Jordan v. Secretary of Education of the United States

                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

      Argued October 25, 1999    Decided November 16, 1999 

                           No. 99-5024

                        Renee M. Jordan, 
                            Appellant

                                v.

         Secretary of Education of the United States and 
                 Nebraska Student Loan Program, 
                            Appellees

          Appeal from the United States District Court 
                  for the District of Columbia 
                         (No. 97cv00876)

     Michael E. Tankersley argued the cause for appellant.  
With him on the briefs was Alan B. Morrison.

     Meredith Manning, Assistant U.S. Attorney, argued the 
cause for appellees.  With her on the brief were Wilma A. 
Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. 
Attorney.

     David Ober was on the brief for appellee Nebraska Student 
Loan Program.

     Before:  Silberman, Ginsburg, and Randolph, Circuit 
Judges.

     Opinon for the Court filed by Circuit Judge Silberman.

     Silberman, Circuit Judge:  Renee Jordan sought a dis-
charge of her federally guaranteed student loan because the 
vocational school she attended had falsely certified her ability 
to benefit from its training.  The holder of her loan refused, 
and the Secretary of Education denied her appeal, on grounds 
that she failed to satisfy a regulation that requires students 
seeking a discharge to demonstrate an inability to find a job.  
When Jordan sued the Secretary, the district court granted 
summary judgment against her.  We hold that the regulation 
is inconsistent with the governing statute, and thus reverse.

                                I.

     Under the Federal Family Education Loan Program, pri-
vate lenders make loans for "eligible borrowers" to attend 
"eligible" post-secondary institutions.  See 20 U.S.C. s 1071 
et seq.1  State and private guaranty agencies insure the loans, 
and the Secretary of Education reinsures the agencies.  Gen-
erally, eligible borrowers are those who have a high school 
diploma or a GED.  However, an individual without a diploma 
or GED may qualify to attend a vocational school if the school 
certifies that she has the "ability to benefit" from the training 
it provides.  Under s 1091(d), a student may demonstrate an 
ability to benefit in one of three ways:  (1) by earning a GED 
before graduation from the program or by the end of the first 
year of study;  (2) by being counseled before admission and 
completing a prescribed program of remedial education;  or 
(3) by passing "a nationally recognized, standardized or indus-
try developed test" that measures "the applicant's aptitude to 
complete successfully the program to which the applicant has 
applied."

__________
     1 We discuss the statute as it existed at the time of the events at 
issue in this case.  Congress has since made extensive changes to 
the statutory scheme.

     In 1992, in response to public concern about vocational 
schools that defrauded students by falsely certifying their 
ability to benefit and then providing them worthless training, 
Congress provided that if a "student's eligibility to borrow 
under this part was falsely certified by the eligible institution 
... then the Secretary shall discharge the borrower's liability 
on the loan."  20 U.S.C. s 1087(c)(1).  The agency holding 
the loan decides whether to grant a discharge, subject to 
review by the Secretary.  See 34 C.F.R. s 682.402(e).  A 
student must submit a written statement affirming that she 
was admitted to a school on the basis of ability to benefit but 
did not satisfy the ability to benefit requirements.  If the 
student completed the program, she also must state that she 
"made a reasonable attempt to obtain employment in the 
occupation for which the program was intended to provide 
training, and--(1) Was not able to find employment in that 
occupation;  or (2) Obtained employment in that occupation 
only after receiving additional training that was not provided 
by the school that certified the loan."  Section 
682.402(e)(3)(ii)(C).

     Jordan completed a six-month course at the National Busi-
ness School's Law Enforcement Academy (NBS) in the Dis-
trict of Columbia.  When she was admitted to the school in 
1987, she did not have a high school diploma or GED, and she 
did not meet the requirements of s 1091(d).  Nevertheless, 
NBS arranged for Jordan to obtain a guaranteed student 
loan.  Jordan's experience was apparently not unique:  an 
investigation by the Department of Education's Inspector 
General and the FBI revealed that the school admitted 
unqualified students by improperly administering entrance 
examinations, in some cases by giving students the answers.

     After her graduation from NBS, Jordan sought employ-
ment as a security officer.  She answered a newspaper adver-
tisement for security officers, but she was told that she would 
have to start at what she described as "an unacceptably low 
salary" because she lacked a high school degree.  The record 
is not entirely clear on whether Jordan was denied a position 
or was offered a position that she declined.  In any event, 
Jordan submitted a request for a discharge to the holder of 

her loan, the Nebraska Student Loan Program.  That agency 
denied her request, because she had been offered a job that 
she declined.  The holder also relied upon a policy statement 
issued by the Deputy Assistant Secretary stating that, absent 
"unusual circumstances," a guaranty agency could reasonably 
"consider three separate attempts by the student to find a 
job" persuasive evidence that the student had complied with 
34 C.F.R. s 682.402(e)(3)(ii)(C).  The Secretary denied Jor-
dan's appeal on the ground that she had been able to find 
employment but simply declined the job she was offered.

