the federal definition of a credit hour under 34 CFR 600.2. The regulation requires that a credit hour reflect not only student work time but also “direct faculty instruction” or the equivalent academic engagement as determined by the institution. Without careful oversight of course design, institutions risk assigning credit hours without sufficient instructional activity, leading to inflated credit hour assignments.

Documenting instructional equivalence in asynchronous courses can be especially difficult. Activities such as independent reading or self-paced quizzes may not, on their own, meet the threshold for academic engagement. Institutions must be able to demonstrate how instructional activities—discussion boards, instructor feedback, guided projects, or other structured interactions—are designed to be equivalent to in-person contact hours. Failure to do so has led to program review findings where ED determined credit hours were overstated, resulting in recalculated aid levels and, in some cases, financial liabilities or heightened monitoring.

To mitigate this risk, institutions should establish clear credit hour policies, faculty training, and systematic review processes for online courses. Regular audits of syllabi, LMS activity, and course design can help ensure consistency and compliance. Building a defensible framework for credit hour assignment not only protects Title IV eligibility and funding levels but also reinforces academic integrity across modalities.

Challenge: Online programs are generally required to disclose:

• Technology requirements
• Licensure eligibility by state
• Complaint processes

Risk: Non-compliance may lead to enforcement actions or negative accreditation findings.

Student disclosures are a cornerstone of compliance in distance education, with requirements spanning federal regulations, state authorization rules, and accreditor standards. Online programs must provide clear and accessible information on at least three fronts: (1) technology requirements so students understand the hardware, software, and connectivity needed to succeed; (2) professional licensure eligibility by state, in compliance with 34 CFR 668.43(a)(5)(v), so students know whether a program meets licensure requirements where they are located; and (3) student complaint processes, federally noted under 34 CFR 668.43(b), including both internal and external escalation pathways.

The complaint process disclosure is especially important. Institutions must explain how students can file complaints internally, and they must also provide information on external options—such as the state authorizing agency where the student is located, or the state portal agency under NC-SARA, if applicable. Inadequate complaint disclosures have been cited in federal program reviews and accreditation visits as evidence of noncompliance, since they go to the heart of consumer protection.

The challenge lies in ensuring disclosures are complete, accurate, and consistently updated. Institutions that fail to publish or maintain these disclosures risk more than student dissatisfaction—they face federal enforcement actions, state sanctions, and negative accreditation findings. To reduce risk, institutions should centralize disclosure management, assign responsibility for regular updates, and monitor compliance across all online programs. Consider a one-stop Consumer Information page that is annually updated and includes all required disclosures (tech needs, licensure by state, complaint contacts, cost of attendance, etc.).

Challenge: Many institutions lack integrated systems to:

• Track student location over time
• Verify engagement in online courses
• Monitor RSI at scale
• Handle disbursement schedules across multiple modalities

Risk: System limitations can lead to noncompliance or missed deadlines for reporting and documentation.

Institutional compliance relies on the integration of systems across functional areas. Many campuses operate with siloed student information systems, learning management systems, and financial aid platforms that do not easily “talk” to each other. This makes it difficult to capture a holistic view of where a student is located, how they are engaging in courses, and how those behaviors intersect with disbursement and compliance rules. Additionally, the monitoring of Regular and Substantive Interaction (RSI) requires more than just tracking log-ins. Tools are required that can analyze patterns of academic engagement, which are not widely available. Scaling these processes for large enrollments further amplifies the burden, often requiring significant manual intervention by staff.

The risks associated with these system limitations are significant and multifaceted. Without reliable data integration, institutions run the risk of under-reporting or over-reporting student activity, leading to inaccurate federal compliance submissions. If RSI is not adequately documented, courses may be reclassified as correspondence courses, jeopardizing eligibility for Title IV financial aid. Similarly, missing or misaligned disbursement schedules across multiple modalities (online, hybrid, in-person) could result in late aid distribution, triggering student complaints, audits, or even findings of mismanagement by regulators. Over time, repeated lapses could undermine accreditation standing and diminish institutional credibility with both oversight bodies and students.

