UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of Docket No. 98-21-SP
TEXAS COLLEGE, Student Financial
Respondent. PRCN: 199610612279
Appearances: William A. Blakey, Esq., Dean, Blakey & Moskowitz, Washington, D.C., for
Stephen M. Kraut, Esq., Office of the General Counsel, United States Department
of Education, Washington, D.C., for Student Financial Assistance Programs.
Before: Judge Richard F. O'Hair
SFAP's remaining finding found Texas College liable for failing to verify application
information submitted by students who applied for assistance under Title IV, HEA programs
during the 1992-93 and 1993-94 award years. After program reviewers discovered errors in eight
out of 30 sample student files, Texas College was ordered to perform a full file review to
determine which student files should have been verified. The institution did not conduct a full
file review; therefore, the FPRD assessed a liability of $1,169,819. Texas College appealed the
FPRD, arguing that although it conceded it had failed to verify student applications at the time of
SFAP's site visit, the subsequent Student Aid Reports (SARs) which it submitted to the
Department and which it used to reconstruct the students' files were sufficient to establish proper
verification of all student applications. Additionally, it claims that the adoption of new internal
management procedures and practices will ensure proper verification of Title IV, HEA funding in
Pursuant to 34 C.F.R. § 668.54 (1997), an institution must establish written policies and
procedures for verifying information contained in a student aid application. This verification
must be conducted at either the prerogative of the Secretary of Education, or because a student
application contains incorrect, missing, illogical, or inconsistent information. 34 C.F.R.
§§ 668.54, 668.56 (1997); Fisk University, Dkt. No. 94-216-SP, U.S. Dept. of Educ. (Oct. 5,
1995). Documents that include information on adjusted gross income, income tax paid, number
of family members, and untaxed income and benefits can satisfy the verification requirement.See footnote 1*
34 C.F.R. § 668.56 (1997); Monmouth County Vocational School, Dkt. No. 94-144-SP, U.S.
Dept.. of Educ. (April 21, 1995). Additionally, SFAP cannot require an institution to verify more
than 30 percent of its applicants for any award year. 20 U.S.C. § 1091(f); Leonard's Hollywood
Beauty School, Dkt. No. 95-131-SA, U.S. Dept. of Educ. (March 19, 1996).
Texas College has the burden of proving that it complied with the regulation's verification requirement. 34 C.F.R. § 668.116(d) (1997). To satisfy its burden, Texas College submitted Student Aid Reports (SARs) for the students in question for the 1992-93 and 1993-94 award years. However, SFAP is correct in pointing out that the SARs contain the information that needs to be verified, and cannot satisfy the verification requirement by itself. See The Verification Guide for the Federal Student Financial Aid Programs 1995-96 at 2-1. Consequently, I find that Texas College has failed to meet its burden of proving that its questioned disbursements were proper and that it complied with program requirements. Furthermore, while its commitment to perform all required verifications in the future is commendable, that is not sufficient to absolve the institution for past impropriety. In as much as Texas College could not have been required to verify more than 30 percent of its Title IV applicants for the award years in question, the college's liability is limited to a figure which represents 30 percent of the grants disbursed and 30 percent of the Department's estimated loss under the loan program for the 1992-93 and 1993-94 award years. SFAP has correctly assessed a liability of $1,169,819 against Texas College.
Judge Richard F. O'Hair
Dated: July 30, 1998
A copy of the attached initial decision was sent by certified mail, return receipt requested, to the
William A. Blakey, Esq.
Dean, Blakey and Moskowitz
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
Stephen M. Kraut, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110