UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
In the Matter of
Docket No. 98-4-SP
TRUCK DRIVING ACADEMY,
In its appeal of the FPRD, TDA focuses its challenge upon SFAP's decision to terminate
its eligibility. The institution argues that it should have been afforded a Subpart G termination
hearing because the denial of its recertification application deprives it of a fundamental property
interest. TDA also contends that it does in fact offer eligible graduate or professional programs,
that it cannot be categorized as undergraduate, that SFAP acted arbitrarily and capriciously in
the termination process, and that the Department retroactively applied its requirements.
SFAP responds that a truck driving school cannot claim to offer graduate or professional
programs within the meaning of the regulations, and that TDA should correctly have categorized
itself as an undergraduate institution. However, since its programs would not have met the
eligibility criteria for undergraduate training, SFAP claims that TDA's attempt to pass itself off
as a graduate institution is little more than a post hoc rationalization for its failure to fulfill the
clearly written regulatory standards. TDA's arguments against the termination decision are
ultimately misplaced, SFAP contends, because this tribunal does not have the authority to hear
these issues in a Subpart H proceeding.
SFAP argues that TDA appealed the FPRD pursuant to 34 C.F.R. § 668, Subpart H, and
therefore the institution may only challenge the imposition of liability, not the termination itself.
The Subpart H proceeding applies to any participating institution or third-party servicer that
appeals a final audit determination or final program review determination. 34 C.F.R.
§ 668.111(b). Accordingly, the regulations specifically state that Subpart H does not apply to proceedings governed by Subpart G. 34 C.F.R. § 668.111(c). As TDA appealed the November 19, 1997, FPRD in a timely fashion on December 19, 1997, and entitled its appeal as Request for Review of a Final Determination Letter, there can be little doubt that the institution was initiating a Subpart H proceeding. TDA's continued assertions that this tribunal has authority under Subpart G represent a misunderstanding of the applicable regulations.
The institution also argues that it has due process rights since the termination of its
eligibility denied it a fundamental property interest. The Department's refusal to recertify an
institution, however, does not constitute the kind of termination which TDA alleges requires full
due process. The institution cites Career College Ass'n v. Riley, which specifically distinguished
the due process rights necessary for provisional certification from those for termination, a
differentiation which does not support TDA's argument. 74 F.3d 1265 (D.C. Cir. 1996).
Although Career College addressed termination for excessive cohort default rates, it is worth
noting the court's statement that institutions subject to provisional certification . . . as initial or
renewal applications are not entitled to the notice and hearing and the appeal requirements. Such
applications are not 'participating' in a Title IV program and do not possess any current
'eligibility' that can be lost. Id., at 1274. As TDA itself notes, due process requirements for
provisional certification are minimal. The very process of applying for recertification suggests
that there is no 'entitlement' to certification or continued eligibility. Id.
For these reasons, TDA is only entitled to a Subpart H hearing. As jurisdictional authority under Subpart H is limited to the FPRD, this tribunal will make no judgment on the merits of SFAP's decision not to recertify TDA as an eligible institution. The sole issues before me in this proceeding concern SFAP's finding that TDA offered an ineligible program and its subsequent assessment of liability.
According to SFAP, no plausible reading of the applicable regulations would lead to a
definition of TDA's truck driving program as graduate or professional. TDA awarded Federal
Pell Grants to its students, although Pell Grants may only be awarded to students who have not
yet received a baccalaureate or professional degree. 34 C.F.R. § 690.75(a)(2). A graduate or
professional student is defined under 34 C.F.R. § 682.200(b) as one enrolled in a program above
the baccalaureate level or a program leading to a first professional degree. Such a student also
has completed at least three academic years of full-time study at an institution of higher
education and is not receiving Title IV aid as an undergraduate during the same period of
enrollment. Id. An undergraduate student, on the other hand, has not yet earned a baccalaureate
or first professional degree and is participating in an undergraduate course of study. 34 C.F.R. § 690.2. TDA not only stretches credulity by arguing that its truck driving program could fit
under these regulations as a graduate program, but it also conveniently ignores the 34 C.F.R. § 690.6 requirement that only undergraduate students may receive Pell Grants.
Furthermore, as TDA's programs are 16 weeks and 330 clock hours in length, SFAP
charges that the institution does not meet the length requirements necessary under 34 C.F.R.
