In the Matter of Docket No. 97-94-SP
BETH MEDRASH EEYUN HATALMUD, Student Financial
Respondent. PRCN: 199-32020021 ____________________________________
Beth Medrash Eeyun Hatalmud (BMEH) is a post-secondary institution located in Monsey, New York, which offers programs of rabbinical study in what is known as the Lithuanian tradition. It is accredited by the Accrediting Commission for Continuing Education and Training (ACCET), and was eligible to participate in the federal Pell Grant program authorized under Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C. § 1070 et seq. (Title IV). BMEH's eligibility to participate in the Pell Grant program was terminated on January 27, 1997, based on a finding that it failed to satisfy the statutory and regulatory definition of an eligible institution. In re Beth Medrash Eeyun Hatalmud, Docket No. 94-45-ST, U.S. Dept. of Educ. (Decision of the Secretary, January 27, 1997).
On May 7, 1997, the office of Student Financial Assistance Programs (SFAP), of the U.S. Department of Education (ED), issued a Final Program Review Determination (FPRD) which found that since BMEH's programs were ineligible to participate in the Pell Grant Program, all federal funds that had been disbursed to students in those ineligible programs from the inception of its participation in the Pell Grant Program in 1988, had to be refunded. As a consequence, SFAP demanded the return of $15,949,148. On June 27, 1997, BMEH filed an appeal and requested an administrative hearing in order to rebut the findings in the FPRD.
This action is the latest in a series of proceedings between the parties which involve the question
of BMEH's eligibility to participate in the federal student financial assistance programs. Two
issues were originally litigated in each of the previous proceedings: (1) was BMEH properly
accredited for Title IV purposes, and (2) did BMEH satisfy the definition of an eligible
institution.See footnote 11 The question regarding appropriate accreditation was resolved adversely to SFAP;
however, the second question persists and constitutes the basis for this proceeding.
To be eligible to participate in the Title IV programs, BMEH is required, inter alia, to offer not
less than a one-year program of training which prepares students for gainful employment in a
recognized occupation. 20 U.S.C. § 1141(a), 20 U.S.C. § 1088(c). BMEH has, throughout all
the proceedings, consistently claimed that its programs lead to such employment while SFAP
disputes that contention. The hearing official in the termination action involving BMEH
ultimately decided in his Decision Upon Remand that, although some students have found
employment as teachers in the field of Orthodox Jewish education . . . , these programs were
neither intended nor designed to prepare students for gainful employment in a recognized
occupation. In re Beth Medrash Eeyun Hatalmud, supra. Based on that conclusion, he
determined that BMEH did not meet the statutory definition of an eligible institution and, as a
consequence, its eligibility was terminated.See footnote 22 An application for a Temporary Restraining Order
was denied by the U. S. District Court for the Southern District of New York. Beth Medrash v.
Richard Riley, 97 Civ. 2035 (RO), (S.D.N.Y, April 30, 1997) (the Court granted ED's motion for
In the present action, SFAP reasons that since BMEH's programs have remained essentially
unchanged since it was first certified as eligible, it should have been ineligible to participate in
Title IV programs from the inception of its certification. Therefore, it argues, all federal funds
which were disbursed to its students were improperly spent and must be returned. BMEH, on the
other hand, urges that I determine that it does satisfy the eligibility criteria and it was, therefore,
improperly terminated. In the alternative, it posits that it is improper and unfair for SFAP to
recoup federal funds which the institution disbursed to students in a good faith belief that it was
eligible, and it is especially unfair to sanction this and other like institutions on the basis of an
apparent retroactive application of a changed interpretation by SFAP officials.
Although it might appear that the question before me is one of straightforward interpretation, it
becomes complicated by the fact that two hearing officials in two previous cases involving very
similar facts and the same controlling statute have issued conflicting decisions. In Academy for
Jewish Education, Docket No. 96-29-SP, U.S. Dep't of Educ. (August 23, 1996), the hearing
official found that it would be an abuse of discretion for ED to retroactively apply the result of
the termination case when SFAP sought to collect all the federal funds which were disbursed by
the school under a previously approved eligibility determination. On the other hand, in Beth
Jacob Hebrew Teachers College, Docket No. 96-77-SP, U.S. Dep't of Educ. (March 17, 1997),
the hearing official found that SFAP could recover all funds expended in the ineligible program
despite the delay in enforcement and the lack of intentional wrongdoing on the part of the
institution. Each of the decisions was appealed to the Secretary who, noting that the two needed
to be reconciled, remanded the Beth Jacob case to the hearing official for his further explanation.
The remand decision is pending.
I start my examination from the point of reference that BMEH is ineligible to participate in the
Title IV programs, effective on January 27, 1997.See footnote 33 Further, I find that since the relevant Title IV
provisions in question have remained essentially the same since the date that BMEH was first
certified as eligible to participate in the Title IV programs, had BMEH's programs been reviewed
originally under the current criteria, it would not have been granted eligibility recognition. Since
I have assumed these two as givens, the fundamental question is: what has changed, if anything,
in the intervening years to lead to two different results regarding BMEH's eligibility when
applying the same statutory provisions? An ancillary factor is what consideration should be
given to the fact that SFAP has admitted that BMEH has always made full disclosure of its
programs and, further, that it has no evidence of fraud or bad faith on the part of BMEH?
