In the Matter
TECHNICAL Student Financial
INSTITUTE, Assistance Proceeding
Respondent. PRCN: 94406054
Appearances: Leigh Anne Yeargan, Esq., Assistant Attorney
General, Little Rock, AR, for Arkansas Valley Technical Institute.
S. Dawn Robinson, Esq., Office of the
General Counsel, United States
Department of Education, Washington, D.C., for Student Financial Assistance
Before: Judge Richard F. O'Hair
were being paid directly by a Job Training Partnership Act (JTPA) agency. SFAP further alleges
that the institution expended Federal Supplemental Educational Opportunity Grant (FSEOG)
funds in excess of its allocation level.
AVTI responds that, as provided in the Federal Student Financial
Aid Handbook, it
properly included the cost of tuition and fees in its COA for the JTPA students at issue because,
even though the JTPA agency reimbursed the institution for these charges, the students remained
liable if the JTPA agency did not fully reimburse the institution. In the alternative,
the institution argues that if I find
it to be in violation of the interpretative guidelines contained in
the Handbook, I should hold that these guidelines are void because they are vague and
The cases cited by ED, however, are distinguishable from the
present case. In both In re Education Management Systems, Inc. d/b/a Chenier, Dkt. No.
94-31-SA, U.S. Dep't of Educ. (June 22, 1994) and In re Microcomputer Technology
Institute, Dkt. No. 94-88-SP, U.S. Dep't of Educ. (May 5, 1995), the institutions involved
had provided educational services to incarcerated
students. The decisions held that
an institution may not include
tuition and fee charges as elements of the institution's cost of attendance
the institution (1) is precluded from
charging its students tuition under an exemption from state licensure, (2) agrees to provide
vocational education services for a private entity managing a state's correctional facilities,
which itself is precluded by a contractual agreement with the state from charging incarcerated
students tuition or fees for the provision of vocational education services, and (3) has a
registration or enrollment contract with its students that expressly provides that the student is
not responsible for tuition or fee charges.
In In re Massachusetts
School of Barbering and Men's Hairstyling, Dkt. No. 94-128-SP, U.S. Dep't of Educ. (May
12, 1995), a case that involved incarcerated students whose tuition and fees were waived if they
could not obtain Pell
Grant funding, the institution did not dispute SFAP's claim that the institution never actually
charged tuition and fees to its students. There, the institution argued that 20 U.S.C. §
6(5)(A) permitted the institution to include the tuition and fees that normally would have been
charged to such students, an argument that had been rejected in the prior two decisions. The
judge again rejected this argument, holding that tuition and fees can be included in the
institution's COA only if these are actually charged to the student.
A slightly different scenario is found in In re Mount Wachusett
Community College, Dkt. No. 94-102-SP, U.S. Dep't of Educ. (September 1, 1995). This
case also involved the
computation of the COA for incarcerated students. Unlike the institutions in the two previous
cases, however, Mount Wachusett was able to show that its students were charged for the tuition
and fees. SFAP attacked this practice by alleging that the students were never billed for any
tuition and fee costs in excess of the students' federal Pell Grant awards. Mount Wachusett
successfully defended its practice because it was able to show that the students were potentially
liable for any unpaid balances at the end of the year, even though the institution had established a
practice whereby it routinely waived any charges to the student that remained after federal
student financial assistance funds were credited to the students' accounts.
None of these decisions, however, stand for the proposition that an
include in its COA tuition and fee charges that are actually charged against the student but for
which the institution is reimbursed from another source. In fact, a recent decision of this tribunal
specifically upheld the right of an institution to include in its COA tuition and fees for which the
institution is reimbursed by a JTPA agency. In In re Hallmark Institute of Technology,
Dkt. No. 94-127-SP, U.S. Dep't of Educ. (August 23, 1995), the institution contracted with a
agency providing that the JTPA agency would reimburse the institution for all or part of the cost
of training each student. The JTPA students signed a student enrollment agreement and became
contractually obligated to pay for tuition and fees incurred. The judge also discussed an internal
ED memorandum that authorized institutions to include tuition and fees charges in their COA for
JTPA recipients when the charge is made directly to the student and is paid by either the student
or student financial assistance (such as the JTPA program). The memorandum also stated as
If an institution charges the student for tuition and fees, it must
expect the student
to pay the charge if the JTPA agency or other source of assistance does not pay.
The existence of the tuition and fee charge must be documented in the same way
as for any non-JTPA student (i.e. in the school's contract with the student or in
the agreement with the JTPA agency).
