Docket No. 93-19-SP
Student Financial Assistance Proceeding


JOHN P. HORNUNG, President, Twentieth
Century College, for Respondent

EDMUND J. TREPACZ, II, Esq., for the
Institutional Participation and

Oversight Service of the United
States Department of Education.

Before Paul J. Clerman, Administrative Law Judge:

By a motion dated July 20, 1993, counsel for the Institutional Participation and Oversight Service (IPOS) of the United States Department of Education (ED) requested that I issue a
decision dismissing this proceeding, with prejudice, and that I
enter judgment against respondent, Twentieth Century College (TCC). TCC is not represented by counsel in this proceeding, but is represented by its President, John P. Hornung (Hornung), who did not offer a response to IPOS' motion to dismiss.

In lieu of acting on IPOS' motion to dismiss I issued an
Order to Show Cause, dated August 17, 1993, in which, for reasons
stated in my Order, I gave respondent a final opportunity to show
cause why IPOS' motion should not be granted by offering such a
showing no later than fifteen days after the date of service of
m. Order. TCC did not offer such a showing or make any other
response during the prescribed time period.

    Now, by a letter dated October 18, 1993, counsel for IPOS
adverts to TCC's failure to respond to IPOS' motion to dismiss or to
my show-cause Order, and renews its request for an order
dismissing this proceeding and entering judgment against TCC.

IPOS acknowledges that its motion to dismiss, served upon Hornung at
his last-known address by first-class mail, was returned,
undelivered, by the postal service, but points out that my Order to
Show Cause was apparently delivered in due course to Hornung. IPOS
states that it has not been contacted by Hornung or TCC
since the service of that Order.


Docket No. 93-19-SP

    This proceeding was commenced November 18, 1992, when ED's
Region IV Institutional Review Branch issued a Final Program Review
Determination (FPRD) in which TCC was notified, through Hornung, of
certain liabilities of TCC resulting from the findings in the FPRD,
was provided with instructions regarding payment of TCC's
liabilities, and was informed of TCC's right to appeal the FPRD.
Under Subpart H of 34 CFR Part 668, the Student Assistance General
Provisions, specifically at Section 668.111 et seq., procedures are
estabilished whereby an educational institution, such as TCC, may
request a review of a FPRD, including a hearing before an authorized
hearing official. Such a request for review was filed by Hornung on
behalf of TCC on January 21, 1993. The procedures followed in this
regard are as authorized in Title IV of the Higher Education Act of
1965, as amended (HEA).

    On brief, IPOS supported various findings in the FPRD that
indicated a failure on the part of TCC to show that TCC has complied
with program requirements of Title IV student assistance programs and
a failure by TCC to show that certain expenditures were proper, as
required under 34 CFR 668.116(d). IPOS showed on brief, for example,
that TCC failed to make timely refunds of Title IV program funds;
that TCC failed to implement a default reduction plan, by not
calculating correctly pro rata refunds for students; that TCC
disbursed Title IV program funds to ineligible students; that TCC
admitted students to Title IV programs without first determining
whether they had the ability to benefit therefrom; that TCC failed to
document the independent status of students receiving Title IV
program funds; that TCC misappropriated Title IV program funds by
improperly drawing such funds as administrative cost allowances; and
that TCC misappropriated Supplemental Educational Opportunity Grant
funds. In all, IPOS requests that the findings in the FPRD be upheld
and that judgment be entered for ED in the total amount of $38,293.
Additionally, IPOS requests that TCC be required to remit the sum of
$7,468 to present holders of loans under the Stafford Federal Student
Loan Program, as described in the FPRD findings.

    In his motion to dismiss counsel for IPOS contends that in
proceedings where an educational institution is appealing the
findings in an FPRD, as here, the hearing official has the authority
to issue a decision adverse to the party, TCC in this case, that
failed to meet the procedural time limits previously established by
the hearing official. Among other decisions, IPOS cites No.
93-13-ST, In the Matter of Tri-State Beauty Colleges, decided June
24, 1993. In that case, under somewhat similar circumstances, the
hearing official noted that ED regulations gave him the authority
and the responsibility to take all steps necessary to conduct a fair
and impartial proceeding, and also to

Docket No. 93-19-SP

take whatever measures are necessary and appropriate to
expedite the proceeding, including but not limited to setting
time limits for the submission of documents. Under 34 CFR
668.117(c)(3), in Subpart H proceedings, specifically, the
hearing official may terminate the hearing process and may
issue a decision against a party if that party fails to meet
time limits previously established. In Tri-State, where a
prima facie case was presented by ED, and where respondent was
given every reasonable opportunity to make substantive
response thereto but failed to do so, good cause was found to
be shown for granting a motion to dismiss.

    A like conclusion is warranted here. Good cause is shown
for granting IPOS' motion to dismiss the proceeding, with
prejudice, and for entering judgment against TCC. I so

conclude and find. Accordingly,


1. That this proceeding is dismissed, with

    2. That judgment is entered against respondent, in the
amount of $38,293 to be paid to ED, and in the total amount of
$7,468 to be remitted to present holders of student loans
under the Stafford Student Loan Program as described in the
FPRD issued November 18, 1992, in this proceeding.

         3. That this Decision shall take effect when it is served.

    By Paul J. Clerman, Administrative Law Judge, on November
3, 1993, at Washington, D.C.