Two possible answers to my above query are readily apparent. First, it is possible that the
program official who first determined that BMEH was eligible made an error in applying the law
and, therefore, mistakenly approved BMEH's eligibility. Alternatively, it is possible that the
program official was correct in applying the then existing interpretation of the statute, but that the
interpretation has since changed. Given this situation, I must decide whether the statute and
regulations in question are clear and unambiguous and, if not, whether ED has effectively
interpreted the language in the past. In addition, an overriding question is, does it comport with
Due Process to seek to recover funds so many years after they were expended, especially when
there was never any attempt to do so during the intervening yearsSee footnote 44 and SFAP cannot, even today,
offer an explanation of why this occurred?
Were these provisions clear and susceptible to only one reasonable interpretation, my inquiry
would end because the answer to such a question would be that the program official made a
mistake when BMEH was certified as eligible.See footnote 55 But here, I am convinced that the provisions
which define an eligible institution, inter alia, as one which provides a program which prepares
students for gainful employment in a recognized occupation, are not so clear so as to foreclose
reasonable debate as to its meaning.
Having found that the authorities are, indeed, unclear and, therefore, subject to varying
interpretation, I must determine whether the provisions have been previously interpreted by ED
in a manner which would constitute effective and binding interpretive rulemaking. During the
course of this proceeding, neither party provided any direct evidence of such an interpretation of
the statute at any time prior to the initiation of the action in this and the others cited herein.
SFAP argues, not unexpectedly, but without reference to any document or other evidence of
record, that its currently espoused interpretation has always been the same. On the other hand,
BMEH evidences serious doubts that such interpretation has been consistently applied. In the
absence of any such direct evidence, I must resort to available circumstantial evidence to
ascertain the interpretation afforded the eligibility provisions.
I note as significant that SFAP changed its theory of the case in the termination action involving
BMEH. This provides me with some indication of an evolving change of interpretation. Also,
considering the well recognized theory of presumption of regularity, it is extremely difficult
for me to believe that during the intervening years, each and every decision-maker has been
mistaken when approving this and similar programs -- this would be the case if SFAP's
interpretation had been consistently applied throughout the period. As a consequence, I find that
SFAP has not previously effectively interpreted the language in issue.See footnote 66
Further, I must resolve the question of whether or not I should retroactively apply SFAP's
current interpretation. ED does not address an issue of retroactivity, rather, it acts as if the return
of the federal funds is a given. SFAP points out that since the decision to terminate BMEH was
based on a reasonable interpretation of the statute -- that decision acts as a collateral estoppel,
preventing a second litigation of the same issue in this case. Consequently, both the FPRD and
SFAP's brief assume that the finding that BMEH was not eligible to participate in the Title IV
programs automatically results in the authority to demand the return off all Title IV funding for
the entire period of BMEH's participation.
The regulations do not speak specifically to the issue of retroactivity. They do provide, however, that if ED believes that a previously designated educational institution or program no longer satisfies the relevant statutory or regulatory eligibility requirements, it may initiate a termination action. 34 C.F.R. § 600.41 (a) and (b). Once the action becomes final, the termination is then effective. 34 C.F.R. § 600.41(c)(2). There is one instance where the decision that an institution is ineligible may be applied retroactively. Under 34 C.F.R. § 600.40(c)(1), if an institution has been designated as eligible on the basis of inaccurate information or documentation, the Secretary's designation is void from the date the Secretary made the designation. No other provision relative to the retroactivity of a termination decision is made either in the statute or regulations.See footnote 77 If we follow the well known legal maxim of inclusio unius est exclusio alterius, we should presume that there are no other possible instances of retroactivity, otherwise, they would have been specifically provided for. Put another way, if BMEH had engaged in fraud or had provided misleading information during its eligibility process, its eligibility could be terminated ab initio. However, there is no evidence of such activity.
In summary, I conclude that absent any evidence of fraud or misleading information, and based
on the fact that the statutory provision and the regulations in question are subject to varying
interpretation, it would be unfair and impermissible, and possibly a violation of substantive due
process, to direct repayment of the amount in issue. This result is limited to the facts of this case
and, in situations where the loss of eligibility has been occasioned by other factors, such as the
failure to satisfy one of the absolute prerequisites for eligibility, a different rationale probably
Based on the foregoing findings of fact and conclusions of law, it is hereby ORDERED that Beth
Medrash Eeyun Hatalmud is relieved of any obligation to repay to the United States Department
of Education the sum of $15,949,148, as demanded by the FPRD.
Ernest C. Canellos, Chief Judge
Dated: June 16, 1998
On June 16, 1998, a copy of the initial decision was sent by certified mail, return receipt
requested to the following:
14 Fred Eller Drive
Monsey, New York 10952
Howard D. Sorensen, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110