UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter
ACADEMY OF HAIR
Financial Assistance Proceeding
____________________________________ PCRN: 91405104
Appearances: Beverly Jo Hembree, Owner/Director for Academy of
Paul G. Freeborne, Esq., Office of the
General Counsel, United States Department
of Education, Washington, D.C., for Student Financial Assistance Programs.
Before: Judge Ernest C. Canellos
The FPRD, which resulted from a July 29 - August 2, 1991, program review of Academy's Title
IV compliance for the award years 1989-1990 and 1990-1991, contained eight adverse findings.
These included findings that Academy: improperly charged non-educational items to student
account cards and used Federal funds as payment; disbursed Federal funds to students after said
students failed to maintain satisfactory academic progress; and improperly made disbursements
of Pell funds to students enrolled at an ineligible location. In its brief, Academy appealed
numerous other findings contained in the FPRD, but only the above three are in issue.See footnote 1
The evidence in the record reveals the Academy charges all students a $450.00 supplies fee that
is supposed to cover all items needed to complete the program of study. The following items
identified in the FPRD were added charges incurred by students: one student was charged for a
variety of items including, but not limited to, a watch, sweatshirt, scout master, tanning bed, T-
shirt, and unidentified "school items;" a second student was charged for a jacket, sweatshirt, T-
shirt, bag, watch, and unidentified "school items," and a third student was charged for
unidentified "supplies," sweatshirt, jacket, and a hairdo. As a result of these added charges,
Academy was required to reconstruct account cards for all affected students and provide copies
of original account cards for all students who attended Academy during the program review
period. Academy was also required to have this information attested to by a certified public
accountant. In a November 7, 1992, letter from Academy's certified public accountant, Froehle
and Co. (Froehle), to the Department, Froehle calculated the school's liabilities for this finding
based upon reconstructed records of Pell and FFEL recipients and the number of accounts
Academy failed to make available to Froehle.See
Froehle's review was to include an itemized list of non-educational charges to students'
account cards, however, the report submitted by Froehle
merely listed the total dollar amount of non-educational charges.
SFAP claims that Academy operated a wholesale/retail outlet selling assorted jewelry, clothing,
and tanning beds, and argues that charges for such items are not related to the students'
educational program. Academy argues that these charges were related to the program of study
and that the institution was advised by the Ohio State Loan Commission, a state guaranty
that it had to disburse monies as requested by their students if the items charged were related to
their program of study.
In an appeal of a finding in an FPRD, the institution has the burden of proving that the Title IV funds were lawfully disbursed. 34 C.F.R. § 668.116(d). I find that Academy failed to carry its
burden of proof in showing that the charges to the accounts were for educational expenses
connected with attendance at the institution. Academy submitted no proof that these charges
were required for the program of study; these charges were above and beyond the only charge
identified by the school in the enrollment contract as required for completion of the program. In
its request for review, Academy stated that some items were for the students' personal use or
were purchased in anticipation of the students' employment after completion of the
Academy also argues that it was advised by the Ohio Student Loan Commission that it must
disburse funds to students as they requested it so long as it was related to the program of study.
However, I find that this does not excuse the institution from meeting Title IV requirements and
Academy is responsible for the return of Tile IV funds disbursed for such purposes.
The Secretary has held that once an institution has established and published a valid satisfactory
academic progress policy, it must be applied. In Re Sinclair Community College,
Docket No. 89- 21-S, U.S. Dep't of Educ. (September 26, 1991) (Decision of the Secretary).
There is no dispute
between the parties regarding the satisfactory academic progress policy that should be used to
determine whether or not the students at issue were making satisfactory academic progress.
Academy asserts that of the students at issue, one changed her enrollment status from full-time to
part-time in September 1990; another was enrolled part-time from April 1991 through the
summer of 1991 and then was to begin a full-time schedule; and a third student changed from
full-time to half-time in July 1990. Therefore, according to Academy, these students were
maintaining satisfactory academic progress.
SFAP asserts that these students continued to be enrolled at Academy and receive Pell and FFEL
disbursements following the final probation period where their attendance fell below 66 percent.
SFAP maintains that even if the two students dropped to part-time, their attendance fell below 66
percent for three consecutive months and, therefore, the Academy did not apply its own
satisfactory progress policy to these students.See
For the third student, SFAP asserts that although the documentation purports to show this
student changed to part-time status in July 1990, his
attendance far exceeded the level for half-time attendance in August 1990, October 1990, and
November 1990. Thus, he should be considered full-time.
The record reveals that for two students, due to their drop from full-time to part-time schedules,
their attendance did not fall below 66 percent attendance for three consecutive evaluation periods
and, therefore, maintained satisfactory academic progress. SFAP has interpreted Academy's
satisfactory academic progress policy as being that if a part-time student falls below 66 percent
attendance for three consecutive months, the student is not making satisfactory academic
progress under the institution's policy. However, under Academy's policy, a student fails to
maintain satisfactory academic progress following the third evaluation period where the student
fell below 66 percent attendance. For less than full-time students, attendance is evaluated
bimonthly. Therefore, a less than full-time student would, in effect, have to attend less than 66
percent for six months before Academy would deem the student not to be making satisfactory
academic progress. Accordingly, I find that Academy has demonstrated that the two students
maintained satisfactory academic progress and were eligible to receive Title IV funds.
As for the third student, I find Academy's contention that this student became part-time is
unpersuasive. The record reveals that this student remained a full-time student with subsequent
monthly attendance levels well in excess of any reduced schedule and, therefore, I find he failed
to maintain satisfactory academic progress throughout the period at issue.
Academy concedes that its Dayton location was not eligible to disburse Title IV funds, and
admits a $5,600.00 liability for three of the students who attended the Dayton location.
However, Academy maintains that the remaining 12 students listed in the FPRD as having
attended the Dayton location actually attended the Middletown location. SFAP points out that
Academy's attendance records show that the remaining 12 students did attend the Dayton
location from December 1, 1991, to March 1992. Hence, SFAP has also recalculated Academy's
liability to include only the portion of Pell funds the students received while attending the
Dayton location rather than the entire Pell funds received by the students. The only question
before me is a factual dispute concerning whether the 12 students attended the Dayton location.
The evidence submitted by Academy to prove that these 12 students attended the Middletown
location is either irrelevant and/or does not contain information demonstrating that these students
attended a site other than the Dayton location. Attendance sheets submitted by SFAP in support
of this finding contain all of the students cited in FPRD and show that these students attended the
Dayton location. Therefore, I find that Academy remains liable for the recalculated amount of
Pell funds disbursed to students for the portion of their attendance at the Dayton location.
2. Academy improperly disbursed Pell and FFEL payments to one
student who was not
maintaining satisfactory academic progress.
3. Academy improperly disbursed Pell payments to students
attending the institution's
ineligible Dayton, Ohio location.
Ernest C. Canellos
Dated: March 22, 1996
A copy of the attached initial decision was sent by certified mail, return receipt requested to the
Beverly Jo Hembree
Academy of Hair Design
1230 Ellicott Drive
Middletown, Ohio 45044
Paul G. Freeborne, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110