IN THE MATTER OF DENVER PARALEGAL INSTITUTE,
Docket No. 92-86-SP & 92-87-SA
Student Financial Assistance Proceeding
ORDER RE RECONSIDERATION
On March 14, 1994, this tribunal issued a decision which ordered
Denver Paralegal Institute (DPI) to pay a sum of $185,764 to the
United States Department of Education. This decision resolved
several disputes between the parties that arose following an
audit and program review which concluded that DPI had certified
ineligible and excess Stafford and Supplemental Loans for
Students. Subsequent to the issuance of the decision, DPI filed
a motion for reconsideration which noted, correctly, that the
primary issue -- whether DPI students were entitled to Stafford
loans at the second-tier level available to third year or above
undergraduates -- was resolved based upon an interpretation of 20
U.S.C. § 1075(a)(1)(A) which was not urged by DPI or the
Department's Office of Student Financial Assistance Programs
In its motion for reconsideration, DPI requested, inter alia, an opportunity to address this
interpretation. While the rules
governing audit proceedings are silent on this matter, such a
request was appropriate under the circumstances in this case and,
accordingly, the tribunal granted DPI's motion. In support of
its motion for reconsideration, DPI's supplemental brief raises
three arguments. For the reasons set forth below, the tribunal
reaffirms the decision.
Initially, DPI argues that SFAP's program review determination,
which sought the recovery of overawards of Stafford loans under
20 U.S.C. § 1075(a)(1)(A), must be reversed because the tribunal
rejected SFAP's interpretation of this statute in the program
review. According to DPI, the tribunal may only uphold the
program review determination on the same basis asserted in the
program review. Hence, where the tribunal's interpretation of
the relevant statute differs from that advanced in the program
review determination and yet upholds the assessment of the
proposed liability, the tribunal may not, according to DPI,
impose the liability. Its only recourse is to reverse the
program review determination.
The program review determination raised the issue regarding the
appropriate funding level for student loans under 20 U.S.C. §
1075(a)(1)(A). Thus, DPI was apprised of the issue and its
pertinent facts. While DPI and SFAP urged different
constructions of 20 U.S.C. § 1075(a)(1)(A) before the tribunal,
the tribunal adopted yet another interpretation of this statute.
There are occasions, such as this one, when a tribunal will
resolve an issue on a basis not advocated by one of the parties.
Such action does not affect, however, the administrative process.
Notice of the issue has been given to the institution and the
institution has provided its views regarding the matter. The
tribunal's decision represents, at this point within the
administrative process, the Department's current view regarding
this issue. Hence, a reissuance of a program review
determination is inappropriate.
DPI argues that In re Sara Schenirer Teachers Seminary, Dkt. No. 94-8-EA, U.S. Dep't of
Education (March 28, 1994) supports its
view that the only recourse for the tribunal is to reverse the
program review determination. In Sara Schenirer, SFAP sought to impose an emergency action
against the Seminary. According to
the opinion, the emergency action was based upon the Seminary's
purported failure to qualify as an eligible-type institution
under 20 U.S.C. §§ 1141(a) or 1088(c), on the theories that it
lacked proper accreditation and that it did not provide a program
to prepare students for gainful employment. The designated
deciding official found that the Seminary was accredited and that
it offered at least two programs which were eligible programs.
Thus, the designated deciding official determined that the
Seminary had established that the emergency action was not
appropriate and disapproved the action.
