Decision of the Secretary: CollegeAmerica Denver
This is why administrative law defense can really stink sometimes. This is the original, unexpurgated, no-holds-barred version of my article, which may end up being published in Career Education Review in a toned-down version sometime in Summer 2009. I owe it to you to give you access to the original. GB
Secretary’s Decision in CollegeAmerica-Denver Case
We don’t need no stinkin’ regulations: If we say it, it’s a rule.
Glenn Bogart, J.D.
Glenn Bogart Compliance, Inc.
Faithful readers will recall there was a ray of sunshine for schools when Administrative Judge Richard F. O’Hair published his initial decision in the CollegeAmerica – Denver case two years ago. Judge O’Hair held that Federal Student Aid could not modify or supplant ED regulations by the expedient of publishing a Dear Colleague Letter setting forth more onerous requirements than those set forth by regulation.
That initial decision was published April 3, 2007. http://www.ed-oha.org/cases/2006-24-SP.pdf
Now, more than two years later, the new Secretary of Education, Arne Duncan, has ruled on ED’s appeal. Former Secretary Margaret Spellings evidently was too busy cutting ribbons to deal with the matter before she headed back to Texas. But new Secretary Duncan wasted little time before eviscerating federal student aid legal doctrine that had been in place for a generation. Here is the Secretary’s decision, dated May 5, 2009. http://www.ed-oha.org/secretarycases/2006-24-SP.pdf
Up until now, and going back for many, many years, federal regulations, duly promulgated under law, constituted the rules by which both schools and the U.S. Department of Education must live. Dear Colleague Letters and the Federal Student Aid Handbook, however, had something less in status. These latter pronouncements existed as mere guidance, which schools could follow and if they did so, there was safe harbor in doing so. But the regulations, always, trumped these policy statements, in the event of conflict. This afforded schools some defense against overly-aggressive policy pronouncements by ED.
To some extent, the doctrine still exists, but the Secretary’s decision in CollegeAmerica-Denver certainly lessens the protection schools have.
At issue in this case was a Dear Colleague Letter which stated that schools that are required to take attendance by their state licensing agency or accrediting agency should determine that a student has withdrawn within 14 days of the last date of attendance, if the student does not actually tell the school that he or she is withdrawing, but rather, simply stops attending. It was stated as an “expectation” of ED in the DCL. This contrradicted (in my view, at least) a federal regulation which states that schools (whether they’re required to take attendance or not) must withdraw these “disappearing students” as soon as possible, but no later than 30 days after the end of the term, payment period, or academic year, as applicable.
Judge O’Hair decided that a Dear Colleague Letter could not trump the regulation, and that ED could not impose interest liabilities on a school simply for failing to make the withdrawal determination within 14 days of the last date of attendance. The regulation says it must be done no later than 30 days after the end of the term or payment period, and, according to this judge, no earlier deadline may be set by means of a policy pronouncement like a Dear Colleague Letter.
Secretary Duncan disagrees. In fact, in his decision he refers to the 14-day guidance in the Dear Colleague Letter as a “rule,” believe it or not. Evidently, the man either doesn’t know the difference between a properly promulgated federal regulation and a Dear Colleague Letter, or doesn’t care. They’re all “rules,” as far as he’s concerned.
I don’t know who actually writes these decisions of the Secretary. You can tell from the language that it was a lawyer (and Mr. Duncan is not a lawyer). Some anonymous lawyer served up this exercise in “empathy” for the writers of Dear Colleague Letters, who prefer writing these edicts to going through the legally required rulemaking process, and the Secretary said, “Sure, I’ll sign that.” That’s what happened, I promise you.
I should point out here that some attempt is made in the decision to reconcile it with prior case law. It’s lame. Really lame. The prior case law (Baytown Technical Institute) made it clear that policy pronouncements can’t supplant the regulations. The person who wrote the Secretary’s decision in CollegeAmerica paid lip service to the Baytown case, but that’s all. He might as well have just said that Baytown is good law only if FSA goes along with it.
He also indicated that there could be cases where a school could demonstrate that a 14-day deadline for determining withdrawal might be absurdly unrealistic, but since CollegeAmerica was able to do that on a few occasions, this demonstrates, according to the Secretary, that the school should always be able to do it.
Well, heck, if I can hit the basket from 20 feet sometimes, then certainly it must follow that I can, if I would just try a little harder, hit every three-pointer I try, right? Nice work, Arne and anonymous lawyer who writes his opinions. Great logic. And coincidentally, intellectually dishonest to the max.
Oh, I also argued that the final program review determination was null and void because it did not make reference to any regulation that was in any way related to the alleged violation. I did, however, figure out that what they were really trying to do was to enforce that Dear Colleague Letter as if it were a regulation. Since I did that, and argued the case “vigorously” according to the Secretary, there was no need for FSA actually to cite a regulation that was violated. So much for the Constitutionally-mandated notice requirement. I had to guess what they were driving at in the FPRD, and since I guessed correctly, there’s no harm, according to Secretary Duncan.
Naturally, the Secretary ignored my argument pointing out that an earlier Dear Colleague Letter had set a 7-day deadline, but after much complaining by the DuPont Circle crowd, ED changed it to 14 days – thus proving the arbitrariness of the deadline – which, again, contradicts what is in the regulations, either way. Not worth mentioning, I guess, according to Secretary Duncan.
Anyway, the state of the law right now as to when a school that is required to take attendance must drop a disappearing student is that you’d better not do one in 14 days unless you do all of them in 14 days. According to the Secretary, the fact that a school can hit that target once in awhile proves that the 14-day requirement is reasonable, and in cases where a school doesn’t hit that target, interest penalties can be imposed.
If interest penalties can be imposed under these circumstances, termination or revocation of certification for this “violation” cannot be far behind – not just for “violating” this particular Dear Colleague Letter advice, but for running afoul of anything contained in a Dear Colleague Letter. “Expectations” that are pronounced in a DCL now have the force of law, evidently. Apparently the Department of Education can now regulate without bothering to issue regulations. Pretty darned convenient, for them. Not so wonderful for us.