Guidelines for Applying for Title IV Eligibility for Direct Assessment (Competency-Based) Programs

In a Dear Colleague letter, the Department of Education provided the requirements for institutions who want to receive Title IV aid for direct assessment programs. The letter contains a detailed overview of the guidelines, recent changes to application process, and where administrators can find additional resources if they have questions or concerns.

Read the full announcement below.

PUBLICATION DATE: February 14, 2024
DCL ID: GEN-24-02
SUBJECT: Applying for Title IV Eligibility for Direct Assessment (Competency-Based) Programs

SUMMARY: This letter provides guidance to institutions that wish to have direct assessment (competency-based) programs considered for Title IV, Higher Education Act (HEA) program eligibility, including requirements for approval of such programs under the current regulations on direct assessment programs.

This guidance supersedes the information contained in Dear Colleague Letters GEN-13-10 and GEN 14-23.

Dear Colleague:

Over the last several years, some postsecondary institutions have developed new and creative program models in which students are provided with the means to acquire the knowledge and skills at an individual pace to demonstrate achievement of specific competencies identified as necessary to complete a program and earn a degree or other credential. A majority of these program models are offered in credit or clock hours and can be accommodated under the current Title IV, HEA (Title IV) regulations as non-term programs. Some programs, however, are not offered in credit or clock hours, and many institutions offering such programs want them approved for participation in the Title IV programs. These competency-based education (CBE) programs organize academic content according to competencies—what a student knows and can do—rather than following a more traditional scheme, such as by course. There are two types of CBE programs: those that measure progress using clock or credit hours and direct assessment programs.

Credit or clock-hour CBE programs are organized by competency but measure student progress using clock or credit hours. In such programs, Title IV aid must be administered under normal statutory and regulatory provisions for credit- or clock-hour programs.

Direct assessment programs are a type of CBE program that do not use credit or clock hours. Progress in a direct assessment program is measured solely by assessing whether students can demonstrate that they have a command of a specific subject, content area, or skill, or can demonstrate a specific quality associated with the subject matter of the program. Therefore, unlike a CBE program measured in credit hours, a direct assessment program does not specify the level of educational activity a student is expected to engage in to complete the program. The school must establish a methodology to reasonably equate each module in the direct assessment program to either credit hours or clock hours. This methodology must be consistent with the requirements of the school’s accrediting agency recognized by the Secretary of Education (Secretary) under 34 CFR 602 or State approval agency recognized by the Secretary under 34 CFR 603.

An institution’s accrediting agency or State approval agency must be recognized by the Secretary to evaluate direct assessment education in order for the agency to approve the institution’s direct assessment programs. An institution cannot submit a direct assessment program for Departmental approval or acknowledgement unless it has been approved by an agency with direct assessment in its scope of recognition.

There are no application requirements specific to CBE programs that are not direct assessment programs, and these programs are subject to normal approval and reporting requirements. No special recognition is needed for an accrediting agency to approve an institution’s offering of CBE programs generally. However, a school that wishes to award Federal Student Aid (FSA) funds for a program using direct assessment must submit an updated Application for Approval to Participate in the Federal Student Financial Aid Programs (E-App) to the Department to apply for approval of the program. We provide more information about the application process for direct assessment programs later in the letter.

Frequently Asked Questions (FAQs) about Competency-Based Education Programs

The Department has received numerous questions about CBE programs, which include direct assessment programs, related to the requirements for awarding and disbursing Title IV funds in such programs.

These FAQs address common questions related to competency-based education and direct assessment programs, including –

• The distinction between credit hour competency-based education and direct assessment;
• Requirements for establishing credit hour equivalencies in direct assessment programs;
• Requirements for regular and substantive interaction between students and faculty;
• Prohibitions on paying Title IV aid for credit earned through prior learning assessments;
• Satisfactory academic progress;
• Return of Title IV Funds provisions; and
• Accrediting agencies’ roles in reviewing competency-based education programs.

The FAQs primarily address competency-based education programs that are offered using credit hours or using direct assessment with credit hour equivalencies and can be found on the Office of Postsecondary Education (OPE) website by accessing the following link: (Direct Assessment FAQs). The FAQs in GEN 14-23 have been updated to be consistent with current regulations and schools should refer to the FAQs on the OPE website for the most recent information.

