UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of Docket No. 95-101-SP
IVY TECH STATE COLLEGE, Student Financial Assistance Proceeding
____________________________________ PRCN: 94305054
Appearances: Leslie H. Wiesenfelder, Esq., Dow, Lohnes, & Albertson, Washington, D.C., for Ivy Tech State College.
Stephen M. Kraut, Esq., Office of the General Counsel, United States Department
of Education, Washington, D.C., for Student Financial Assistance Programs.
Before: Judge Richard I. Slippen
A student's cost of attendance is defined as "the tuition and uniform compulsory fees normally charged a full-time student at the institution at which the student is in attendance for any award year [plus certain allowances]." 20 U.S.C. § 1070a-6(5)(A) (1991). Furthermore, both parties rely on guidance from The 1991-92 Federal Student Financial Aid Handbook (Handbook). As the Handbook states, when calculating students' cost of attendance for Pell Grant purposes, ". . . a school may use either the actual or the average amount charged for tuition and fees for a full academic year." Handbook, at 4-14. Since both parties agree that Ivy Tech
SFAP concedes that "[i]n the abstract, Ivy's method of determining the amount of tuition
and fees it normally charged its full-time students would be legally authorized . . . because, in the
abstract, that method was rationally based." SFAP Brief, at 9. Ivy Tech asserts that this SFAP
admission illustrates that the school ". . . has met its burden under the applicable legal standard."
Respondent Brief, at 2. To support this claim, Ivy Tech cites to a decision by this tribunal, In Re Mount Wachusett Community College, Dkt. No. 94-102-SP, U.S. Dep't of Educ. (September 1, 1995). In Mount Wachusett, the judge stated that "this tribunal is obliged to finding violations of law, not violations of statements of policy." Id., at 8 (citing In Re Baytown Technical School, Inc., Dkt. No. 91-40-SP, U.S. Dep't of Educ. (Initial Decision) (January 13, 1993)). Without more, this case supports Ivy Tech's assertion that, because their policy did not violate a statute or
regulation, the school should not be penalized for its method of calculating average cost of
Nevertheless, there are two fundamental reasons why Ivy Tech cannot successfully rely on
Mount Wachusett. First, in Mount Wachusett, the judge stated that regardless of whether a school uses an average or an actual cost of attendance, the figure must be based on ". . . costs
which are actually incurred by the students." Mount Wachusett, at 6. Regardless of the reasonableness of Ivy Tech's method of calculation, therefore, the calculated average must reflect
tuition costs that were actually incurred. As stated below, because the school actually did overestimate each student's credit hour enrollment for the 1991-92 award year, Ivy Tech
inappropriately increased the average cost of attendance.
Second, in Mount Wachusett, the judge acknowledged that not only was the school's method of calculation not prohibited by law, but that the school also demonstrated that ". . . this practice is not an improper expenditure of Federal Student Financial Aid." Mount Wachusett, at 8. As previously stated, in the present case it remains in issue whether the school over-awarded
Pell Grant money, creating an improper expenditure absent in Mount Wachusett. To decide whether the school over-awarded students Pell Grant funds during the 1991-92 award year, it is
necessary to examine each of the four Ivy Tech defenses to SFAP's charge.
Both parties have admitted the lawfulness and even the reasonableness of Ivy Tech's
actions. If it is apparent that the institution overestimated the number of credit hours its average
students take, and this overestimate resulted in an over-award of Pell Grant money, SFAP is
entitled to a reimbursement for the over-awarded funds. This tribunal has that ". . . the recovery
of misused Federal funds is 'intended to promote compliance with the requirements of the grant
program [and therefore,] a demand for repayment is more in the nature of an effort to collect
upon a debt than a penal sanction.'" In Re Macomb Community College, Dkt. No. 91-80-SP, U.S. Dep't of Educ. (May 3, 1993), at 7-8 (quoting Bennett v. Kentucky Dep't of Educ., 470 U.S. 656 (1985)). Through its revised submission of Pell Grant awards, Ivy Tech admits that it
overestimated the actual number of credit hours taken by its students. The total difference is
consistent with SFAP's figure of $432,351.88. The argument that the school should not be liable
for this money that was, even according to the revised Ivy Tech submissions, actually over-
awarded must be rejected. Merely by demonstrating that its method of estimating tuition was not legally prohibited, an institution has not necessarily proven that its Title IV expenditures were proper.
had SFAP analyzed the enrollment patterns of all of Ivy Tech's students, rather than just the Pell
Ivy Tech further maintains that Pell Grant recipients would enroll in less credit hours
because such students are the least likely to be able to afford child care. This argument, however,
substantially weakens the school's contention that its liability should be reduced to allow for child
care costs. If Pell Grant recipients are awarded more funds due to child care costs, the school
cannot claim that students are unable to enroll in credit hours because they cannot afford child
Finally, Ivy Tech argues that this tribunal should reduce any liability by $152,793 for child
care costs. The school asserts that because its students had received their maximum Pell Grant
funds for the 1991-92 award year, Ivy Tech did not find it necessary to figure child care costs into
cost of attendance. Nevertheless, Respondent maintains that its submission of the Peter Rabbit
School weekly charges should reduce any payment due SFAP. While this tribunal acknowledges
the legitimacy of child care costs, the institution's submissions are insufficient evidence of actual
expenditures. In the absence of documentation supporting that these costs were actually incurred
by Ivy Tech students, this tribunal cannot reduce the institution's liability.
Judge Richard I. Slippen
Dated: August 7, 1996
A copy of the attached initial decision was sent by certified mail, return receipt requested to the
Leslie H. Wiesenfelder, Esq.
Dow, Lohnes, & Albertson
1255 23rd Street N.W.
Washington, D.C. 20037-1194
Stephen M. Kraut, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110