An attendance-taking proprietary educational institution, was issued a Final Program Review Determination on May 11, 2006, and assessed liability of $8561 for failing to determine that a student had withdrawn from class within 14 days of the student’s last date of attendance. This determination is important because it is utilized to calculate when unearned federal financial aid funds must be returned to their sources. The Final Program Review Determination concluded that refunds for students must be made within 45 days of the student’s last day of academic attendance. Once an institution has made the determination that a student has withdrawn (14 days) and that it owes unearned federal student aid funds, the institution must make those reimbursements within 30 days of that determination.
The College admitted that 34C.F.R. 668.22(j)(1) requires an institution to make Title IV refunds of unearned student financial aid no later than 30 days after the institution makes a determination that a student has withdrawn. As to the date of that determination, College America-Denver explained that 34 C.F.R. 668.22(j)(2) provides that an institution must determine the withdrawal date for a student who withdraws without notice no later than 30 days after the end of the earlier of the-
(i) Payment period or period of enrollment, as appropriate, in accordance with paragraph (e)(5) of this section;
(ii) Academic year in which the student withdrew; or
(iii) Educational program from which the student withdrew.
Applying these regulations to its operations, College America-Denver argued that it was not bound by any 14 day rule and could appropriately make the determination of withdrawal no later than 30 days after the completion of the payment period or period of enrollment and then had an additional 30 days to refund any unearned Title IV funds.
The College maintained that at the time of the program review it was complying with the procedure set out in the regulations and that FSA was improperly attempting to impose a new 14 day requirement based solely on language found in a Dear Colleague Letter GEN-04-12 and not on an enforceable regulation.
The school argued that the Tribunal is obliged to find violations of law, not violations of statements of policy. It asserted that Dear Colleague Letters are not enforceable and amount to nothing more than an inadequate substitute for proper rulemaking. The College concluded that if FSA believed the regulations regarding the timing of withdrawal determinations were too lax, it should taken the necessary steps to amend the regulation.
FSA conceded that the regulations permit an institution to make a withdrawal determination no later than 30 days after the end of the payment period. FSA maintained that an institution has an obligation to make a determination of withdrawal as soon as it becomes aware of a student’s absence. At an institution that is required to take attendance that date could be well before a point 30 days after the end of the payment period or period of enrollment. Dear Colleague Letters (GEN-04-03 and GEN-04-12) were issued to answer questions raised by institutions regarding the timing of the determination and assist them with their obligations.
FSA’s position is that while Dear Colleague Letters do not create a legal requirement with which schools must comply, the guidance contained in them provide “context and meaning to the requirements in the regulations.”
It is well settled that the College has the burden of establishing that the questioned expenditures were proper and that it complied with program requirements. In summary, the College argued that Dear Colleague Letters do not rise to the level of law, but only serve as guidance to the schools. Finally, it asserted that its failure to comply with sub-regulatory guidance cannot be treated as a violation of a regulation and that FSA’s basis for recovery was limited.
Judge Richard F. O’Hair found that FSA had no authority to collect liabilities from the College on the basis that it violated a Dear Colleague Letter policy issued by FSA. During the negotiated rulemaking process, the committee clearly established the time in which an institution must make a withdrawal determination that is well beyond the 14-day period FSA attempted to enforce. FSA must accept the current procedures in the regulations. The Judge concluded that if FSA believed that the issue of timeliness of determination of student withdrawals should be shortened, it should make the appropriate changes to the governing regulations.
If you have any comments or questions, you may contact Milton L. Kerstein, Esq. via email at mkerstein@kcl-law.com or by telephone at 617-965-9698.
This article is provided, with the assistance of Sherron Heller of the Higher Education Assistance Group, Inc., for general information purposes only and with the understanding that neither the authors or publisher are engaged in rendering legal advice or opinion. If legal advice is required, the services of a competent professional person should be sought. |