To mitigate these risks, institutions should prioritize investments in integrated data systems and workflow automation that connect core platforms such as the SIS, LMS, and financial aid systems. Where full integration is not feasible, institutions can establish standardized data-sharing protocols and dashboards that consolidate critical compliance indicators into a single view for administrators. Regular internal audits and spot checks can help catch discrepancies early, and documenting processes creates a defensible record in case of review. Training staff to interpret RSI data and ensuring clear communication across compliance, IT, and academic affairs are also essential. Longer-term, institutions may consider partnerships with third-party vendors specializing in compliance analytics to supplement internal capacity and ensure monitoring can be scaled effectively.

Challenge: Ensuring faculty understand RSI, academic engagement definitions, and Title IV implications of their course design and delivery.

• Adjuncts and part-time faculty may not be consistently trained.
• Faculty autonomy in LMS use can lead to inconsistent practices.

Risk: Non-uniform practices increase institutional risk and reduce audit readiness.

A major challenge lies in achieving consistent faculty understanding of complex regulatory requirements such as Regular and Substantive Interaction (RSI), definitions of academic engagement, and the direct connection these have to Title IV compliance. Many full-time faculty may not receive ongoing compliance updates, while adjuncts and part-time instructors—who often teach a significant percentage of online courses—may only get minimal orientation or onboarding. Furthermore, faculty autonomy in course design and their varied approaches to using the learning management system (LMS) can create significant inconsistency across programs. This variability makes it difficult for institutions to demonstrate uniform compliance, particularly when courses are reviewed by auditors or regulators.

The risks tied to inconsistent faculty practices are substantial. If faculty fail to provide sufficient RSI, courses can be reclassified as correspondence courses, threatening the institution’s eligibility for federal financial aid. Inconsistent documentation of engagement also reduces audit readiness, as an accreditor or Department of Education review may reveal gaps that compromise institutional integrity. Additionally, faculty misunderstandings can lead to unintentional noncompliance that affects not only individual courses but entire academic programs. Over time, patterns of inconsistency may erode student trust, spark complaints, and attract heightened scrutiny from oversight bodies.

Institutions can mitigate these risks through structured and ongoing faculty training programs that clearly connect compliance expectations to teaching practices. Standardized templates and LMS course shells can reduce variability by embedding required engagement features and RSI checkpoints directly into course design. Offering mandatory professional development that is tailored for adjuncts and part-time faculty, and supported with just-in-time resources ensures that expectations are accessible and reinforced throughout the teaching cycle. Regular course audits, paired with constructive feedback, create a continuous improvement loop. Institutions can also incentivize compliance by linking effective implementation of RSI and engagement standards to faculty evaluations or recognition programs, ensuring these practices are seen as integral to high-quality teaching rather than just a regulatory burden.

Challenge: Online programs are more likely to be scrutinized in ED program reviews and audits, especially in areas like RSI, R2T4, and state authorization.

• Lack of documentation or inconsistent application of policies can lead to costly findings.
• Institutions often struggle to demonstrate compliance retroactively.

Risk: Financial liabilities and reputational damage from findings. 

Online programs are consistently under heightened scrutiny during ED program reviews and audits. Areas such as Regular and Substantive Interaction (RSI), Return to Title IV (R2T4) calculations, and State Authorization are common focal points, given their direct connection to federal compliance. Institutions often face difficulty producing adequate documentation, particularly when policies are applied inconsistently across schools, departments, or programs. Compounding the challenge, many institutions lack robust processes for capturing compliance evidence in real time, which means that when audits occur, staff may be assembling documentation or justifying decisions retroactively.

The risks of insufficient preparation are both financial and reputational. Costly findings from an ED program review may include repayment of federal aid, monetary fines, or mandatory corrective actions that divert significant institutional resources. For example, errors in R2T4 calculations can directly translate into liabilities the institution must repay, while inadequate RSI documentation can jeopardize eligibility for Title IV aid. Beyond the financial consequences, repeated or high-profile findings can damage institutional credibility, erode trust with students and regulators, and potentially affect accreditation standing. Publicized findings can also deter prospective students, especially in competitive online markets where reputation is closely tied to enrollment growth.

