UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of Docket No. 96-138-SP
KELSEY-JENNEY COLLEGE, Student Financial Assistance Proceeding
____________________________________ PRCN: 199510900003
On September 10, 1996, the Office of Student Financial Assistance Programs (SFAP) of the U.S. Department of Education (Department) issued a final program review determination (FPRD) finding that Kelsey-Jenney College (KJC) violated several regulations promulgated pursuant to Title IV of the Higher Education Act of 1965, as amended (HEA). 20 U.S.C. § 1070 et seq. and 42 U.S.C. § 2751 et seq.
The FPRD contains two findings against KJC, of which the institution only challenges
one.See footnote 11 KJC challenges SFAP's finding that it awarded and disbursed Title IV funds to students
who violated KJC's attendance policy and thus, were ineligible to receive Title IV funds.See footnote 22 As
directed by SFAP, KJC reconstructed its attendance records for the 1992-1993 award year. KJC
then reviewed a statistical sample of 291 students. SFAP projected liabilities to a universe of
988 students. Initially, SFAP assessed liability in the following amounts: Pell Grant Program:
$83,591.18; Supplemental Educational Opportunity Grant Program: $509.27; and the Federal
Family Education Loan (FFEL) Program: $62,674 for a total of $146,774.45. In its brief, SFAP
reduced the liability by $6,462.67, which reflects an amount already paid by KJC. SFAP further
reduced the liability by $31,409.78 for students who attended the institution's El Centro campus
whose attendance records were later produced by KJC. Currently, SFAP seeks $108,902 in
According to KJC's attendance policy, students who are absent for eight consecutive
days will automatically be withdrawn from the institution.See footnote 33 SFAP argues that KJC disbursed
Title IV funds to students who should not have been enrolled according to KJC's published
attendance policy. SFAP argues that the language of the policy itself indicates that the
institution did not have discretion in determining whether a student would be withdrawn after
being absent for eight consecutive days.
KJC presents several arguments as to why liability should not be assessed or that it be
reduced. First, KJC argues that SFAP's reasoning that the students who were absent eight
consecutive days necessarily made them ineligible to receive Title IV funds under 34 C.F.R.
§ 668.7(a) (1991) is flawed. Second, KJC argues that it has the right to make exceptions to its own rules and it reserved such a right in its catalog. Third, KJC argues that its students are enrolled based on quarterly enrollment contracts. Therefore, according to KJC, students who became ineligible due to excessive absences could become eligible again merely by re- enrolling in the next quarter, since this constituted a new enrollment contract. Fourth, KJC argues that it is not required to maintain an attendance policy and that the institution does so voluntarily.
To be eligible to receive Title IV funds, a student must maintain satisfactory academic
progress in his or her course of study. 20 U.S.C. § 1091(a)(2) and 34 C.F.R. § 668.7(a)(5) and
(c) (1991). An institution must establish, publish, and apply reasonable standards for measuring
satisfactory academic progress. 34 C.F.R. § 668.14(e) (1991). A determination of
reasonableness includes the consistent application of the satisfactory academic progress
standards. 34 C.F.R. § 668.14(e) (1991).
Consistent with its obligation under 34 C.F.R § 668.14(e), an institution is required to
consistently enforce its own attendance policy so long as it is reasonable. In re Mountain States
Technical Institute, Docket No. 93-60-SP, U.S. Dep't of Educ. (September 16, 1993) at 7. In
Mountain States, the institution had a policy whereby students were required to maintain a 90
percent attendance rate during a phase (i.e. a period of approximately 11 days). Id. at 4.
Although the tribunal acknowledged that neither the Department nor the accrediting agency
required a 90 percent standard, this did not mean that the institution was not required to
consistently apply its own reasonable standards. Id. This tribunal has found that where an
institution has disbursed Title IV funds to students who violated its published attendance policy
(i.e. quantitative standard for measuring satisfactory academic progress), the institution is liable
for the Title IV funds disbursed to these students. In re Indiana Barber/Stylist College, Docket
No. 94-111-SP, U.S. Dep't of Educ. (March 23, 1995).
The language of KJC's policy is clear: students absent eight consecutive days will be
withdrawn from the college. KJC argues that this policy is not as it appears in its catalog. KJC
points to language in its catalog that it asserts contemplates counseling by the Dean's staff and
permits exceptions by the Dean.See footnote 44 KJC states that during 1992, its policy was to allow the Dean's
Office, in concert with the respective faculty, to use their professional judgment to determine if
the student could successfully continue in their classes given the consecutive absences before
implementing the policy of automatic withdrawal.See footnote 55 Further, KJC states that based on the
professional judgment of the faculty and Dean's Office, some students were allowed to continue
in classes after eight consecutive absences. Additionally, KJC points out that a later edition of
the institution's catalog added the word may to reflect its right to make exceptions to its
automatic withdrawal policy.See footnote 66 KJC next argues that its policy permitting leaves of absence
under certain circumstances further evidences the institution's flexibility in implementing its
attendance policy.See footnote 77
This tribunal has consistently held that an institution is required to apply its policies,
namely policies relating to a students' eligibility, as published. In re Sinclair Community
College, Docket No. 89-21-S, U.S. Dep't of Educ. (September 26, 1991) (Decision of the
Secretary); In re Santa Clara Beauty College, Docket No. 94-24-SP, U.S. Dep't of Educ.
