UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of Docket No. 96-104-ST
SYRIT COMPUTER SCHOOL SYSTEMS, Student Financial Assistance
On August 2, 1996, the office of Student Financial Assistance Programs (SFAP), U.S. Department of Education (ED), issued a notice of its intent to terminate the eligibility of Syrit Computer School Systems (Syrit), located in Brooklyn, New York, to participate in the student financial assistance programs authorized under Title IV of the Higher Education Act of 1965, as amended (Title IV), 20 U.S.C. § 1070 et seq., and 42 U.S.C. § 2751 et seq.See footnote 11 In response to that notice, on August 20, 1996, the President of Syrit appealed and requested a hearing. The parties filed briefs, made evidentiary submissions, and, on March 19, 1997, I conducted an evidentiary hearing and oral argument in this matter.See footnote 22 A verbatim record was made at the hearing and a copy of the transcript was provided to each side. The parties filed timely post-hearing briefs, as authorized.
The present action had its genesis in a June 13, 1996, notice from the Accrediting
Commission of Career Schools and Colleges of Technology (ACCSCT) which reported that Syrit
had voluntarily withdrawn its accreditation status effective on June 5, 1996, while it was the
subject of a show-cause order.See footnote 33 Upon receipt of the notice, SFAP determined that under the
provisions of 34 C.F.R. § 600.11(c)(2), Syrit was no longer eligible to participate in the Title IV
programs, and could not reapply for eligibility to participate in those programs for 24 months.
SFAP's termination notice ensued. Syrit appealed and argued that even though it had resigned
from ACCSCT under circumstances as enumerated by SFAP, it should not be terminated because
ACCSCT was not its accrediting body at that time and, as a result, the provisions of 34 C.F.R.
§ 600.11(c)(2) are not applicable.See footnote 44
The parties generally agree that the following series of events occurred. In 1979, Syrit
became eligible to participate in the federal student financial assistance programs authorized
under Title IV as a private non-profit vocational school, accredited by ACCSCT. Sometime in
January 1992, Syrit applied to the New York State Board of Regents (Regents), the cognizant
agency in its home state, to become authorized as a degree-granting institutionSee footnote 55. The Regents did
not act upon the application by the time Syrit's current accreditation was about to expire. Faced
with that situation, Syrit chose to apply to ACCSCT for reaccreditation as a vocational school in
November 1994. For the same reason, Syrit applied to SFAP for recertification as a vocational
school in September 1995. In December 1995, ACCSCT notified Syrit that it had deferred action
on its request for reaccreditation until its April 1996 meeting because it was concerned about,
among other things, some aspects of Syrit's English as a Second Language (ESL) program and
wanted to accomplish an on-site visit. Syrit kept the Regents informed about ACCSCT's
concerns and forwarded to it all the correspondence relative to the issue. After considering such
concerns, on March 13, 1996, the Regents issued a Charter to Syrit accrediting it as Syrit
College, a degree-granting institution. Under New York law, all degree-granting institutions
must be accredited by the Regents. In contrast, ACCSCT is not authorized to accredit degree-
granting institutions anywhere. After some discussion with SFAP employees on how notice of
this change would be transmitted, on March 31, 1996, Syrit filed an amended application for
recertification in which it listed the New York Regents as its accrediting agency.
On May 21, 1996, ACCSCT issued its show-cause order and Syrit was faced with a
dilemma -- should it defend itself or, since it was then a degree-granting institution, should it
simply drop its ACCSCT accreditation. Syrit's President did not wish to drop its request for
ACCSCT reaccreditation until he was assured that SFAP had acknowledged that Syrit's
accrediting agency was now the New York Regents because he feared that he might lose Title IV
eligibility if there was any lapse in accreditation. Following a visit to SFAP by Syrit's
consultant, on May 30, 1996, a staff member of SFAP's Institutional Participation and Oversight
(IPOS) changed Syrit's listing of accrediting agency in SFAP's Post-Secondary Educational
Participant System (PSEP) and various offices within SFAP were notified of that change.
According to his testimony, the staff member entered the change in the PSEP database because
he was unaware of any requirement of any further review of the accrediting agency change.