Current Regulations

The Department published final rule amending its regulations related to competency-based education programs, including direct assessment programs, on September 2, 2020.

Changes Related to Direct Assessment Programs

Those final regulations, located in 34 CFR 668.10, include changes to the definition of a “direct assessment program,” update the procedures and requirements for an institution that offers such a program to apply for the program to be determined an eligible program, and specify limitations on the use of Title IV program funds. Although the requirement that institutions must apply for direct assessment program approval has not changed, the approval of a direct assessment program at the same academic level is only required for the first program offered at an institution. Second or subsequent direct assessment programs at the same academic level require only reporting as described under 34 CFR 600.21(a)(12).

Under these revised regulations, direct assessment programs can be offered using a combination of credit hours and direct assessment (with credit hour equivalencies) or using a combination of clock hours and direct assessment (using clock hour equivalencies). A program is not required to be provided entirely using direct assessment. However, if a program includes any component that is measured using direct assessment, it must be approved or included in the institution’s accreditation by an accrediting agency with evaluation of direct assessment in the scope of its recognition by the Department.

Generally, 34 CFR 668.10 includes the following requirements:

• A direct assessment program is a program that, in lieu of using credit hours or clock hours as a measure of student learning, utilizes direct assessment of student learning, or recognizes the direct assessment of student learning by others. The assessment must be consistent with the accreditation of the institution or program utilizing the results of the assessment.
• Direct assessment of student learning means a measure of a student’s knowledge, skills, and abilities designed to provide evidence of the student’s proficiency in the relevant subject area. An institution must establish a methodology to reasonably equate each module in the direct assessment program to either credit hours or clock hours. This methodology must be consistent with the requirements of the institution’s accrediting agency or State approval agency.
• A direct assessment program that is not consistent with the requirements of the institution’s accrediting agency or State approval agency is not an eligible program as provided under 34 CFR 668.8. In order for any direct assessment program to qualify as an eligible program, the accrediting agency must have: evaluated the program based on the agency’s accreditation standards and criteria, and included it in the institution’s grant of accreditation or preaccreditation; and reviewed and approved the institution’s claim of each direct assessment program’s equivalence in terms of credit or clock hours.
• An institution that wishes to offer a direct assessment program must apply to the Department to have its first direct assessment program determined to be an eligible program for Title IV, HEA program purposes. The information that must be included in the application is outlined later in this document. As a part of its application, the institution must include the methodology the institution uses to determine the number of credit or clock hours to which the program or programs are equivalent. Following the Department’s initial approval of a direct assessment program, additional direct assessment programs at an equivalent or lower academic level may be determined to be eligible without further approvals from the Secretary except as required by 34 CFR 600.10(c)(1)(iii), 600.20(c)(1), or 600.21(a), as applicable, if such programs are consistent with the institution’s accreditation or its State approval agency. However, these programs must be reported to the Department within 10 days of the change. Approval is required when the institution offers a direct assessment program at a different academic level of offering than what was previously approved.
• An institution must demonstrate that its institutional accrediting agency has reviewed and approved its offering of the direct assessment program. The accrediting agency must have evaluated the program based on the agency’s accreditation standards and criteria.
• An institution must demonstrate that its institutional accrediting agency or State licensing body has agreed with the institution’s assessment of its credit or clock hour equivalencies.
• A direct assessment program may use learning resources (e.g., courses or portions of courses) that are provided by entities other than the institution providing the direct assessment program without regard to the limitations on written arrangements between an eligible institution and an ineligible institution or organization under 34 CFR 668.5(c)(3).
• Title IV, HEA program funds may be used to support instruction provided, or overseen, by the institution, except for the portion of the program that the student is awarded based on prior learning.
• No program offered by a foreign institution that involves direct assessment will be considered to be an eligible program under 34 CFR 668.8.
• Unless an institution has received initial approval from the Department to offer direct assessment programs, and the institution’s offering of direct assessment coursework is consistent with the institution’s accreditation and State authorization, if applicable, Title IV HEA program funds may not be used for the following types of programs or coursework, if offered using direct assessment: preparatory coursework required for entry into an eligible program (as described in 34 CFR 668.32(a)(1)(ii)); courses necessary for an elementary or secondary school teaching credential or certificate (as described in 34 CFR 668.32(a)(1)(iii); postbaccalaureate teacher certificate or licensing program as described in 34 CFR 690.6(c); or remedial coursework as described in 34 CFR 668.20.

