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May 1, 1981

Terrel H. BELL, Secretary of Education et al., Defendants

The opinion of the court was delivered by: PENN


The plaintiff, a medical school located in St. George's, Grenada, West Indies, filed this action for declaratory and injunctive relief and seeks an order requiring the defendants *fn1" to grant plaintiff's application for eligibility to participate in the Guaranteed Student Loan Program (GSLP) provided for under the Higher Education Act of 1965 (Act), as amended, 20 U.S.C. § 1071 et seq. Plaintiff also seeks injunctive relief to redress defendants' alleged improper withdrawal of and refusal to reinstate such eligibility from 1977 to the date of the complaint.

 The case is before the Court on plaintiff's motion for partial summary judgment and defendants' motion for summary judgment. There are no outstanding issues of genuine fact in the case.


 The plaintiff began operating as a medical school on January 17, 1977. Plaintiff had been advised by letters dated October 18, 1976 and March 3, 1977, that it "(had) been determined to be an "eligible institution' to apply for participation in the Guaranteed Student Loan Program established by the Higher Education Act of 1965, as amended". Compl.Exs. I and II. *fn2" Plaintiff was thereafter notified on July 7, 1977, that it was ineligible. The grounds for this determination were as follows: (1) Plaintiff had not applied for and been accepted for membership in the Association of Commonwealth Universities, and (2) plaintiff was a school operated for profit. Compl.Ex. III. The definition of a "institution for higher education" requires among other things, that the institution "is accredited by a nationally recognized accrediting agency or association", 20 U.S.C. § 1085(b)(5), and "is a public or other nonprofit institution", 20 U.S.C. § 1085(b)(4).

 Plaintiff was advised that, since it was a proprietary institution and thus fell without the definition of an institution for higher education, it could nevertheless attempt to qualify as a "vocational school". Compl.Ex. III. To qualify as a vocational school, plaintiff is required to demonstrate that it is comparable to a vocational school, and that "it has been in existence for two years or has been specially accredited by the Secretary as an institution meeting the other requirements (of the Act)". 20 U.S.C. § 1085(c)(3). Obviously, plaintiff could not meet those conditions in 1977 since it only began operating in January of that year.

 On December 14, 1978, the plaintiff reapplied for a determination of eligibility effective January 17, 1979, the date of its second anniversary. The defendants had not replied to the application at the time this action was filed. Thereafter, the defendants denied the application. However, on April 23, 1979, four days before the action was filed, the agency published a Notice of Proposed Rulemaking (NPRM) 44 Fed.Reg. 23888-23889, which would require that the institution demonstrate that 95% of its graduates, who were citizens of the United States and who had taken the examination of the Educational Commission for Foreign Medical Graduates (ECFMG), have passed that examination. Furthermore, the proposed rule would require that a foreign medical school have graduated two classes before it is able to qualify for participation in the program.

 The genesis of the proposed rule was that, up to about the time plaintiff applied for the GSLP, the defendants had not established a system for accreditation for foreign students. See Ross Aff. PP 3-5. *fn3" The criteria set forth in the proposed order was based upon the determination that "at least 95 percent of the graduates of any U.S. medical school taking the ECFMG examination for certification purposes would pass the examination on the first attempt". The defendants determined that this should be based upon the performance of two graduating classes. The NPRM noted that "(t)his comparability test establishes a comparable likelihood the GSLP loans will be repaid". *fn4"

 The NPRM also noted that the approval of foreign medical schools for the GSLP in the past, had been on an ad hoc basis "because most of them enrolled very few American students". The need for the regulation is the fact that the number of American students attending foreign medical schools has increased, resulting in an increased number of applications for participation in the GSLP.

 The Court understands that the proposed rule has not yet been promulgated and that there is a virtual moratorium on all applications.

 The defendants have denied the plaintiff's application on the grounds that plaintiff has not yet had two graduating classes. *fn5" And, as an obvious consequence, plaintiff has not had 95 percent of its American students take and pass the ECFMG examination. *fn6"


 Plaintiff seeks to have the Court reinstate plaintiff for participation in the GLSP, retroactive from 1977 to the date of the filing of the complaint, April 27, 1979. This request is without merit and must be rejected for several reasons.

 First, as already noted, plaintiff has mischaracterized the letters which purportedly advised plaintiff that it was eligible for participation in the GSLP. The two letters cited by plaintiff, Compl.Exs. I and II, merely state that plaintiff is an "eligible institution" to "apply" for participation in the GSLP. Neither letter states that plaintiff is eligible for the GSLP. The letters reflect only a notice of plaintiff's "threshold eligibility" to apply for participation in the GSLP. See Ross Aff. P 7. Thereafter additional information came to the attention of the defendants which caused them to withdraw even the notification of threshold eligibility. See Ross Aff. PP 8-12. It also came to the attention of the defendants ...

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