IN THE MATTER OF PHILLIPS JUNIOR COLLEGE (Charlotte),
Docket No. 93-31-SP
Student Financial Assistance Proceeding
Appearances: Leslie H. Wiesenfelder, Esq., and Kelli J. Crummer,
Esq., of Dow, Lohnes & Albertson, Washington, D.C.,
for the Respondent.
Denise Morelli, Esq., Office of the General Counsel, U.S. Department of Education,
Washington, D.C., for the Office of Student Financial Assistance Programs.
Before: Judge Ernest C. Canellos
Phillips Junior College of Charlotte, North Carolina (Phillips) is
one of a number of proprietary schools owned by Phillips Colleges,
Inc. Program reviewers from Region IV of the Office of Student
Financial Assistance Programs (SFAP) of the U.S. Department of
Education (ED), conducted a program review at Phillips between
March 18, 1991, and March 21, 1991. The review analyzed Phillips'
administration of the student financial assistance programs
authorized under Title IV of the Higher Education Act of 1965, as
amended (Title IV) for award years 1988-89, 1989-90 and 1990-91.
A final program review determination (FPRD) was issued on January 20, 1993, which found that Phillips violated various provisions of Title IV. Two of those findings are the subject of this appeal. They are: Phillips disbursed Title IV funds in two rather than the required three installments; and, Phillips failed to document the independent status of six students.
The issue of the payment in two rather than three installments, has been litigated previously between the schools of Phillips Colleges Inc., and ED and finally settled by Secretarial action. In the Matter of Edmondson Junior College, Docket No. 93-7-SP, U.S. Dep't
of Educ. (April 5, 1994). The facts of the current case and those
in Edmondson, are indistinguishable. Therefore, I find that Phillips did not err by disbursing
federal student financial
assistance utilizing incorrect payment periods.
The second issue is that Phillips' did not properly document the
independent status of six students. In its original determination,
SFAP demanded that Phillips perform a full file review to determine
the liability for this violation. Phillips declined, stating that
it was an unreasonable demand because of the prohibitive costs
involved in such an undertaking. Upon Phillips's refusal, SFAP
demanded repayment of all Title IV funds that had been disbursed by
Phillips during the period. SFAP's demand has been since modified
- now only the return of the Title IV funds disbursed to those six
students ($15,273.90) is demanded.
In its defense, Phillips presented evidence seeking to rebut the
specific findings of error enumerated in the program review. In the
case of three of the six students, OSFA claimed there was
insufficient documentation to show that the students were not
claimed as dependents by their parents on their federal income tax
forms. However, in each case, Phillips provided the declaration of
each student to that effect, claiming that is all the law requires.
Citing, 20 U.S.C. § 1087vv(d)(2)(D). A student may be certified as an independent
student "on the basis of a demonstration made by the
individual, but no disbursement of an award may be made without
documentation." 20 U.S.C. § 1087vv(d)(4).
It is readily apparent by reading the two sections together, that
prior to disbursement, the school must secure documentation as to
the factors qualifying the individual as an independent student -
that documentation must be other than the student's own input.
Phillips alludes to the obvious - in some cases, what other
information can be reasonably gathered. However, I am constrained
to follow the law, as written, and cannot waive any requirements of
the law. Consequently, I find that Phillips has failed to properly
document the independent status of these three students (#5, 22,
As to the other three students, OSFA claims that there is no
evidence that the students had $4,000 in total resources other than
from parents the previous two years. 20 U.S.C. § 1087vv(d)(2)(F).
My review of the file reveals that such evidence does exist as to
one student (#16) by virtue of documents from the Internal Revenue
Service (IRS). As to another student (#30), the evidence is
insufficient - IRS documents show income of $3,341, whereas, the
student self-certified another $1,400 in untaxed income, for 1989.
The third student (#25), did not have any independent evidence of
two years previous resources. I find, therefore, that Phillips has
met its burden of proof as to student #16, but not as to students
#25 and 30.
Accordingly, Phillips Junior College, Charlotte, is ordered to
repay $11,580 ($15,273.90 - $3,693 credit for student #16) to the
U.S. Department of Education.
Judge Ernest C. Canellos
Issued: November 18, 1994