UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
Docket No. 98-148-SP
In the Matter of
MARSHALLTOWN COMMUNITY COLLEGE, Student Financial Assistance Proceeding
Appearances: Edward Jackson, Financial Aid Officer, Marshalltown Community College,
Marshalltown, Iowa, for Respondent.
Denise Morelli, Esq., Office of the General Counsel, U.S. Department of Education, Washington, D.C., for Student Financial Assistance Programs.
Specifically, SFAP determined that Marshalltown maintained excess cash balances
(Finding #1); that Marshalltown was unable to determine Title IV eligibility because it could not
demonstrate that students receiving Title IV funds had attended at least one day of class (Finding
# 2);See footnote 1 that Marshalltown was not properly making student refunds since it did not have a method
of determining a student's last day of attendance (Finding # 3);See footnote 2 that Marshalltown's refund
policy did not comply with the Title IV regulations and that a number of students were given
Federal loans prematurely (Finding # 4); that Marshalltown was not calculating refunds properly
(Finding # 5); that the promissory note for one student was not signed in violation of the
standards for the William D. Ford Federal Direct Student Loan Program (Finding # 8); and that
the electronic student aid report for one student was not signed (Finding # 9). The final program
review determination assessed liability as follows:
Finding # 2:
$ 510See footnote 3
Finding # 3 805
Finding # 4 78,115
Finding # 5 13
Finding # 8 4,000
Finding # 9 3,750
By letters dated November 3, 4, and 12, 1998, Marshalltown appealed all of the findings
in the final program review determination, and submitted documentation satisfactory to SFAP
concerning Finding # 8 and Finding # 9. See SFAP's brief, page 5, note 3. Although given the
opportunity, Marshalltown did not submit any additional documents or argument in support of its
position, but relied on its appeal letters and attachments.
With respect to Finding # 4, Marshalltown contends that six of the students (numbers 33,
57, 189, 258, 262,and 313) found by SFAP to have been prematurely awarded Title IV loans
were actually awarded loans after the requisite 30 days, and submitted the appropriate
documentation. In its brief, SFAP demonstrates that three of the six students (numbers 189, 262,
and 313) actually withdrew prior to reaching the thirtieth day of enrollment and, for that reason,
were not eligible. See SFAP brief, page 13. Marshalltown never responded to the SFAP brief.
SFAP accepts the documentation for the other three students, thus reducing the liability
determination for Finding # 4 by $2,640.
With respect to the remainder of Finding # 4, and to the additional findings which remain
in contention, Marshalltown makes no effort to dispute the SFAP factual determinations, but
simply argues that the regulations are complex, that it made a good faith effort to comply, and
that, consequently, the liabilities assessed under the findings should be waived.See footnote 4 Under the
procedural rules governing this proceeding, I cannot waive regulations. See 34 C.F.R.
§ 668.117(d) (1998). Even if I had that authority, I would not do so. The purpose of a program
review is not to access punishment or state that an institution is doing a good or bad job, but
simply to determine whether a participating school is in compliance with program requirements
and to seek a return of all Title IV funds not properly allocated. Schools participating in the Title
IV programs determine, in the first instance, which students are entitled to receive Federal grants
and loans. The schools then disburse the funds as fiduciaries for the Federal government. As
fiduciaries, participating schools are subject to the highest standard of care and diligence in
administering the Title IV programs and accounting for the funds. See 34 C.F.R. § 668.82 (1998).
The standards for the administration of the Title IV programs are established by Congress and
refined by the Department under regulations adopted pursuant to rulemaking proceedings. Thus,
if a school has not properly awarded Federal funds under these standards, it is not my place to
state that the funds, although improperly awarded, should not be returned. I agree that the rules
are complex. Notwithstanding, as fiduciaries, participating schools must ensure that they are
totally familiar with the rules and properly award and account for the funds. In a program review
appeal, such as the present case, the issue is not whether the participating school made a good
faith effort to comply with the rules, but simply whether it complied. Therefore, except for the
three students under Finding # 4, and for Findings # 8 and # 9, Marshalltown has not meet its
burden of proving that the expenditures questioned by SFAP were proper and in accordance with
program requirements. See 34 C.F.R. § 668.116(d) (1998).
Finding # 2
Finding # 3 $ 805
Finding # 4 $75,475
Finding # 5 $ 13
It is FURTHER ORDERED that Marshalltown repay $7,105 to the school's Federal Perkins Loan Fund, as specified in Finding # 4 of the final program review determination.
Frank K. Krueger, Jr.
Dated: May 27, 1999
Denise Morelli, Esq.
Office of the General Counsel
U.S. Department of Education
400 Maryland Ave., SW
Washington, DC 20202-2110