§ 668.8(d)(1) for a vocational program to participate in the Federal Pell Grant program. Since the institution does not meet the requirements of a vocational or graduate training program, it must qualify under the only other remaining category_as a high-performing vocational program, which requires it to present evidence that it has completion and placement rates of at least 70%. TDA, however, failed to conduct a placement study to satisfy this requirement. Moreover, this category only applies to Federal Family Education Loan program participation, as such schools cannot receive Federal Pell Grants, which TDA did in fact receive. 34 C.F.R. § 668.8(d)(3), (f) and (g). SFAP argues that students may only be considered eligible to receive Title IV funds if the institution and its programs are eligible. In a Subpart H proceeding, the institution has the burden of proving that its disbursements of Title IV funds were proper, and SFAP asserts that TDA did not meet this burden. See 34 C.F.R. § 668.116(d).
TDA, on the other hand, claims that the Department's categorical determination is
unnecessarily rigid, that an institution can have programs of multiple designation. The
institution focuses on SFAP's assertion that it provides vocational, or undergraduate, training.
TDA argues that because it could not fulfill the threshold requirements for eligibility as an
undergraduate program, it must therefore not be an undergraduate program. This is a peculiar
leap of logic, for TDA's failure to meet the requirements of one category cannot be used to
prove that it does not belong in that category.See footnote 33 The institution asserts that it chose this
designation based on the plain language of the regulation, that it is clearly . . . a proprietary and
vocational school of higher education offering a professional program of study. (emphasis in
original) However, the institution does not explain why this is so obvious.
TDA seems to suggest that the definitions of undergraduate and graduate study and the
requirements included for each should be ignored in favor of a its good faith interpretation of
the regulations. The institution's acceptance of Pell Grants, however, negates this argument,
for § 690.6 is quite clear in stating that a student is eligible to receive a Federal Pell Grant for
the period of time required to complete his or her first undergraduate baccalaureate course of
study. TDA does not address the fact that it accepted Pell Grants, but it could not receive them
and yet be a graduate institution.
The regulations, when read as a whole, do not leave any doubt that TDA did not fulfill
the requirements of any of the three program categories. TDA cannot be a graduate or
professional program because the institution accepted Pell Grants; it cannot be a vocational
program because it does not fulfill the length requirements; and it cannot be a high-performing
vocational program because it failed to perform a placement study.
The institution makes a final argument that SFAP has retroactively applied its requirements. According to TDA, the application of the placement study requirement is arbitrary and capricious. TDA does not provide much support for this claim, however, aside from its from its assertions that this tribunal need not be deferential in the face of irrational administrative decisionmaking. As noted above, however, SFAP's attempt to categorize TDA into one of the three regulatory categories does not represent an abuse of discretion. An institution must only conduct a placement study if it wishes to fit within the high-performing vocational school category. Quite simply, TDA did not fulfill the requirements for any of the categories.
Although TDA did not articulate a clear argument for estoppel, the institution did
challenge SFAP's assessment that it is liable for retroactive sums. It is therefore worth noting
that the Department cannot be estopped from collecting misspent funds. SFAP is entitled to
repayment of Title IV funds if the institution was not eligible to receive those funds regardless of
the institution's good faith or lack of notice. In re Beth Jacob Hebrew Teachers College,
Docket No. 96-77-SP, U.S. Dep't of Educ. (March 17, 1997) at 4. Although it is not clear
whether TDA's original certification was the result of mistake or negligence, the Department
should never be precluded from enforcing its regulations, even though there may have been
gross negligence or a previous lapse in such enforcement. Id. at 5. See also In re Academia La
Danza Artes Del Hogar, Docket No. 90-31-SP, U.S. Dep't of Educ. (May 19, 1992), aff'd by
the Secretary (August 20, 1992) at 10. It is also worth noting again that the Department's
certification was only provisional. Therefore, I find that SFAP may recover all Title IV funds
expended by TDA during the 1995-96 and 1996-97 award years.
1. TDA did not fulfill the institutional eligibility requirements under 34 C.F.R. § 668.8.
2. TDA remains liable for all Title IV funds expended during the 1995-96 and 1996-97 award
On the basis of the foregoing, it is hereby ORDERED that Truck Driving Academy pay to the U.S. Department of Education the sum of $174,009.
Judge Richard I. Slippen
Dated: August 10, 1998
A copy of the attached initial decision was sent by certified mail, return receipt requested, to the
Charles P. Nemeth, Esq.
415 Kings Highway
Rosslyn Farms, PA 15106
Pamela Gault, Esq.
Office of the General Counsel
United States Department of Education
600 Independence Avenue, S.W.
Washington, D.C. 20202-2110