It is imperative that faculty and academic officials work closely with their institution’s financial aid administrator throughout the process of developing a direct assessment program and completing the application for Title IV, program eligibility to ensure that all applicable aspects of Title IV program eligibility are addressed and that the program can be operationalized for Title IV purposes. In its application, an institution must explain the method for reasonably equating the direct assessment program to credit or clock hours and related parameters of the program, including minimum weeks of instructional time, payment period, how an academic activity will take place during each week, and the definition of a full-time student. An institution should also address issues such as how it plans to measure satisfactory academic progress (SAP) for students in the direct assessment program and how or whether the financial aid system will be configured to process aid for students in the program.

For more detailed information on the eligibility requirements for a direct assessment program, please refer to the regulations at 34 CFR 668.10 and to Volume 2, Chapter 2 of the FSA Handbook. In addition, this Dear Colleague Letter contains step-by-step instructions that an institution must follow in completing the E-App to apply to have a competency-based program approved to participate in the Title IV, HEA programs. While there is no prescribed, uniform competency-based education model or approach, the Department will work closely with interested institutions as they move through the approval process. We encourage institutions with competency-based program models to apply for title IV, program eligibility under the existing framework for direct assessment programs.

For general questions about direct assessment programs, please contact the Department at CaseTeams@ed.gov.

Application for Title IV Approval of a Direct Assessment Program

If your institution wishes to have a direct assessment program determined to be an eligible program for Title IV, HEA program purposes, you must submit an updated E-App including the new program. The E-App is available on the Knowledge Center. After submitting the E-App, please upload the required supporting documentation to the Department via the Common Origination and Disbursement (COD) Document Center as instructed in Section M of the E-App, and submit, via e-mail to CaseTeams@ed.gov, and a detailed description of the program that fully addresses each of the 6 required elements outlined in 34 CFR 668.10(b)(2)(i)-(vi). We also strongly encourage institutions to provide a detailed description of financial aid administration that addresses the financial aid requirements in 34 CFR 668.10(a), as this narrative often provides valuable context that reduces the time needed for the Department to complete its review.

An institution may not submit a formal application for Title IV approval of a direct assessment program until the program is authorized by the State and has been approved by the institution’s accrediting agency with direct assessment in its scope of recognition. Institutions may submit questions or other inquiries related to its direct assessment program prior to formal submission of the application.

Application Process Overview

The Department accepts applications for approval online and on a rolling basis. Institutional applications will be reviewed by the Department to ensure that the application is properly completed, to determine whether the institution has any restrictions on adding additional programs, and to evaluate whether the narrative adequately demonstrates that the program satisfies the requirements in 34 CFR 668.10. Please include the names and contact information of the institutional program contact who can answer specific questions about the direct assessment program, as the Department may need to contact the institution to ascertain or clarify information during the review of the application.

Application Process

Below are step-by-step instructions that institutions must follow when completing the E-App to request Title IV approval of a direct assessment program.

In applying for approval of a direct assessment program, it is critical that you make only changes to the E-App that are relevant to the direct assessment program. Institutions should not make any other changes, such as updating the institution’s address, adding other programs, or updating accreditation information, as doing so will delay the approval process.

