The U.S. Department of Education is encouraging colleges to seek federal approval for degree programs that don't rely on the credit hour as a measurement of learning, an Inside Higher Ed story said.

A letter released by the Department of Education on March 19 endorsed competency-based education, and indicated that credit hours will no longer be required as a basis for federal student loans. Department officials said they will soon allow Southern New Hampshire University's College for America to assess learning independent of the credit hour, and still be eligible for federal financial aid programs. The school is poised to launch a $5,000 online associate degree based on competency measures instead of credit hours, according to Inside Higher Ed.

It will be the first such program for which federal loans are allowed, wrote Inside Higher Ed blogger Paul Fain, but not the last. Other institutions are discussing the approach with department officials, including Capella University, Northern Arizona University, Brandman University and Bellevue University.

In a Huffington Post blog, Western Governors University president Robert Mendenhall wrote that the most important characteristic of competency-based education is that it measures learning rather than time.

"Students progress by demonstrating their competence, which means they prove that they have mastered the knowledge and skills (called competencies) required for a particular course, regardless of how long it takes," Mendenhall wrote.

The Department of Education's softened stance on competency-based education follows on the heels of a New America Foundation report called "Cracking the Credit Hour," by Amy Laitinen, which blamed the credit hour for myriad problems plaguing the U.S. system of higher education.

"If the U.S. is to reclaim its position as the most-educated nation in the world, federal policy needs to shift from paying for and valuing time to paying for and valuing learning," a report summary said. "In an era when college degrees are simultaneously becoming more important and more expensive, students and taxpayers can no longer afford to pay for time and little or no evidence of learning."

In its best guise, competency-based education requires learners to prove what they know, and what they can do, wrote Todd Hitchcock on a blog for Pearson textbook company. Hitchcock urges educators to focus on the competency-based education's value for students, instead of its potential to disrupt education models.

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"Those educators and institutions that are early adopters of this innovation can be proud that they play a role in a groundbreaking new movement that seeks to promote the real end-goal of higher education: the long-term success of the student," he wrote.

Department of Education officials cautioned that they haven't given the final word on competency-based education, according to Inside Higher Ed. The story said programs most likely to be successful in obtaining federal approval will be those that feature competencies recognized by both accreditors and employers.