This language is an accurate description of the law in this area as delineated by recent decisions of this tribunal. The Department's 1991-92 Student Financial Aid Handbook, contained at ED Ex. 10-1, summarizes the law as follows:
A school may include a tuition and fee charge in the cost of attendance for a Pell Grant recipient only if that charge is actually made to the student and is paid either by the student or by some type of student financial assistance (such as JTPA). The existence of such a tuition and fee charge must be documented in the same way as for any non-JTPA student--for instance, in the school's contract with the student, or in the agreement with the JTPA agency. (If the school charges the student for tuition and fees, the school would have to expect the student to pay the charge if the JTPA agency or other source of assistance does not pay on behalf of
On the other hand, if the school does not actually charge the
student for tuition
and fees (either because it is prohibited from doing so under the JTPA contract, or
for any other reason), then no tuition and fee component would exist for the Pell
Grant cost of attendance.
The facts of the instant case are analogous to those in
Hallmark and as discussed in the Student Financial Aid Handbook. AVTI charged
students tuition at the beginning of each
semester and entered these amounts on the Accounts Receivable Ledger. Ex. R-14 through R-
36. The exhibits submitted by AVTI demonstrate that the students at issue in this proceeding
were charged tuition at the beginning of each semester. Ex. R-14, R-16, R-18, R-20, R-21, R-22,
R-23, R-24, R-28, R-29, R-30, R-31, R-32.
Students who received JTPA funds (which were listed on the
ledgers as "WAEDA"
funds) had those funds credited to their accounts at the time that they were received. The ledgers
maintained a balance for each student showing any credit owed to the student or debit owed to
the institution. Ex. R-37 contains the "Procedures Related to Tuition Ledger and Tuition
Refunds," which explain the usage of the Account Receivable Ledgers and the procedures under
which students may obtain credit refunds or the institution may collect debit balances owed to it
At the end of the fiscal year, in compliance with these procedures,
compiled a Control Sheet from the Accounts Receivable Ledger that listed all students with
unpaid tuition and fees. Ex. R-38 through R-47. After having their accounts credited with JTPA
funds, students #3, #5, and #10 still owed AVTI the amounts listed on the Control Sheet. Ex. R-
39, R-41, and R-42. Payments to the institution from various sources were specified, and
remaining debit balances became a debt owed by the student to the institution. Ex. R-48 through
Although SFAP challenges the credibility of the evidence
submitted by AVTI, I find the
institution's documentary evidence to be persuasive. These exhibits amply demonstrate that
AVTI actually charged tuition to JTPA students and that they remained liable if the JTPA
agency did not reimburse the institution. Moreover, the tuition charges for JTPA students were
documented in the same way as tuition charges for non-JTPA students were documented.
Student #8, who was not a JTPA student, was charged tuition on the Accounts Receivable
Ledger in the same manner as the JTPA students. Ex. R-21. Student #8 was also included on
the Control Ledger in the same manner as the JTPA students were. Ex. R-42. Since his debit
balance was not paid by the end of the fiscal year, it became a debt owed by him to the
institution. Ex. R-51.
SFAP concedes that the JTPA contracts did not explicitly prevent AVTI from charging tuition and fees to the students, yet inexplicably claims that "the contracts, in effect, precluded
AVTI from charging those JTPA trainees tuition and fees." SFAP Br. at 8-9. The evidence
discussed above demonstrates that the institution did in fact charge tuition and fees to its
students. SFAP also claims that a ruling in favor of the institution would allow it to engage in
"double-dipping," an argument that was rejected in Hallmark and that I reject here for
similar reasons. See Hallmark at 9, n.5.
Therefore, I find that
AVTI properly included the cost
of tuition and fees in its COA for the JTPA students at issue because the JTPA agency simply
reimbursed the institution for these
charges and the students remained liable if the JTPA agency did not reimburse the institution.
Because I find that the
institution complied with ED's interpretative guidelines and their actions
are in accord with prior precedents of this tribunal, it is not necessary to address the institution's
alternative argument that the interpretative guidelines contained in the Handbook are vague and
unconstitutional. Accordingly, AVTI has no liability under Finding 3.
2. AVTI did not satisfy its burden of persuasion
under 34 C.F.R. §
to show that it did not exceed its
FSEOG allocation by $800.
Judge Richard F. O'Hair
Dated: January 31, 1996
A copy of the attached initial decision was sent by certified mail, return receipt requested to the
Leigh Anne Yeargan, Esq.
Assistant Attorney General
323 Center, Suite 200
Little Rock, AR 72201-2610
S. Dawn Robinson, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110