• Step 1 – Access the institution’s E-App through Partner Connect. Select “Update/Report Information” as the reason you are submitting the application.
• Step 2 – From the drop down arrow in the box under “What section will you be updating,” select “other purpose” and enter “Add Direct Assessment Program” in the box below. Click “Next.”
• Step 3 – From the left navigation bar, click the down arrow in the “Location and Educational Programs” section and select “Educational Programs.” The Educational Programs section will appear. Select “Next.”
• Step 4 – Select the applicable boxes in Question 1 of Section G. Select “Next.”
• Step 5 – In question 2b of Section G, click the “+Add New” icon. Select “Next.”
• Step 6 – Provide details of the program in the applicable sections of Section G, question 2b. Be sure to include “Direct Assessment” as part of the title of the program in the “Name of Program” field. When answering the “How is this program delivered” question, you must select the “Direct Assessment” box. You must ensure that all information entered in this section matches the information that you will provide in your narrative description of the direct assessment program (see below).
• Step 7– From the left navigation bar, select “Upload documents.” Use the “+Add New” icon to add the required Direct Assessment program supporting document(s). Under Document Type select “Direct Assessment Measurement – Accrediting Agency Approval,” “Direct Assessment Measurement – Explanation,” or other type as appropriate. If the program reported is the first direct assessment program at the institution, or the first direct assessment program at that credential level, be sure to upload the Detailed Program Description and the Detailed Description of Financial Aid Administration of your direct assessment program (see below).
• Step 8 – select the “Submit E-App” option at the bottom of the left navigation bar.
• Step 9 – Check the applicable boxes and enter all applicable information for the Authorized Signature Authority.
• Step 10 – When presented with the Certification box, click the certification then “Submit for Signature.

Detailed Program Description

The detailed description of the program, (recommended length not to exceed 20 pages), should be a succinct narrative that clearly indicates the name of the program and how the program meets each of the regulatory requirements below (the regulatory element that each part of the narrative addresses must be clearly identified). Be sure to include the name and contact information of the institutional program contact who can answer specific questions about the direct assessment program.

1. A description of the educational program, including the educational credential offered (degree level or certificate) and the field of study.
2. A description of how the direct assessment program is structured, including information about how and when the institution determines on an individual basis what each student enrolled in the program needs to learn and how the institution excludes from consideration of a student’s eligibility for Title IV program funds any credits or competencies earned on the basis of prior learning.
3. A description of how learning is assessed and how the institution assists students in gaining the knowledge needed to pass the assessments.
4. The number of semester, trimester, or quarter credit hours, or clock hours, that are equivalent to the amount of student learning being directly assessed for the certificate or degree.
5. The methodology the institution uses to determine the number of credit or clock hours to which the program or programs are equivalent.
6. Documentation from the institution’s accrediting agency or State approval agency indicating that the agency has evaluated the institution’s offering of the direct assessment program(s) and has included the program(s) in the institution’s grant of accreditation and approval documentation from the accrediting agency or State approval agency indicating agreement with the institution’s methodology for determining the direct assessment program’s equivalence in terms of credit or clock hours.

Detailed Description of Financial Aid Administration

If you submit a detailed description of financial aid administration for the program (recommended length not to exceed five pages), it should explain how the program meets the requirements for administering Title IV aid. You must establish a methodology to reasonably equate each module in the direct assessment program to either credit or clock hours. This methodology must be consistent with the requirements of your institution’s accrediting agency or State approval agency. All applicable regulatory requirements that refer to credit or clock hours as a measurement apply to direct assessment programs according to whether they use credit or clock hour equivalencies, respectively. You must provide documentation that your accrediting agency has evaluated the program based on the agency’s accreditation standards and criteria and has included it in the institution’s grant of accreditation or preaccreditation. In addition, you must demonstrate that the accrediting agency has reviewed and approved the institution’s claim of each direct assessment program’s equivalence in terms of credit or clock hours. In your description, please describe how you have established a methodology to reasonably equate each module in the direct assessment program to either credit or clock hours. Based on that equivalency, you should also explain—

• How you determined the minimum weeks of instructional time;
• How you define the payment period;
• How the student will interact with a faculty member on a regular and substantive basis; and
• How you define a full-time student.

In addition to the items above, please address how you will measure whether a student is making satisfactory academic progress in the program, and how you will determine when a student has withdrawn or changed his or her enrollment status. Please also provide evidence that your institution has considered whether your financial aid systems are configured to handle the management of a direct assessment program and whether you anticipate any challenges related to these systems. Finally, be sure to include the name of the program and the name and contact information of the financial aid contact who can answer specific questions about the direct assessment program.

Contact Information

Please send questions about the direct assessment application and approval process through the Contact Customer Support link in Federal Student Aid’s Help Center. When submitting a question, please enter your name, email address, topic, and question. When selecting a topic, please select “Policy Guidance.”

Sincerely,

Nasser H. Paydar
Assistant Secretary
Office of Postsecondary Education

SOURCE: (GEN-24-02) Applying for Title IV Eligibility for Direct Assessment (Competency-Based) Programs