To mitigate these risks, institutions can proactively implement strong compliance management systems that emphasize documentation, consistency, and audit readiness. Creating centralized repositories for compliance records, such as RSI logs, R2T4 calculations, and state authorization determinations, ensures evidence is available and consistent across units. Regular mock audits and internal compliance reviews can identify gaps before regulators do, allowing corrective action to be taken early. Institutions can also establish clear policy ownership, reinforce a culture of reporting as well as documentation, and designate responsible offices and points of contact for each compliance area. Investing in staff training and cross-departmental collaboration further strengthens the institution’s ability to respond to audits quickly and accurately, reducing the likelihood of findings and reinforcing a culture of compliance.

Challenge: Institutions must obtain prior accreditor approval for certain significant changes, including launching new online programs, converting an on-campus program to online or hybrid delivery, or contracting with third-party providers for key educational services.

• Misunderstanding what qualifies as a “substantive change” can lead to unapproved program launches.
• Failure to notify accreditors in advance can delay program start dates or invalidate eligibility for aid.

Risk: Violations can result in loss or suspension of Title IV eligibility, repayment of disbursed funds, or heightened monitoring by the U.S. Department of Education.

Institutions are required to secure accreditor approval before making certain major changes, such as launching new online programs, shifting an existing on-campus program to online or hybrid formats, or outsourcing instructional services to third-party providers. The difficulty lies in understanding what counts as a “substantive change.” Accreditation standards can vary, and guidance may be open to interpretation, creating uncertainty for institutions. Without clear processes, administrators may overlook the need for prior approval, leading to programs being rolled out before the accreditor has formally signed off.

The risks of failing to obtain prior approval are significant. A program launched without accreditor authorization can be deemed ineligible for Title IV funds, requiring the institution to repay aid already disbursed to students. Beyond financial liabilities, violations can trigger heightened monitoring or additional reporting requirements from the Department of Education, adding administrative burdens and costs. Repeated violations can also erode trust with regulators, accreditors, and students, damaging the institution’s reputation and credibility.

To mitigate these risks, institutions should establish clear internal protocols for identifying and vetting potential substantive changes. This can include creating a checklist of scenarios that require accreditor approval, designating a compliance office or committee to review program proposals, and maintaining ongoing communication with accreditor liaisons to clarify requirements in advance. Training academic leaders and program developers on what qualifies as a substantive change helps prevent oversight. Documenting all submissions and approvals ensures the institution can demonstrate compliance and reduces the chance of delays or penalties.

Challenge: Institutions must verify a student’s identity at multiple points in the student lifecycle: during the admissions process, registration, and course participation to confirm that the student who registers for an online course is the same individual who participates and completes the coursework.

• Verification methods may include secure logins, proctored exams, or identity confirmation technology.
• Inconsistent application across courses and programs can create audit vulnerabilities.

Risk: Noncompliance can lead to findings of fraudulent disbursements, repayment liabilities, and sanctions during program reviews.

Before a student ever registers for an online course, institutions must first verify the identity of the applicant during the admissions process to ensure the individual seeking enrollment is legitimate and eligible. Establishing identity at the point of admission is a foundational control that reduces downstream fraud risk and supports later verification during online coursework. Institutions are then required to confirm that the student who enrolls in an online course is the same person completing the coursework. While secure logins, proctored exams, and identity-verification technologies are common tools, applying these methods consistently across programs remains a challenge. Faculty may interpret requirements differently, and not all systems integrate smoothly with the institution’s learning management system. As a result, verification processes can vary widely, leaving gaps that auditors may view as weaknesses.

