UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of
Docket No. 98-133-ST
DRAKE SCHOOL OF THE BRONX,
In November 1997, the Student Financial Assistance Programs (SFAP) notified
Respondent that its cohort default rate under the Federal Family Education Loan (FFEL) Program
for fiscal year (FY)1995 was 54.2 percent. As a result of Respondent's appeal to SFAP under the
procedures provided by 34 C.F.R. § 668.17(h) (1997), Respondent's final rate was reduced to
52.9 percent. On September 14, 1998, SFAP notified Respondent of its intent to terminate
Respondent's participation in all programs authorized under Title IV of the Higher Education Act
of 1965, as amended, based on Respondent's FFEL cohort default rate for FY 1995.See footnote 11
Respondent filed a timely request for hearing under 34 C.F.R. Part 668, Subpart G to challenge
the proposed termination.
As stated in my Order Governing Proceeding issued on October 13, 1998, under 34
C.F.R. § 668.90(a)(3)(iv) (1997), since Respondent's FY 1995 FFEL cohort default rate is above
40 percent, and it is a final rate arrived at by SFAP under 34 C.F.R. § 668.17, I must find that
the remedy proposed by SFAP _ i.e., termination _ is warranted. See Aladdin Beauty College
# 32, Docket No. 97-108-ST, U.S. Dept. of Educ. (Order of the Secretary, Aug. 20, 1998).
Respondent argues that its FY 1995 FFEL cohort default rate cannot be considered final since
SFAP failed to apply the correct legal standards and failed to exclude certain data from its
calculations. Respondent contends that I have the authority to review SFAP's final rate
determination and cites International Junior College, Docket No. 97-164-ST, U.S. Dept. of
Educ. (July 28, 1998) (on appeal to the Secretary) in support of its position. These arguments
were also raised in Westchester School of Beauty Culture, Docket No. 98-97-ST, U.S. Dept. of
Educ. (Oct. 27, 1998) (on appeal to the Secretary). For the reasons provided in Westchester, I
find these arguments unpersuasive.
Respondent also contends that the regulatory history of 34 C.F.R. § 668.90(a)(3)(iv)
supports its position that the SFAP final cohort default rate determination may be challenged in
a Subpart G proceeding. Respondent relies on language contained in the preamble to the
proposed regulation appearing in the Federal Register on September 1, 1995. This argument was
also raised in Hair Design Institute, Docket No. 97-122-ST, U.S. Dept. of Educ. (Aug. 5, 1998)
(on appeal to the Secretary). For the reasons provided in Hair Design, I reject this argument. As
noted in Hair Design, the language relied on by Respondent was interpreting language in the
proposed regulation which was eliminated when the regulation was published in final on
December 1, 1995.
Respondent also raises a number of other factors which it contends should be taken into
consideration before a decision is made on termination. Under section 668.90(a)(3)(iv), I have
no authority to consider such factors as mitigation and must order termination.See footnote 22
2. SFAP seeks an order terminating Respondent's eligibility to participate in all
programs authorized under Title IV of the Higher education Act of 1965, as amended.
Dated: March 8, 1999
Ronald L. Holt, Esq.
Watkins, Boulware, Lucas, Miner, Murphy & Taylor, LLP
Suite 600 Northpointe Tower
10220 N. Executive Hills Blvd.
Kansas City, Missouri 64153