Refunds & Unofficial Withdrawals

In March of 2001, the Office of Student Financial Assistance (SFAP) of the U.S. Department of Education (DOE) issued a Final Audit Determination Letter (FADL) alleging that Armstrong Atlantic State University of Savannah, Georgia (the “College”) had violated the Title IV regulations by failing to calculate refunds for students who unofficially withdrew from the College. As unofficial withdrawals are a problem at many institutions, this case report is illustrative of DOE’s position and how these issues are dealt with by the administrative law judges.

In the FADL, SFAP asserted that the College did not have a system in place to identify those student who unofficially withdrew from the institution. This would include students who either unofficially withdrew from classes or never attended any classes in the first place.

The College reviewed all awarded students for Award Year 1998-99 to identify student recipients for whom the College was unable to confirm attendance or who unofficially withdrew from the College but did not receive a refund. The College identified 41 students in those categories and admitted to liability totaling $14,009.00. The College objected to SFAP’s requirement that it review three award years for overpayments and omitted refund calculations. It did so by apparently asserting that three years was too far back in time, that some of the students attended off-campus classes and that the College was unable to contact certain professors in order to confirm attendance because those faculty members were no longer employed by the College.

SFAP argued that the College was responsible for overpayments and omitted refunds because it had no system in place for identifying unofficial withdrawals. SFAP apparently also asserted that the three year look back period was reasonable and that it was the College’s responsibility to confirm attendance and, absent a faculty member’s certification or some other certification, that the College was unable to confirm attendance.

Judge Richard I Slippen ruled in favor of SFAP on January 9, 2002. He reasoned that 34 C.F.R. §668.116(d) places the burden of proof squarely on the College. He noted that the College was unable to confirm attendance and, in fact, had admitted to some liabi lity. He concluded that neither the College’s inability to locate former faculty to confirm student attendance or the fact that students attended classes off-campus alleviated the College of its burden to confirm student attendance. He assessed liability in the amount requested by SFAP.