IN THE MATTER OF PAINTER'S COLLEGES, INC.,
Docket No. 91-60-SP
Student Financial Assistance Proceeding
Appearances: Dale E. Stratford, Esq., of Stratford & Stratford,
Ogden, Utah, for the Respondent
D. Sorensen, Esq., of the Office of the
General Counsel, United States Department of
Education, for the Office of Student Financial
Before: Judge Allan C. Lewis
This is an action initiated by the United States Department of
Education (ED) to recover $127,419.33 in Federal funds advanced
to Painter's Colleges, Inc. (Painter) under the Pell Grant
program and $42,899.13 of interest and special allowances and to
require the institution to repay or purchase $292,168.64 in
guaranteed student loans and related charges. This action was
proposed following a program review which determined that Painter
had disbursed Federal funds to students participating in
ineligible programs. The program review concluded that several
programs were ineligible due to the lack of appropriate
accreditation by Painter's accrediting agency. The program
review also included supplementary findings reflecting various
regulatory violations of the Higher Education Act of 1965, Pub.
L. No. 89-329, 79 Stat. 1219 (to be codified at 20 U.S.C. § 1001
et seq.), as amended.
Painter argues, in effect, that the purportedly ineligible
programs were accredited by the National Accrediting Commission
of Cosmetology Arts & Sciences (NACCAS). Accordingly, Painter
asserts that its students were eligible to receive funds under
the Guaranteed Student Loan and Pell Grant programs.
Based upon the findings of fact and conclusions of law, infra, ED may recover $170,400.10 and
Painter shall repay or purchase
$291,831.00 in outstanding guaranteed student loans and repay
$256.00 in additional guaranteed student loans.
I. FINDINGS OF FACT
The pertinent findings of fact are set forth in the opinion. The
detailed findings of fact are set forth in the appendix, infra. To the extent that proposed findings
of fact or conclusions of
law by a party have not been adopted in this decision, they are
rejected as being inaccurate or unnecessary to the disposition of
On July 17, 1991, ED issued a final program review to recover
Federal funds advanced under the Pell Grant and Guaranteed
Student Loan programs. On August 12, 1991, ED received, within
the period specified by 34 C.F.R. § 668.113(b), Painter's request
for review of the final program review determination.
Accordingly, jurisdiction is proper before this tribunal.
The Guaranteed Student Loan program and the Pell Grant program
are Federal programs which make funds available to eligible
students through grants and loans and are designed to assist
students financially by defraying the costs of postsecondary
In order to participate in the Guaranteed Student Loan and Pell
Grant programs, a school must be an eligible institution under 20
U.S.C. § 1085 and 20 U.S.C. § 1088, respectively.
An eligible institution under the Guaranteed Student Loan program
and the Pell Grant program is, among other things, an institution
which is accredited by a nationally recognized accrediting
agency. 20 U.S.C. §§ 1085(a)(1)(B), 1085(c)(4)(A),
1088(a)(1)(B), and 1088(b). See also 34 C.F.R. §§ 600.5(a)(6) and 600.7(a)(4)(i).
Therefore, participation in the Guaranteed
Student Loan and the Pell Grant programs is contingent upon
receiving accreditation by a nationally recognized accrediting
Under the Guaranteed Student Loan and the Pell Grant programs,
accreditation is defined as "[t]he status of public recognition
which a nationally recognized accrediting agency or association
grants to an institution, school, or educational program which meets certain established
qualifications and educational
standards." 34 C.F.R. § 600.2 (emphasis added). Consequently,
an accrediting agency may accredit an entire institution which
would include all of its programs or it may accredit particular
programs within an institution.
Initially, the parties dispute whether five programs, which were added by Painter to its curriculum after its original eligibility designation by ED, were accredited by the National Accrediting
Commission of Cosmetology Arts & Sciences (NACCAS), its
accrediting agency.See footnote 1
Under NACCAS' Rules of Practice and Procedure, an institution must receive accreditation of a
program before the institution offers the new program. Under NACCAS' rules, an institution
add other programs to the programs currently accredited under a
procedure relating to re-accreditation or a change in its
NACCAS grants accreditation for periods up to five years. As the
period for accreditation reaches expiration, the institution may
submit an application for renewal of its accreditation and
include new programs. A favorable decision on the application
for renewal constitutes accreditation of the new program and is
effective on the date of the notice of approval.
Accreditation of new programs may also occur by virtue of a
request for a change in the curriculum. In this instance, the
institution submits an application and requests that
accreditation be granted. If NACCAS approves the proposed
change, the institution is informed by letter and the
accreditation is effective as of the date of this notice.
In the instant case, ED asserts that NACCAS did not accredit the five disputed programs. The record discloses that the 1,000 clock hour Salon Management program, the 1,800 clock hour Salon Management program, and the 300 clock hour Nail Technician program were submitted to NACCAS for accreditation and accreditation was denied. The record also discloses that the other two programs, the 1,000 clock hour Barbering program and the 600 clock hour Brushup program, were never submitted to NACCAS for accreditation. Thus, the five disputed programs were not accredited.
