As was demonstrated in last month’s article, the burden of proof rests with the institution when an institution appeals a Department of Education (DOE) finding against it. In the matter of Wright Business School (the “College”), Docket No. 00-56-SP, decision February 7, 2002, the College challenged a Student Financial Assistance Program (SFAP) Final Program Review Determination (FDRP) Finding of $151,950 alleging that the College improperly calculated refunds for students who had withdrawn from the College prior to completion of their respective programs.
The College is a private, non-profit institution offering courses leading to diplomas in a number of administrative fields. During the 1996-97 and 1997-98 award years, the College treated the cost of books and equipment purchased from its bookstore as non-institutional charges and, as a consequence, excluded their costs when it calculated the refunds due students who withdrew prior to completing their program.
The Parties were in agreement that the proper refund calculation in this case was the pro-rata refund as governed by 34 C.F.R. 668.22.
Factually, the College operated a bookstore at the school where students could purchase their required books. The College’s published book return policy was that once books were purchased and used, the books were not returnable. The College argued that the purchase of books from its bookstore was a convenience it offered its students, as the students had the option to purchase books from other local bookstores. The College argued that, in fact, some students did purchase their books from other bookstores, as well as from previous students.
The College further argued that its prices were competitive with these other outlets. In its support, the College submitted sworn statements from Admissions Counselors attesting to the fact that they advised students that they could purchase books from other sources. Also, the College claimed that it had contacted a member of SFA’s staff and received advice that its policy was allowable. In support of its position, the College provided written copies of SFAP?s advice to other schools in support of its position.
Finally, the College as serted that SFAP was relying on its definition of the term “assessed” and that SFAP’s interpretation of that term had been a changing and evolving one and therefore ambiguous prior to 1999.
SFAP asserted that such book charges were institutional charges that must be included when calculating refunds. In its presentation, SFAP insisted the College must prove that the student had a real and reasonable opportunity to purchase the books elsewhere and that such evidence must be included in the student’s file. SFAP pointed out that almost all of the students purchased their books from the school, concluding there was no real option available.
Judge Ernest C. Canellos, Chief Judge, reasoned that the question of whether the student had a real option as to where to purchase books was the primary question. The Judge concluded that the students did have a real option. He further concluded that, since the students retained the books they had purchased and had been properly informed of the book return policy, the book charges, then, were non-institutional charges and were not to be considered in the refund calculation. He relieved the College of its liability to repay the Department of Education the sum of $151,950.