(November 14, 1994); In re Bryant & Stratton Business Institute, Docket No. 94-190-SA, U.S.
Dep't of Educ. (September 16, 1996). KJC's explanation of how individualized judgements
and/or unwritten standards were used to determine if its clearly articulated attendance policy
would be enforced demonstrates that the institution failed to apply its policy as written. Further,
the language in KJC's catalog that contemplates counseling only applies to students whose
attendance would subject them to probationary status. Under KJC's policy, students are
automatically withdrawn from the institution once they accrue eight consecutive absences, they
are not placed on probation.
An institution is also required to publish its satisfactory academic progress policy under 34 C.F.R. § 668.14(e) (1991). This tribunal has held that the regulation's use of the word publish requires that the institution make known all of the required elements of its satisfactory academic progress policy. In re Chicago State University, Docket No. 94-172-SA, U.S. Dep't of Educ. (April 26, 1996); In re Santa Clara Beauty College. KJC admits that it used non- published standards in order to determine if its policy of automatic withdrawal would be applied. KJC's admission that it used non-published standards violates the requirement that an institution publish its satisfactory academic progress policy.
Further, KJC's argument that it was not regulatorily required to apply its attendance
policy is rejected. KJC cites In re Southeastern University, Docket No. 92-102-SA, U.S. Dep't
of Educ. (November 13, 1995), in which the tribunal held that an institution could not be held
liable for failing to maintain copies of its students' high school diplomas in order to demonstrate
that its students were high school graduates. The tribunal found that the regulations only require
than an institution document that its students were high school graduates but it did not specify
what type of documentation was needed. Id. at 4. The tribunal's finding in Southeastern
University is inapplicable here because Southeastern University's failure to follow its own
procedures did not violate any Title IV program requirement. Conversely, KJC's failure to
follow its attendance policy, although it was developed by KJC, does rise to the level of a
violation of a Title IV program requirement. In the instant proceeding, KJC was required to
comply with the regulatory requirements that it establish, publish, and consistently apply its
chosen attendance policy because that policy was a measure of satisfactory academic progress as
required by 34 C.F.R. §§ 668.7(a)(5), (a)(7) and 668.14(e) (1991). Therefore, KJC's failure to
apply this policy during the program review period resulted in disbursement of Title IV funds to
students who were not enrolled under KJC's own quantitative standards.
KJC's contention that its students have quarterly enrollment contracts that allow those students that did not maintain the required attendance rate to re-enroll for the next quarter and thereby be eligible to receive Title IV funds is not persuasive. KJC's own evidence to support its argument demonstrates that its enrollment contracts were entered into on the basis of an entire academic program and not quarterly. Moreover, the record indicates that its students were admitted into several academic programs of various lengths that apparently spanned several quarters.See footnote 88
Finally, KJC argues that the liability assessed against it in the FPRD is excessive for two
reasons. First, KJC states that the liability should be reduced because some of its students
returned to the institution after accruing eight consecutive absences. I do not find KJC's
evidence regarding a proposed reduction in liability due to the fact that some of its students
returned to the institution persuasive. The amounts identified in KJC's Initial Brief cite three
different exhibits regarding two different categories of students: students who returned during
the same quarter in which the absences occurred and students who returned in a subsequent
quarter.See footnote 99 In fact, these exhibits cite a number of the same students in each exhibit and it appears
that KJC may have counted the Title IV funds more than once in computing its reduced liability.
Therefore, I find that KJC has failed to meet its burden under 34 C.F.R. § 668.116(d) in
demonstrating that a reduced liability would be warranted.
Second, KJC asserts that the estimated loss liability should be reduced in light of KJC's
assertion that the Department is overall able to collect approximately 30 percent of all defaulted
FFEL Program loans. The estimated loss formula does not represent a windfall to the
Department. The estimated loss formula has been adopted as a fair method of calculating the
extent of the Department's losses when an institution has violated Title IV program
requirements. See In re Christian Brothers University, Docket No. 96-4-SP, U.S. Dep't of Educ.
(January 8, 1997) at 2. The estimated loss formula has also been used in cases involving
violations similar to the one at issue in the instant proceeding. Id. at 3. Therefore, I do not find
KJC's assertion relevant to this tribunal's long-held determination that the estimated loss
formula is a reasonable method of calculating SFAP's loss due to an institution's improper
disbursement of FFEL loans.
Judge Richard I. Slippen
Dated: May 1, 1998
A copy of the attached initial decision was sent by certified mail, return receipt requested to the
Peter S. Leyton, Esq.
Ritzert & Leyton
10387 Main Street
Fairfax, VA 22030
Alexandra Gil-Montero, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110