The U.S. Department of Education on Friday released a long-awaited response to an inspector general audit, which found that one the country’s largest online universities had run afoul of federal standards.

The department’s Office of Inspector General found in 2017 that Western Governors University, which enrolls more than 83,000 students, failed to meet federal requirements for the interaction between faculty members and students. The audit said WGU should pay back $713 million in federal student aid.

The Trump administration wasn’t expected to carry out the IG’s recommendations. The Education Department has been less interested in cracking down on colleges under Betsy DeVos, the U.S. secretary of education. And Western Governors has received bipartisan support from Washington policy makers, including praise from the Obama administration for its low-priced, competency-based model.

But Inspector General Kathleen Tighe, who retired from the department last year, found that most WGU courses should actually be classified as correspondence courses, citing a 1992 law that defines distance education programs' eligibility for federal aid. Those courses don't meet requirements for regular and substantive interaction between faculty and students, according to the audit. And an institution isn't eligible for federal funds if more than half of its courses are offered via correspondence.

However, in a letter sent to Western Governors Friday, the department's Office of Federal Student Aid said that because of "the ambiguity of the law and regulations and the lack of clear guidance available at the time of the audit period" as well as information provided by WGU and its regional accreditor, the department would not seek the return of Title IV student aid funds. (The university will be required to return about $2,600 thanks to one identified instance of deficiencies in returning Title IV funds when a student withdrew.)

"The statements made and the actions taken by the institution and its accrediting agency demonstrate that the institution made a reasonable and good faith effort to comply with the definition of distance education and provide regular and substantive interaction between the students and its instructional team during this period," FSA found.

Some experts have complained that the "regular and substantive" standard is an outdated way to assess online education programs. The rules may be in flux. In upcoming negotiated rule-making sessions, the Education Department will ask appointed panelists to consider modifying regulations involving faculty interaction. A proposal from the department would allow accreditors to define who qualifies as an instructor for the purposes of college-level courses.

The IG audit also included findings critical of WGU's adherence to the credit-hour standard. But, as with the regular and substantive requirement, the department disagreed with those findings. FSA noted in the letter to WGU that the Education Department is undertaking negotiated rule making to craft new policies involving both rules.

"The department is hopeful that further clarification will be part of future regulations that will help spur the growth of high-quality innovative programs," the agency said in a press release Friday.

In a statement released Friday, Western Governors said FSA's decision affirmed that the institution is eligible to participate in the federal student aid program.

"We appreciate the extensive and careful review conducted by the Office of Federal Student Aid over the past 15 months, we respect the important role of the OIG, and we are pleased to receive this notification," the university said in the statement. "As we have done since our founding by U.S. governors 22 years ago, WGU will continue our work to expand access, improve quality, and optimize outcomes for students."

But Spiros Protopsaltis, the director of George Mason University’s Center for Education Policy and Evaluation and a former Education Department official, said nothing in the letter questions the substance of the inspector general's findings. To the contrary, he said, the letter directed Western Governors to comply with existing regular and substantive interaction requirements.

"However, the critical issue is that we should not lower the bar to accommodate any particular online model, whether it's WGU or any other school, but instead we should raise the bar for quality and rigor," he said. "Given the evidence on the importance of interaction between students and instructors for student success, requiring and enforcing such interaction is imperative."

Just because one institution has strong outcomes while failing to meet that standard, he said, does not mean the Education Department should lower the bar for the entire online industry.