IN THE MATTER OF BLAINE HAIR SCHOOL,
Docket No. 94-129-SP
Student Financial Assistance Proceeding
Appearances: Leslie H. Wiesenfelder, Esq., of Washington,
D.C., for Blaine Hair School.
Sarah L. Wanner, Esq., Office of the General
Counsel, for the Office of Student Financial
Assistance Programs, United States Department of Education, Washington, D.C.
Before: Judge Ernest C. Canellos
Blaine Hair School (Blaine) is a proprietary school located in
Lowell, Massachussets. Blaine appeals a final program
determination letter (FPRD) of June 14, 1994, issued by the
Office of Student Financial Assistance Programs (SFAP) of the
United States Department of Education (ED), only one finding of
which remains for adjudication. That finding alleges that Blaine
incorrectly implemented the refund requirements enacted under the
Higher Education Amendments of 1992, which became effective on
July 23, 1992, the date of its enactment. The FPRD identified
eight students as having a refund due for a total liability of
$5,441. Those students were identified with specificity by name,
Social Security number, loan program, and refund amount owed.
Blaine's position is that it acted correctly in applying the
refund requirements of the 1992 Amendments only to those students
who began their first enrollment on or after July 23, 1992.
Blaine contends that such was a reasonable construction of the
statute in the absence of any guidance from ED. Blaine claims
that applying the new refund policy to students who had already
begun attending class before July 23, 1992, would be to alter the
refund policies that were contractually agreed to and would
impermissibly give retroactive effect to the statute. Citing,
Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988).
Blaine also contends that it made good faith efforts to ascertain
ED's interpretation of the new refund policy and to implement it
based on such guidance. It faults ED for lack of guidance and
claims that even the "Dear Colleague" letter which ED issued in
October of 1992, does not provide guidance on the subject.
Blaine further argues that at least one guaranty agency
(Education Assistance Corporation in South Dakota) interpreted
this provision of the 1992 Amendments to apply only to
enrollments beginning on or after July 23, 1992. Blaine asserts
that the guaranty agency is ED's agent in endorsing the
interpretation Blaine makes.
SFAP maintains that the refund policy requirement of the 1992
Amendments was to be effective "on the date of enactment" and
there is no justification for reading in an enrollment-date
limitation. SFAP disputes any retroactivity problem since the
refund policy only applies to refunds made on or after enactment.
Also, Blaine's asserted defense of "good faith" efforts to
determine the meaning of the provisions does not excuse its
failure to pay the refunds because there is nothing in the
statutory provision which sets forth a "good faith" exception to
the obligation to pay refunds under the new statutory scheme.
The facts in this case do not appear to be in dispute. The
refund provisions of the Higher Education Act of 1965, as amended
(HEA), prior to July 23, 1992, were followed by Blaine in the
cases of the eight students referenced above; the refund
provisions required by the amendments were not followed by Blaine
in those cases; the refund provisions of the amendments are more
favorable to the students involved; and, by not applying these
more favorable rules, Blaine realized a gain of $5,441.
This case involves a narrow question of law - what does the statute provide as to how Congress intended the new refund policy to be applied. It is not ED's interpretation or guidance which is at issue here because a question of statutory construction arises only where ambiguities are present and the plain meaning of the statute cannot be determined. That problem is not apparent in this case because the statutory provisions are abundantly clear.
It is uncontroverted that, on July 23, 1992, as part of the 1992
Amendments to the Higher Education Act of 1965, Congress enacted
P.L. 102-325, § 485(a), adding to the HEA, amended Section 484B,
20 U.S.C. § 1091b. This legislation expressly provided that
Section 484B "shall take effect on the date of enactment of this
Act." See Effective Dates for 1992 Acts at 20 U.S.C. §1088.
Section 484B mandates a fair and equitable refund policy under
which institutions are to make refunds to students - the intent
is to provide the largest refund amount due the student under one
of three enumerated refund situations. The statutory purpose
here is to give the greatest degree of protection to students in
their refund returns. Blaine's assertion that an enrollment-date
limitation applies flies in the face of the purpose of the
statute of insuring such protection to the students who qualify
Further, the operative date for determinations relative to
refunds is the date a student withdraws. No other date is
pertinent. Applying the new refund requirements to any student
who withdraws as of the date of enactment is consistent with the
plain meaning of the statute. There is no legal justification
for Blaine to disallow the refund policy advantages to students
because they enrolled prior to, rather than on or after, July 23,
1992, so long as they withdrew after that date.
Blaine offers nothing of substance to support its contention that
there are ambiguities in the statutory language. The language is
clear and unambiguous. It is readily discernable that the refund
policy was meant to be applied to any student who withdraws on or
after July 23, 1992.
Blaine's argument that retroactive application is being given to
the refund policy provisions is simply inaccurate. The changes
in policy under the amendments are applied prospectively to those
who qualify for a refund. Finally, Blaine tries to validate its
position because of ED's lack of guidance on how the pro rata
refund policy was to be applied. Blaine points out that one
guaranty agency interpreted the language the same as it did.
Yet, Blaine is silent about what all the other guaranty agencies,
including its own, did or said about applying the refund policy.
Clearly, it would have been more reasonable for Blaine to have
adopted and followed its own guaranty agency's position. In any
event, the "reasonable efforts" claim is not a consideration here
because the statute is unambiguous.
Accordingly, under the circumstances, Blaine has not met its
burden of proving that the refunds owed the eight enumerated
students totalling $5,441 were lawfully paid under the amended
refund provisions. Blaine is, therefore, directed to repay the
liability as set forth in the FPRD.
Ernest C. Canellos
Issued: January 31, 1995