Courses offered through distance education

(A) In general A student enrolled in a course of instruction at an institution of higher education that is offered principally through distance education and leads to a recognized certificate, or recognized associate, recognized baccalaureate, or recognized graduate degree, conferred by such institution, shall not be considered to be enrolled in correspondence courses.

(B) Exception An institution of higher education referred to in subparagraph (A) shall not include an institution or school described in section 2302(3)(C) of this title .

A student’s eligibility to receive grants, loans, or work assistance under this subchapter shall be reduced if a financial aid officer determines under the discretionary authority provided in section 1087tt of this title that distance education results in a substantially reduced cost of attendance to such student.

For award years beginning prior to July 1, 2008 , the Secretary shall not take any compliance, disallowance, penalty, or other action based on a violation of this subsection against a student or an eligible institution when such action arises out of such institution’s prior award of student assistance under this subchapter if the institution demonstrates to the satisfaction of the Secretary that its course of instruction would have been in conformance with the requirements of this subsection.