Subsequently, as it now claims, Syrit resigned from ACCSCT on June 5, 1996, without the
knowledge that such an act could lead to its termination. After it received the termination notice,
Syrit approached ACCSCT in order to contest the show-cause directive; however, Syrit was
informed that since it had already resigned from ACCSCT, it would not consider the matter any
SFAP's position is quite straightforward -- Syrit resigned from ACCSCT, its accrediting
agency of record, while a show-cause order was in effect and SFAP asserts that, as consequence,
Syrit is ineligible to participate in Title IV. Further, SFAP posits that for an institution to
effectuate a change of accrediting agency, it must secure SFAP's approval.See footnote 66 Therefore, in spite
of Syrit's claim to the contrary, ACCSCT was Syrit's accreditor of record since SFAP had not
officially approved the change. SFAP believes that it was required to take termination action
without reference to or consideration of any other factor and, as a matter of fact, it did not
consider any other factor before issuing the termination notice. Clearly, SFAP, by its own
admission, did not consider whether Syrit had otherwise committed any other violations of Title
IV requirements in determining whether Syrit was the type of institution which Congress
believed would be a peril to the federal student financial assistance program. SFAP argues that it
has no discretion in this matter because Congress made loss of eligibility absolute under
circumstances similar to this case -- Congress sought to effectively eliminate abuses occasioned
when schools that are accredited by more than one accrediting agency are able to continue
eligibility despite the fact that one of its accrediting agencies had taken adverse action against
In support of its position, SFAP refers to the legislative history of the 1992
Reauthorization of the Higher Education Act, and quotes that:
Rather than constituting accreditation hopping, as envisioned in the discussion of the
Senate committee enumerated above, it appears to me that Syrit's actions in securing a new
accreditation first, then resigning from its former accreditation, fall squarely into the statutory
scheme which discourages multiple accreditations and requires institutions to justify any desire to
maintain such multiple accreditations.
Syrit's position is likewise straightforward -- when it resigned from ACCSCT, it did not know nor did it have any reason to know that it was threatening its Title IV eligibility. It had a new accreditation as a degree-granting institution, it had notified ED of the change of accrediting agencies which SFAP had acknowledged, and it believed that it was a waste of its resources to pursue the matter with ACCSCT. Once it was informed of the consequences of its resignation, however, it sought to reopen the matter, but ACCSCT refused. Syrit believes that if it had been afforded the opportunity to reopen the show-cause proceeding, it would have succeeded since it had successfully responded to a previous show cause order from ACCSCT, the ESL program had been substantially modified to satisfy ACCSCT's concerns, and those areas of concern were considered by the New York Regents in their exhaustive review.
This case exemplifies the well-known concept of Catch 22." Assuming, for the sake of
this discussion that SFAP is correct in that it has no discretion in this matter and that the
resignation while under a show-cause order automatically causes eligibility to be lost, then this
issue was irrevocably determined by Syrit's resignation. Syrit clearly did not intend to resign its
Title IV eligibility when it resigned from ACCSCT and argues that it certainly was not on notice
of that effect. When Syrit belatedly sought an opportunity to address the show-cause order, it
was denied by ACCSCT, even though a reading of both 20 U.S.C. § 1099b(j)(3) and 34 C.F.R.
§ 600.11(c)(2) indicates that such a right is inherently provided. The inability of anyone to alter
that effect raises serious due process considerations.See footnote 77 Further, the jurisdictional question of
whether ACCSCT could consider accreditation questions regarding Syrit, even if it wished to do
so, given that it is now a degree-granting institution, persists. That question inexorably leads to
the next -- whether ACCSCT, at the time it did so, had jurisdiction to issue an effective show
cause order against the degree-granting institution in the first instance.
Also implicated is the concept of action based on form over substance. SFAP's
assertion that it has absolutely no discretion in this area is quite puzzling. Courts have often
recognized a general presumption that an agency has absolute discretion not to take an
enforcement action. See Heckler v. Cheney, 470 U.S. 821 (1985); United States v. Batchelder,
442 U.S. 114 (1979); United States v. Nixon, 418 U.S. 683 (1974). Further, the presumption of
agency discretion can only be rebutted by clear statutory guidelines which preclude that
discretion. Although SFAP is charged with the obligation of upholding applicable statutes,
without the imposition of arbitrary discretion, the circumstances of this case do not seem to
contradict that interest. In fact, the governmental interest of ensuring that qualified programs do
not have their eligibility cut off without due consideration -- for the cutoff itself may close down
the school and deprive students of the educational opportunity the H.E.A. was designed to afford
them, would be furthered. Continental Training Services, Inc. v. Cavazos, 893 F.2d 877, 893
(7th Cir. 1990).
Congress enacted the provisions of 20 U.S.C. § 1099b(h), (i), and (j) to avoid the inherent dangers to the Title IV program caused by schools engaged in accreditation [s]hopping. Without doubt, any process which allows an institution to avoid the scrutiny of an accrediting agency by merely switching to another accrediting agency is deplorable and should be curtailed.