As an aside, the designated deciding official indicated that the
evidence "suggests" that the students enrolled in ineligible
programs "may have received Title IV funds, however, as SFAP
opted to apparently not pursue this issue by this emergency
action, and since my jurisdiction is limited to such action, I
leave this issue for a more appropriate forum." Id. at 3. Thus, the designated deciding
official made no finding regarding
whether any students in the ineligible programs had received
Federal funds. Hence, his reversal of the emergency action was
not related to this issue. As such, Sara Schenirer does not mandate the course of action sought
DPI's second contention concerns its estoppel argument. DPI
argues that it processed its students as fifth year
undergraduates entitled to the higher, second-tier loan amount in
accordance with the guidance and instructions from its guaranty
agency, the Colorado Student Loan Program (CSLP), which was
acting as the agent of the Department. Therefore, according to
DPI, SFAP is estopped from asserting that DPI acted improperly in
processing the student loans at the second-tier loan level
In its motion for reconsideration, DPI argues that CSLP's advice
was given following DPI's full disclosure of the facts that some
of its students had only 1½ years of college. Specifically, DPI
argues the CSLP and the Department were aware of DPI's admission
policies by virtue of ED's July 1983 program review and CSLP's
March 1985 program review. The first program review focused, in
part, on the proper classification of its students as graduates
or undergraduates. In the second program review, DPI provided
CSLP, as part of the audit process, a current catalog which
outlined its admission requirements. Based on these events, DPI
implies that CSLP and Department were aware that some of its
students had less than two years of college education.
This information does not alter the conclusion previously reached
by the tribunal which rejected DPI's estoppel argument. The
critical factor is the written information provided by the
institution to the representative of CSLP or Department upon
whose advice the institution seeks to rely. The information
provided must be full and complete. It cannot be expected or
required that a representative of Department or CSLP will
research and review any records of their respective organizations
prior to responding to a request for advice. Such a standard
would impose an enormous and improper burden upon the Department
and the guaranty agencies. Thus, it is the duty of the party
seeking advice to set forth all of the pertinent facts in its
request. Unfortunately, this did not happen in this case.See footnote 1
Lastly, DPI asserts that most or all of its students were entitled to the higher or second-tier loan amounts under 20 U.S.C. § 1075(a)(1)(A). It argues that 85% of its students qualified for second-tier loans since, prior to their admittance to the DPI program, they had completed fours years of college, two years more than the minimum required for second-tier loans. DPI also maintains that students admitted with 1½ years of college and 3 years of legal experience also qualified as these students had the equivalent of at least 2 years of college for purposes of studying to become a paralegal on the theory that alternative eligibility requirements in the American system of education are "simply accepted as an equivalent of the other."
Although not addressed by DPI, it presumably believes that its
students admitted with 1½ years of college and an employer's
sponsorship also qualify for the second-tier loans.
For the majority of the period in issue, DPI's program had three
different academic admission requirements that exceeded the
typical undergraduate program requirement, which is a high school
diploma. Moreover, its academic admission requirements were
insufficient to qualify its program as a graduate program.
Unlike students who transfer undergraduate programs, receive
differing amounts of credits toward their new programs, and,
therefore, need differing amounts of additional credits to
complete their new programs, DPI students took the same course
load regardless of the criterion under which they were admitted
to the program. The absence of a reduced load for the more
academically advanced students indicates that DPI's program
treated all students as academically equal at the beginning of
It is then, in this context, that the question arises as to which
academic admittance requirement establishes the academic level of
DPI's program for purposes of the Stafford loans. The highest
academic admittance requirement was a baccalaureate degree. The
lowest requirement was 1½ years of college plus an employer's
sponsorship.See footnote 2
The sponsorship aspect does not add to a student's level of academic education. Thus,
possess insufficient education to qualify under the statute for
the second-tier loan level. As such, the highest academic
requirement would allow these students access to loan amounts
which they could not otherwise obtain. Therefore, the lowest
academic requirement must govern in order to maintain the
integrity of the statute. Accordingly, DPI's students are not
entitled to second-tier Stafford loans.
In view of the above, DPI's motion for reconsideration is denied
and the prior decision is reaffirmed.
Allan C. Lewis
Administrative Law Judge
Issued: June 15, 1994
Jennifer L. Woodward, Esq.
Office of the General Counsel
U.S. Department of Education
Room 4083, FOB-6
400 Maryland Avenue, S.W.
Washington, D.C. 20202
William C. Clohan, Jr., Esq.
Clohan & Dean
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
On June 15, 1994, a copy of the attached Order re Reconsideration
was also sent by regular mail to--
Thomas Hylden, Esq.
Baker & Hostetler
Washington Square Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5304