Painter, however, asserts several arguments that these new programs should be treated as accredited programs.
Initially, Painter argues, in effect, that the purportedly unaccredited programs were derived, at least in part, from programs of Painter which had been previously accredited. Since these new programs were subsumed within programs previously accredited by NACCAS, Painter asserts that they should be treated
as accredited programs.See footnote 2
It is of no consequence that the purportedly unaccredited
programs were derived from previously accredited programs. Under
NACCAS' rules, accreditation was granted on a program-by-program
basis. Accordingly, any modification of a program, including,
for example, an increase or a decrease in the number of hours
required to complete a program, requires an independent
accreditation of that program, as modified. Therefore, even if a
program was subsumed within or derived from an existing
accredited program, NACCAS' rules require that it be accredited
as a change in Painter's curriculum or as part of re-
accreditation. Therefore, the status of accreditation of these
five programs may not be imputed or assigned to the five disputed
programs.See footnote 3
Next, Painter argues that its catalog, which was approved by
NACCAS, included some of the purportedly unapproved courses and
therefore, NACCAS implicitly accredited these additional
The approval of Painter's catalog by NACCAS is not germane to
whether the additional programs were accredited. Under NACCAS'
rules, the accreditation of a program is determined as part of
the accreditation process or the review of a proposed change in
the curriculum. Under both procedures, accreditation is
communicated to the institution by means of a letter. Hence, the
approval of Painter's catalog represents neither an explicit or
an implicit accreditation of the disputed programs.
Finally, Painter contends that it offered these programs after
full disclosure of these programs to its accrediting agency and
the Department and that this disclosure effectively operated as
an accreditation of these programs. This position is without
merit. The statute and regulations require actual accreditation.
20 U.S.C. §§ 1085(a)(1)(B), 1085(c)(4)(A), 1088(a)(1)(B), and
1088(b). See also 34 C.F.R. §§ 600.2, 600.5(a)(6), and 600.7(a)(4)(i). Disclosure is
simply not accreditation.
Accordingly, the five programs in question were not accredited by
a nationally recognized accrediting agency as required by the
applicable statutory and regulatory provisions. As a result,
Painter must repay $122,839 in Pell Grants to the Department and
repay or purchase $291,831 in guaranteed student loans. Painter
must also reimburse ED the amount of $42,899.13 for the
subsidized interest and special allowance identified with the
ineligible guaranteed student loans.See footnote 4
On the basis of the foregoing findings of fact and conclusions of
law and the proceedings herein, it is hereby--
ORDERED that Painter's Colleges, Inc. immediately and in the
manner provided by law pay the United States Department of
Education a sum of $170,400.10; it is further--
ORDERED that Painter's Colleges, Inc. immediately and in
manner provided by law repay the guaranteed student loan amounts, in full, to the present holders of the loans or purchase the loan balances in the total amount of $291,831.00 or such lesser amount as may be due and owing for the guaranteed student loans identified in the July 17, 1991 final program review determination; and it is further--
ORDERED that Painter's Colleges, Inc. immediately and in the
manner provided by law repay the guaranteed student loan amounts,
in full, to the present holders of the loans in the amount of
$256.00 for the guaranteed student loans identified in the July
17, 1991 final program review determination.
Allan C. Lewis
Administrative Law Judge
Issued: July 13, 1993
APPENDIX -- FINDINGS OF FACT
1. Painter's Colleges, Inc. is a proprietary
institution and a
vocational school offering programs in Ogden, Utah and Roy, Utah.
Painter is accredited by the National Accrediting Commission of Cosmetology Arts & Sciences (NACCAS).
2. NACCAS is recognized by the Secretary of the
Department of Education as a nationally recognized accrediting
agency for the accreditation of postsecondary schools and
departments of cosmetology, arts and sciences, and cognate areas.
3. Accreditation by NACCAS is institutional in nature and encompasses any program in cosmetology and its cognate areas which exceeds 150 clock hours in length and/or leads to State licensing. However, approval from NACCAS must be secured before an institution may offer a program under the auspices of its institutional accredited status.
4. An institution may obtain approval for a
program to be
included within its status as an accredited institution utilizing
the accreditation process or a curriculum change process.
5. Under the accreditation process, accreditation
may be granted
for periods up to five years. As the period for accreditation
reaches expiration, the institution may submit an application for
renewal of its accreditation. The renewal application must
provide a list of programs with their corresponding hours to be
included within the scope of accreditation. The institution may
also submit new programs for approval within its renewal
application. The approval of such courses is not recognized
until a favorable decision on the application for renewal has
been issued by NACCAS.
6. Under the curriculum change process, when an
to add, delete, or make other changes in the curriculum approved
by its institutional accreditation, and the institution is not
near the end of the accreditation period, the institution must
follow the curriculum change process for any program in excess of
150 clock hours or if such programs lead to State licensing. Any
increase or decrease in the number of clock hours in a program
must also be approved by NACCAS through this process. If NACCAS
approves the proposed change, the institution is informed of such
by letter and the accreditation for that program is effective on
the date of the letter granting approval.