However, as indicated by the facts of this case, institutions do change accrediting agencies for
legitimate purposes and SFAP's claimed inability to distinguish between these two situations is
extremely troubling. I am confident that Congress did not intend that 20 U.S.C. § 1099b(j)(3)
would be applied to automatically remove the eligibility of an otherwise eligible institution
which had changed its accrediting agency because it was being elevated to a degree-granting
status after a prolonged review process; which had become accredited by an arm of the State of
New York; which had resigned from a previous accrediting agency while under a show cause
order when it did not realize that such action might jeopardize its status under Title IV; and
which was denied the opportunity to litigate the show cause order by the former accrediting
agency after it had requested the right to do so. Assuredly, ED has been endowed with discretion
when overseeing the federal student financial assistance programs and, except where such
discretion has been clearly circumscribed by statute, the degree of discretion is as expansive as
necessary to accomplish the purposes of the statute. To self-limit its authority and, thereby, fail
to avoid a clearly unexpected result, is even more troubling.
As for the procedures for terminating the eligibility of an institution to participate in the
Title IV programs, they are enumerated in 34 C.F.R. § 668, Subpart G. The Secretary may
terminate the eligibility of an institution if the institution violates any statutory or regulatory
provision applicable to Title IV. 34 C.F.R. § 668.86(a)(1). It is axiomatic that if an institution
loses its eligibility, it is subject to a termination action. In any termination proceeding, SFAP has
the burden of persuasion. 34 C.F.R. § 668.88(c)(2).
Syrit's evidence indicates that it has participated in the Title IV programs over time and
that it has always operated within program requirements. It has been audited during that period
with only minor writeups. SFAP did not contest that information and provided no evidence
which would indicate that Syrit was in violation of any Title IV regulatory requirements which
would otherwise be relevant to or support a termination action. My review of the record
convinces me that there is no other possible basis for the termination action against Syrit. As to
Syrit's alleged violation of 34 C.F.R. § 600.11(c)(2), I find that it is clearly erroneous to
terminate an institution on the basis of its resignation from its former accrediting agency:
- when that institution has become a degree-granting institution;
- when the former accrediting agency is not authorized to accredit such a degree-granting institution;
- when that institution is presently accredited by a nationally recognized accrediting agency which is required by state law to accredit degree-granting institutions in that state;
- when the institution was unaware of the fact that its resignation from its former accrediting agency could adversely affect its eligibility;
- when the former accrediting agency refused to consider its concerns, even though requested to do so by the institution; and
- where SFAP, the agency with jurisdiction over the matter, claims it has no discretion over this happening and takes no action, whatsoever, to attempt to ameliorate this situation other than to say gotcha and then institute automatic termination action.
If SFAP's actions were correct under the circumstances, it would exemplify why government is
often viewed by the public unfavorably and its operations are often viewed with suspicion.
I find as a matter of fact and law, that in enacting 20 U.S.C. § 1099b(j)(3), Congress
never intended that provision to be applied to situations such as that before me so as to affect the
eligibility of an institution which changed accrediting agencies for wholly legitimate educational
purposes, and which resigned from its former accrediting agency under a show-cause order as
was occasioned in the case of Syrit. I further find that SFAP impermissibly interpreted 34 C.F.R.
§ 600.11(c)(2) in this case in such a manner so as to read out the significance of the word its
when it claims that ACCSCT is still Syrit's accrediting agency -- it seems quite clear that SFAP
has, in effect, substituted the word any in its interpretation.See footnote 88 Under the unique circumstances
of this case, I find that Syrit's resignation from ACCSCT while its show-cause order was, by its
terms, still in effect, is not violative of the proscription imposed by the statute and regulation
cited above. Moreover, it does not support the imposition of the most serious form of sanction,
that of termination. As a consequence, I find that SFAP has failed to meet its statutory burden of
proof of showing that termination is appropriate. Because of the above determination, I need not
reach the Constitutional question of whether the statute and regulation, if applied as proposed by
SFAP, would violate the Fifth Amendment of the U. S. Constitution, as the taking of property
without due process of law.
On the basis of the foregoing findings of fact and conclusions of law, it is hereby
ORDERED that the eligibility of Syrit Computer School Systems to participate in the federal
student financial assistance programs not be terminated.
Ernest C. Canellos, Chief Judge
Dated: June 4, 1997
A copy of the attached initial decision was sent by certified mail, return receipt requested to the
Leigh M. Manasevit, Esq.
Michael Brustein, Esq.
Brustein & Manasevit
3105 South Street, N. W.
Washington, D.C., 20007
Howard D. Sorensen, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110
An institution may not be considered eligible for 24 months after it has withdrawn voluntarily from its accreditation or reaccreditation status under a show-cause or suspension order issued by an accrediting agency, unless that agency rescinds that order.