If identity verification measures are applied inconsistently, institutions face significant risks. Program reviewers or auditors may determine that students received aid without proper verification, leading to findings of fraudulent disbursements. This can trigger repayment liabilities, loss of Title IV eligibility for affected programs, or broader sanctions. Even a few cases of inadequate verification can raise red flags, leading regulators to question the reliability of the institution’s broader compliance framework. The Department of Education has warned that lack of robust ID verification can facilitate student aid fraud (e.g., rings of individuals impersonating students to pocket aid). Schools are expected to have controls (PPA, Sect. IV, “fraud prevention”) and can be held liable for aid disbursed on false identity.

Traditional two-step verification may not be considered sufficient protection by some institutions; AI-driven impersonation, deepfake voice tools, and automated credential-stuffing attacks have made it far easier for bad actors to bypass basic authentication, increasing the need for stronger, multi-layered identity-verification controls.

To reduce these risks, institutions should adopt a uniform, campus-wide policy for student identity verification in online courses. Standardizing methods through secure logins, multi-factor authentication, or proctored assessments ensures consistency across departments and programs. Regular audits of verification practices, combined with faculty training on required procedures, help close compliance gaps. Partnering with vetted third-party vendors for proctoring or identity confirmation can further strengthen assurance while reducing the burden on internal staff. Clear documentation of verification practices provides an additional safeguard during audits or program reviews.

Challenge: Institutions must maintain financial health and demonstrate operational capacity to meet all Title IV program requirements, including those specific to online and hybrid operations.

• Financial responsibility standards include meeting composite score thresholds and avoiding triggering events that require additional oversight.
• Administrative capability standards require adequate staffing, training, and systems to ensure accurate aid processing, reporting, and compliance monitoring.
   

Risk: Noncompliance can result in placement on Heightened Cash Monitoring (HCM), restricted disbursement of funds, or loss of Title IV eligibility.

Institutions must demonstrate both financial responsibility and administrative capability to remain eligible for Title IV participation. This means maintaining composite score thresholds, avoiding triggering events such as lawsuits or loan defaults, and showing the capacity to manage aid accurately. For online and hybrid operations, the challenge grows: new program launches, scaling enrollments, and third-party service contracts all add complexity. Administrative capability also requires that institutions have enough trained staff, reliable systems, and strong internal controls to ensure aid is processed correctly and compliance monitoring is ongoing. Many institutions struggle to balance these requirements with tight budgets and competing operational priorities.

Failure to meet financial or administrative standards can lead to serious consequences. Placement on Heightened Cash Monitoring (HCM) restricts access to federal funds, creates cash flow challenges, and signals regulators that the institution may not be stable. Extended noncompliance or severe findings can result in limitations on aid disbursement or, ultimately, loss of Title IV eligibility altogether. Beyond regulatory impacts, news of financial oversight measures can damage institutional reputation, reduce student confidence, and make it harder to recruit or retain both students and faculty.

To mitigate these risks, institutions should implement regular financial stress testing and scenario planning to ensure they can withstand changes in enrollment or regulatory conditions. Establishing strong internal audit functions and compliance monitoring systems helps identify issues early. Cross-training financial aid and compliance staff builds resilience, ensuring continuity when workloads or staffing change. For online and hybrid operations, institutions should integrate financial planning into program development to anticipate resource needs for technology, staffing, and oversight. Proactive communication with the Department of Education when triggering events occur can also help manage risk and avoid more punitive sanctions.

For more information on Third-Party Servicers, see our Policy Matters: Insights and Primer on the topic here.

Challenge: Many online programs depend on vendors for recruitment, course design, technology platforms, or other services that may fall under ED’s definition of a third-party servicer.

• Institutions must report TPS relationships to ED and ensure those vendors meet all applicable Title IV requirements.
• Misclassification or lack of reporting can trigger compliance findings.

Risk: Violations can result in program review findings, penalties, repayment liabilities, or termination of Title IV eligibility.

Many online programs rely heavily on outside vendors for critical functions such as recruitment, course design, learning platforms, or student support. Under Department of Education (ED) rules, some of these providers may be considered third-party servicers (TPS). The challenge is that the definition of TPS can be complex and evolving, making it difficult for institutions to know which vendor relationships must be reported. Without clear internal oversight, institutions risk misclassifying vendors or overlooking reporting requirements, leaving them exposed during program reviews.