7. Painter's Colleges, Inc. was accredited by
NACCAS in 1984 for
a five year period. During the five year period commencing with
accreditation, NACCAS approved the following Painter's programs--
Program Hours of Accreditation
Basic Cosmetology 2,000 September 21, 1984
Instructor 960 September 21, 1984
Facial Operator 600 September 21, 1984
Barbering 2,000 June 24, 1987
Salon Management 2,000 June 24, 1987
8. Pursuant to the addition of a new program
process, in April
1987, Painter submitted to NACCAS an application for approval of
a 2,000 clock hour program in Salon Management. On June 24,
1987, NACCAS approved the institution's application for the
addition of a 2,000 clock hour Salon Management program. On
August 24, 1987, NACCAS approved a revised school catalog dated
March 1987 which listed the 2,000 clock hour Salon Management
9. Painter initially sought approval for a 1,800
clock hour Salon
Management program utilizing the renewal of accreditation process
in October 1988. While the action on Painter's renewal of
accreditation was pending, the institution requested retroactive
approval for a 1,800 and a 1,000 clock hour Salon Management
program and a 300 clock hour Manicuring program. On October 19,
1990, NACCAS denied Painter's application for retroactive
approval indicating that its accreditation decisions are
prospective in nature.
10. NACCAS reviewed its original denial of
accreditation for the
additional programs as a result of the allegations by Painter
that the additional Salon Management programs were accelerated
versions of the previously accredited 2,000 clock hour Salon
Management program designed to meet the ability of each student.
11. In a letter from NACCAS to Painter dated
November 2, 1989,
NACCAS deferred action on Painter's application for renewal of
accreditation. This letter requested Painter to submit
documentation regarding the additional programs.
12. Painter replied on January 30, 1990 to
NACCAS' request by
indicating that the 1,000 and the 1,800 clock hour Salon
Management programs were designed for students with partially
developed skills and, as such, less hours were required for
completion of the program.
13. At a hearing on January 11, 1991 before NACCAS, Painter represented that the 1,800 clock hour and the 1,000 clock hour programs were condensed versions of the 2,000 clock hour program designed in a manner to avoid the duplication of subjects in which the students were knowledgeable. As a result of the hearing, NACCAS again deferred action on the appeal in order to verify information submitted by Painter. As a result of further inquiries, NACCAS concluded that Painter failed to use an educationally sound rationale for placing students in a 1,000 clock hour program as opposed to a 1,800 clock hour program or a 2,000 clock hour program. NACCAS found no evidence that the
1,000 clock hour and the 1,800 clock hour programs represented
the accelerated placement of students in the 2,000 clock hour
program based on prior training and experience. Accordingly,
NACCAS determined that the 1,000 and the 1,800 clock hour Salon
Management programs were distinct programs and not accelerated
versions of the 2,000 clock hour Salon Management program.
14. NACCAS subsequently determined that the
programs were essentially business programs which were outside
the parameters for accreditation. Thus, Painter's institutional
accreditation was withdrawn.
15. ED conducted a program review of Painter
during the period of
April 16-20, 1990 covering the 1989 and 1990 award years.
16. The program review report was issued by ED
on July 31, 1990.
After Painter responded to the findings contained therein, ED
informed Painter of the findings contained in the program review
report which had been satisfactorily resolved.
17. During the 1989 and 1990 award years,
received guaranteed student loans in an amount of $291,831 for
the five programs which were unaccredited by NACCAS--
Program Hours GSL Amount
Salon Management 1,800 $195,699
Salon Management 1,000 $ 38,062
Nails Technician 300 $ 47,383
Brushup 600 $ 6,562
Barbering 1,000 $ 4,125
18. During the 1989 and 1990 award years,
received Pell Grants in an amount of $122,839 for two of the five
programs which were unaccredited by NACCAS--
Program Hours Pell Amount
Salon Management 1,800 $195,699
Salon Management 1,000 $ 38,062
19. On July 17, 1991, ED issued its final
determination letter in which ED assessed liability against
Painter for various statutory and regulatory violations. ED
sought to recover $127,419.33 under the Pell Grant program and
$42,899.13 in interest and special allowances. ED also sought
Painter to repay or purchase $292,168.64 in guaranteed student
loans and related charges.
20. On August 12, 1991, ED received Painter's appeal of the final program review determination.
More specifically, Painter asserts that the purportedly unaccredited programs were subsumed within the programs accredited by NACCAS. According to Painter, the programs were condensed versions of other programs with certain courses deleted in which the students were already knowledgeable. Therefore, Painter asserts accreditation of these programs should be recognized. Painter also claims that one of its programs was derived from a more comprehensive program which was accredited by NACCAS and therefore, its accredited status should be carried over. Finally, Painter asserts that the programs in question were special programs designed for students who had begun their studies in other schools and had received Title IV assistance at these other schools. In Painter's view, the prior receipt of Title IV funds indicates that accreditation for the new programs should be retained. As a result, Painter maintains that the accredited status of these programs should be attributed to its disputed programs.