     Jordan then brought this action claiming that the subse-
quent employment conditions in the regulation exceeded the 
Secretary's authority under the statute.  The district court 
granted the Secretary's motion for summary judgment.  See 
Jordan v. Riley, 26 F. Supp. 2d 173 (D.D.C. 1998).  The court 
held that the regulation was a permissible interpretation of 
the ambiguity created by the undefined term "falsely certi-
fied."  For purposes of summary judgment, it assumed that 
Jordan had been denied a job, but it held that the regulatory 
requirement of "a reasonable attempt to obtain employment" 
could not be satisfied by only one unsuccessful attempt to find 
employment, because "[a] sample size of one is too small" for 
a student to demonstrate an inability to get a job.  Id. at 179.  
Jordan appealed.

                               II.

     Jordan contends that the regulation at issue is inconsistent 
with the statute and therefore fails the first step of the 
analysis in Chevron U.S.A. Inc. v. Natural Resources Defense 
Council, Inc., 467 U.S. 837 (1984).  The first part of the 
regulation, it is argued, simply mirrors the statutory require-
ment that the student has been admitted to a school on the 
basis of ability to benefit without actually satisfying the 
ability to benefit test.  The second part, however, demands 
that the student have made an unsuccessful effort to find 
employment.  This condition, appellant argues, is found no-
where in the statute, and for the Secretary to impose it is to 
violate the congressional command that he "shall discharge 

the borrower's liability" if statutory criteria are violated.  
Jordan also argues that, even if the regulation were valid, the 
district court erred in applying a three-attempt rule, because 
that rule was found only in a policy statement, and, in any 
event, the Secretary did not rely on it.

     The Secretary justifies the regulation by pointing out that 
the statute does not define the term "falsely certified."  He 
refers to the dictionary definition of "false" as "contrary to 
truth or fact" and reasons that "one way to determine wheth-
er Ms. Jordan's ability to benefit from security guard training 
was falsely certified in 1987 is to examine whether she in fact 
had the ability to benefit from that training," as measured by 
whether she subsequently found a job.  On his view, under 
Chevron the regulation is a reasonable interpretation of an 
ambiguous statute.

     Ambiguity, of course, "is a creature not of definitional 
possibilities but of statutory context."  Brown v. Gardner, 
513 U.S. 115, 118 (1994).  The Secretary ignores that context, 
for he overlooks that "ability to benefit" is defined in specific 
terms in the statute.  A school does not certify a student's 
general "ability" measured at the time of certification--still 
less as to be determined in the future.  Rather, it certifies 
that the student meets the particular conditions of s 1091(d).  
Because the school is never asked to certify (predict) that a 
student will find a job, a student's post-training employment 
experience is irrelevant to the truth or falsity of the certifica-
tion.  The Secretary appears to recognize as much, for anoth-
er provision of the same regulation already provides a defini-
tion of "falsely certified," one that is based solely on whether 
the student met the objective criteria for certification before 
being admitted.  See 34 C.F.R. s 682.402(e)(1)(i).

     In other words, the statutory scheme is designed to place 
obligations on schools, which must certify ability to benefit, 
and on the government, which must police schools to ensure 
that their certifications are accurate, or failing that must 
compensate defrauded students.  Under the regulation, a 
burden is shifted to the student:  she is obliged to seek a job 
before she may claim the benefit of a discharge.  Thus, the 

Secretary has done more than simply add an obligation that is 
not in the statute;  he has changed the nature of the statute.

     It would be absurd, the Secretary argues, to allow students 
to obtain discharges simply because of trivial technical defects 
in the tests that were used to measure their ability to benefit.  
So it would.  That proposition is not in dispute:  Jordan 
concedes that the Secretary could issue a regulation defining 
"falsely certified" in such a way as to exclude certifications 
that were defective because, for example, the student wrongly 
took a photocopied version of the test rather than the origi-
nal.  Indeed, the Secretary has already issued an interpretive 
policy statement to that effect.  The legality of a "harmless 
error" rule cannot justify this regulation, which has a policy 
objective far exceeding the statutory framework.

     Ultimately, the Secretary relies on a policy argument:  that 
students who gain the benefit of the training should not get a 
windfall by avoiding their loan obligations.2  He attempts to 
tie that policy objective to the legislative history.  He refers 
to a committee report indicating that Congress was concerned 
that students whose eligibility was falsely certified were "left 
without the skills needed to obtain employment and conse-
quently did not have the means to repay the loans."  H.R. 
Rep. No. 447, 102d Cong., 2d Sess. 52 (1992).  From this he 
infers that Congress intended to discharge the loans only of 
students who were unable to find employment.  We think 
that is an inference too far.  Be that as it may, the Secretary 
confuses the subjective intentions of the members of Con-
gress with the statute that Congress actually enacted.  Cf.  
Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 79 
(1998) ("[I]t is ultimately the provisions of our laws rather 
than the principal concerns of our legislators by which we are 
governed.").  The Secretary may not rewrite the statute, 
even if the enacting Congress might have approved of his 
efforts.

__________
     2 The Secretary's regulation has its own perverse consequence.  
Even if a student received zero training--let us say the school was 
a total sham--the student would be obliged to pay, if by dint of 
drive and good fortune he or she happened to get a job.

                             * * * *

     The judgment of the district court is reversed, and the case 
is remanded for further proceedings consistent with this 
opinion.

                                                      So ordered.