This digest offers a brief discussion about the growth of distance education in the postsecondary arena and summarizes the U.S. Department of Education's progress in evaluating current rules governing financial aid for distance learning. Department of Education statistics show that there was a 72% increase in the number of institutions offering distance education from 1995 to 1998, when 1,680 intuitions offered about 54,000 online courses enrolling 1.6 million students. Rules designed to combat fraud and abuse in education in the 1980s and early 1990s are now hampering distance education students as they limit the number of courses an institution can offer online or set strict qualifications for distance students receiving financial aid. It will be necessary to look at this aspect of financial aid and distance education. Congress has already established a Distance Education Demonstration Program to provide increased higher education through distance education, and this program will test some issues related to student aid. Program waivers and changes in program administration will also assist distance education students seeking financial aid. The new Administration has promised to work with Congress to address the issues that must be considered before crafting new student financial aid regulations. (Contains 14 references.) (SLD)