If TPS relationships are not properly reported or monitored, institutions face significant regulatory consequences. ED may issue findings during a program review, leading to penalties, repayment of federal funds, or restrictions on aid disbursement. In the most severe cases, violations can even result in loss of Title IV eligibility. Beyond the financial impact, failure to manage vendor compliance undermines institutional credibility and can erode trust with regulators, students, and the public.

To mitigate these risks, institutions should establish a centralized process for reviewing all vendor contracts and assessing whether they fall under the ED's TPS definition. Maintaining a vendor compliance register and updating it regularly helps ensure accurate reporting to ED. Institutions should also include compliance obligations in vendor contracts, requiring partners to meet Title IV standards. Regular training for staff who manage vendor relationships, coupled with periodic legal or compliance reviews, ensures that the institution stays current with federal guidance and minimizes the risk of findings.

Challenge: Institutions must monitor and enforce SAP standards for all Title IV recipients, including those enrolled in online or hybrid programs.

• Tracking GPA, pace of completion, and maximum time frame can be more complex when students take courses in varying modalities and schedules
  

Risk: Failure to comply can lead to improper aid disbursements and liabilities during audits or program reviews.

Institutions are required to monitor Satisfactory Academic Progress (SAP) for every student receiving Title IV aid. This involves checking GPA, pace of completion, and maximum time frame against established standards. Online and hybrid programs add complexity because students may enroll in different term structures, condensed sessions, or self-paced courses that don’t align neatly with traditional semester schedules. Without strong systems in place, tracking SAP across multiple modalities can quickly become inconsistent or overly dependent on manual processes, creating room for error.

If SAP monitoring is inaccurate or inconsistent, institutions risk disbursing aid to ineligible students. During audits or program reviews, this can result in findings of improper aid payments and the requirement to repay funds. Over time, repeated issues can lead to sanctions, heightened oversight, or reputational harm with both regulators and students. Weak SAP enforcement also undermines student accountability, potentially leading to higher attrition rates and poor academic outcomes.

To reduce these risks, institutions should adopt integrated systems that automatically track GPA, pace, and attempted credits across all course modalities. Standardizing SAP review cycles and ensuring alignment between online and on-campus programs helps create consistency. Staff training is essential so that aid administrators and advisors fully understand how SAP applies in accelerated or self-paced formats. Institutions can also build early alert mechanisms to flag at-risk students, combining compliance with proactive student support. Documenting SAP policies clearly and applying them uniformly across programs strengthens audit readiness and protects Title IV eligibility.

Challenge: Institutions may not provide commissions, bonuses, or other incentive payments to individuals or entities engaged in student recruitment or securing financial aid, including in Online Program Management (OPM) partnerships.

• Risk increases when contracts or pay structures tie compensation to enrollment targets or aid amounts
  

Risk: Violations can result in severe sanctions, including repayment of aid and full loss of Title IV eligibility.

Federal law prohibits incentive compensation for anyone involved in student recruitment or securing federal financial aid. This includes not only institutional staff but also third-party partners such as Online Program Management (OPM) vendors. The challenge is that OPM contracts and internal pay structures can sometimes blur the line, particularly when tied to enrollment numbers, revenue sharing, or performance targets. Institutions must carefully design compensation models to avoid even the appearance of violating these rules, while still motivating staff and vendors to perform effectively.

The compliance landscape is further complicated by ED’s evolving stance on OPM contracts. In 2011, ED created the “bundled services exception,” which allowed certain revenue-sharing arrangements with OPMs when services were sufficiently integrated and not solely focused on recruiting. In 2023, however, the Department announced that it was reconsidering or narrowing this exception, signaling heightened scrutiny of any contract that conditions payment on enrollment-related results. Even though formal guidance updates are paused, the direction of policy is clear: revenue-sharing and other enrollment-contingent compensation models present significant risk. Institutions should proceed with extreme caution, prioritizing flat-fee structures, well-defined scopes of work, and documentation that preserves institutional control and compliance with the incentive compensation ban.

