Financial Aid At Online Colleges


Since the passing of the Higher Education Reconciliation Act of 2005, federal aid has been made available to students enrolled in accredited online degree programs. Before the act, online education was widely considered a suspect way to earn a degree, which meant online-enrolled students were denied access to major sources of aid. But today these programs have earned the recognition and financial support that all legitimate post-secondary operations are entitled to.


Yet, in spite of this win, misinformation about online education continues to circulate. And as you might expect, prospective students who equate online programs with no financial aid rule out online education entirely.


In this brief report, we will first explain why misunderstandings about financial aid and online education remain. From there, we’ll show you, the prospective student, how to do your due diligence, verifying that all major forms of aid are offered at the program of your choice.

Qualifying for Aid

Where does the confusion surrounding online aid come from? The culprits most educators and admissions officers point to first are certain types of for-profit online schools dubbed “diploma mills.” These substandard schools preyed on misinformed students eager to earn their degrees quickly and cheaply. The mills were so prevalent that they became synonymous with online education as a whole, a stigma that’s proven hard to shake.

Almost all diploma mills lacked (and still lack) accreditation ? the stamp of approval from an independent and reputable educational board. Schools with no academic oversight awarded students degrees that, in the eyes of the academic community and most employers, were effectively worthless. This was motivation enough for the federal government to severely restrict online students’ access to aid; the fear being that students would be overcharged for inadequate degrees and then left with a mountain of debt.

But as more and more legitimate schools launched great online programs, there was enough aboveboard activity online for the federal government to feel it could lift aid restrictions. And the clearest way for the government to ensure that only deserving schools received aid? Accreditation.

The basic idea behind accreditation is that the U.S. Department of Education turns to private accrediting agencies it has recognized as “reliable authorities [on] the quality of education or training provided by the institutions of higher education” to verify the academic merits of a given school and its programs. Once these agencies have awarded schools an accreditation title, they are added to the Department of Education’s Database of Accredited Postsecondary Institutions and Programs. Inclusion on this database effectively means the school and its students will qualify to apply for federal aid, again, with online programs included.


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