Beth Rochel Seminary v. Bennett

The Higher Education Act of 1965 (the act) mandated that institutions seeking federal financial student aid either receive or be on the verge of receiving accreditation, or alternatively, that credits earned by its students were accepted, upon transfer and enrollment, by at least three accredited institutions. Beth Rochel Seminary (Beth Rochel) (plaintiff), a nonprofit seminary for Jewish women, applied for financial aid after three accredited institutions agreed to accept Beth Rochel students and offer them transfer credit. The United States Department of Education (the department) initially approved the request and awarded Beth Rochel $52,268 in federal funds, which Beth Rochel disbursed to students. A letter sent by the department stated that Beth Rochel remained eligible for three years, but only while it continued to meet all requirements. The department contacted one of the three universities and was informed that, although transfer credit was offered to Beth Rochel students, no Beth Rochel students had actually registered for courses. Based on that information, the department informed Beth Rochel that it no longer met the statutory requirements for financial aid, and that it had never been eligible in the first place. The letter also requested return of the $52,268. The department’s decision was based on its interpretation of the act as requiring that some students, upon a determination that they are eligible for transfer credit, actually enroll at the accredited institution. Beth Rochel filed a complaint in district court seeking review of the department’s decision. Beth Rochel contended that the department’s interpretation of the act was unreasonable, and that it should be eligible for financial aid solely on the basis of three accredited institutions agreeing to accept and award credit to transfer students. The district court disagreed and granted summary judgment for the department. Beth Rochel appealed, arguing that the department’s reversal amounted to a change in policy.