Violations of the incentive compensation ban carry some of the most severe consequences under Title IV. If an institution is found to have structured payments improperly, it may face repayment of aid funds, monetary fines, or loss of eligibility to participate in federal student aid programs altogether. These sanctions can be devastating both financially and reputationally, signaling to regulators and students that the institution prioritizes profit over compliance and student welfare. Even the perception of a violation can erode trust. Violations of the incentive compensation ban can lead to False Claims Act lawsuits as well, the DOJ and whistleblowers have targeted schools for fraud when they paid recruiters per enrollment while signing compliance certifications that they did not. Aside from ED enforcement, this legal liability is significant (multi-million dollar settlements have occurred).

To mitigate these risks, institutions should implement rigorous contract review processes for OPMs and other vendors to ensure no language ties compensation to enrollment or aid amounts. Internal pay structures for recruitment staff should be reviewed regularly by compliance and legal teams to confirm alignment with federal requirements. Training for administrators and contract managers is critical so they understand the incentive compensation ban and can flag risky terms. Establishing a clear policy on allowable forms of compensation, such as fixed fees or salaries, creates consistency and provides a defensible record during audits or program reviews.

Challenge:

• Applying SEVP limits on online credits for F-1/M-1 students and validating modality mixes by term/session
• Coordinating CPT/OPT and location-based components (clinicals/practica) within online/hybrid programs
• Synchronizing evidence across ISSS, registrar, academic units, and employers

Risk: Student status violations, SEVP scrutiny, forced schedule changes, and downstream enrollment/aid impacts.

Hybrid and online scheduling can accidentally push international students over online-credit caps or into experiential learning that lacks proper work authorization. Under DHS regulations 8 CFR 214.2(f)(6)(i)(G), F-1 students may count at most one class or 3 credits of online/distance education toward their full-course-of-study requirement per term. If they exceed that, they violate visa status. Mid-term modality shifts and modular calendars compound the complexity and documentation burden.

Consequences can include status issues for students, institutional findings during SEVP reviews, and urgent, disruptive schedule fixes that affect persistence and aid eligibility. Reputational risk grows when problems recur across terms.

Mitigate with pre-term audits of F/M student schedules, registration controls that enforce credit-mix limits, and standardized CPT/OPT workflows (templated employer letters, supervisor learning objectives, location logs). Train advisors and program staff on edge cases (modules, asynchronous vs. synchronous), and maintain a centralized documentation archive with a rapid-response correction pathway.

Challenge:

• Ensuring ADA/Section 504/508 and WCAG 2.x compliance across LMS shells, assessments, media, and third-party tools
• Scaling captions, transcripts, alt text, document remediation, and accessible proctoring/ID flows
• Managing FERPA privacy, vendor and proctoring agreements/biometrics, and data minimization
• Maintaining a single, version-controlled consumer info hub (tech requirements, licensure, complaints)

Risk: OCR/DOJ investigations, student grievances, accreditation findings, and reputational harm.

Many institutions struggle to enforce consistent digital accessibility and privacy practices across decentralized course development and a growing stack of tools. Ad-hoc captioning, untagged PDFs, inaccessible widgets, and opaque data flows (especially in proctoring and analytics) create uneven student experiences and audit gaps.

The risks include civil rights complaints, corrective action plans, and negative accreditation notes. Privacy lapses around PII/biometric data, broad staff access to student records, or weak vendor controls can elevate legal exposure and erode trust with students and faculty.

To mitigate, set a policy baseline (WCAG 2.0 AA), require procurement reviews and resource captioning/remediation at scale. Assign ownership (Digital Accessibility Officer), run periodic audits, and centralize disclosures at one URL with a change log. For privacy, enforce FERPA role-based access, strict retention/minimization rules, and a documented breach/notice playbook.