Cleland v. National College of Business

• Decision Date: 20 March 1978
• Docket Number: No. 77-716,77-716
• Citation: 55 L.Ed.2d 225,435 U.S. 213,98 S.Ct. 1024
• Parties: Max CLELAND, Administrator of the Veterans Administration, et al. v. NATIONAL COLLEGE OF BUSINESS
• Court: U.S. Supreme Court

435 U.S. 213

98 S.Ct. 1024

55 L.Ed.2d 225

Max CLELAND, Administrator of the Veterans Administration, et al.

v NATIONAL COLLEGE OF BUSINESS.

No. 77-716.

March 20, 1978.

PER CURIAM.

The question presented is whether the Due Process Clause of the Fifth Amendment prohibits Congress from restricting the educational courses for which veterans' benefits are available under the GI Bill ¹ without including identical course limitations in other federal educational assistance programs.

A veteran seeking educational assistance benefits must file an application with the Administrator of the Veterans' Administration. Before approving the application, the Administrator must determine whether the veteran's proposed educational program satisfies various requirements, including the so-called 85-15 requirement and the two-year rule.

The 85-15 requirement requires the Administrator to disapprove an application if the veteran enrolls in a course in which more than 85% of the students "are having all or part of their tuition, fees, or other charges paid to or for them by the educational institution, by the Veterans' Administration . . . and/or by grants from any Federal agency." ² The Administrator, however, may waive the requirement if he determines that it would be in the interest of both the veteran and the Federal Government.

The two-year rule requires the Administrator to disapprove the enrollment of an eligible veteran in a course that has been offered by a covered educational institution for less than two years. The rule applies to courses offered at branches and extensions of proprietary educational institutions located beyond the normal commuting distance of the institution.³

Appellee National College of Business is a proprietary edu- cational institution which has extension programs in several States. Most of its courses have a veteran enrollment of 85% or more. Appellee is therefore affected by both the 85-15 requirement and the two-year rule.

Appellee brought this action in the United States District Court for the District of South Dakota, challenging the constitutionality of the restrictions.⁴ Appellee contended that the restrictions arbitrarily denied otherwise eligible veterans of educational benefits and denied veterans equal protection because they were not made applicable to persons whose educations were being subsidized under other federal educational assistance programs.⁵ The District Court held the 85-15 requirement and the two-year rule unconstitutional and permanently enjoined their enforcement. 433 F.Supp. 605 (1977). We reverse.⁶

I

The course restrictions challenged by appellee evolved in response to problems experienced in the administration of earlier versions of the veterans' educational assistance program. When extension of the World War II GI Bill to veterans of the Korean war was under consideration by Congress in 1952, the House Select Committee to Investigate Educational Training and Loan Guarantee Programs under the GI Bill studied the problems that had arisen under the earlier program. The Committee's work led to passage of the first version of the 85-15 requirement, which applied only to nonaccredited courses not leading to a college degree that were offered by proprietary institutions. Pub.L. 82-550, 66 Stat. 667.

The purpose of the requirement is not disputed:

"Congress was concerned about schools which developed courses specifically designed for those veterans with available Federal moneys to purchase such courses. . . . The ready availability of these funds obviously served as a strong incentive to some schools to enroll eligible veterans. The requirement of a minimum enrollment of students not wholly or partially subsidized by the Veterans' Administration was a way of protecting veterans by allowing the free market mechanism to operate.

"The price of the course was also required to respond to the general demands of the open market as well as to those with available Federal moneys to spend. A minimal number of nonveterans were required to find the course worthwhile and valuable or the payment of Federal funds to veterans who enrolled would not be authorized." S.Rep.No. 94-1243, p. 88 (1976) (Senate Report); U.S.Code Cong. & Admin.News 1976, p. 5310.

These same considerations prompted extension of the requirement in 1974 to courses not leading to a standard college degree offered by accredited institutions. § 203(3) of Pub.L. 93-508, 88 Stat. 1582. See also Senate Report 88.

In 1976 the 85-15 requirement was further extended to courses leading to a standard college degree. The Veterans' Administration had found increased recruiting by institutions within this category "directed exclusively at veterans." In recommending approval of the extension, the Senate Committee on Veterans' Affairs agreed with the Veterans' Administration that " 'if an institution of higher learning cannot attract sufficient nonveteran and nonsubsidized students to its programs, it presents a great potential for abuse of our GI educational programs.' " Id., at 89, U.S.Code Cong. & Admin.News 1976, p. 5311. The Committee further noted that, in view of the magnitude of the expenditures under the GI Bill, it was essential "to limit those situations in which substantial abuse could occur." Ibid. Finally, the Committee emphasized that "the requirement that no more than 85 percent of the student body be in receipt of VA benefits is not onerous particularly given the fact that under today's GI Bill . . . veterans do not comprise a major portion of those attending institutions of higher learning . . .." Ibid.⁷

The two-year rule is also a product of Congress' judgment regarding potential abuses of the veterans' educational assistance program based upon experience with administration of earlier versions of the GI Bill. Thus, following World War II schools and courses developed "which were almost exclusively aimed at veterans eligible for GI bill payments." Id., at 128, U.S.Code Cong. & Admin.News 1976, p. 5350. In response, the first version of the rule was enacted. It barred the payment of benefits to veterans attending institutions in operation less than one year. Pub.L. 81-266, 63 Stat. 653. As with the 85-15 requirement, the rule "was a device intended by Congress to allow the free market mechanism to operate and weed out those institutions [which] could survive only by the heavy influx of Federal payments." Senate Report 128; U.S.Code Cong. & Admin.News 1976, p. 5350.

Following the Korean war, Congress amended the rule to cover courses that had not been in operation for at least two years. § 227 of the Korean Conflict GI Bill (Veterans' Readjustment Assistance Act of 1952), Pub.L. 82-550, 66 Stat. 667. In its report accompanying the amendment, the House Veterans' Affairs Committee characterized the rule as "a real safeguard to assure sound training for the veteran at reasonable cost, by seasoned institutions" and observed that had the rule been in effect during the administration of the World War II GI Bill "considerable savings would have been realized and . . . much better training would have resulted in many areas." H.R.Rep.No. 1943, 82d Cong., 2d Sess., 30 (1952).

In 1976, Congress again amended the two-year rule, making it applicable to, among other institutions, branches of private institutions such as appellee that are located beyond the normal commuting distance from the main institution. The considerations underlying the extended coverage are fully set forth in the Report of the Senate Committee on Veterans' Affairs accompanying the legislation. Senate Report, supra. There had been a "spectacular" rise in both the number of institutions establishing branch campuses and in the veteran enrollment at those extensions. These institutions were entering into "extensive recruiting contracts directed almost exclusively at veterans." S.Rep.No. 129, U.S.Code Cong. & Admin.News 1976, p. 5351. In a report dealing with the problems generated by these developments, the Veterans' Administration had stated:

" '[A] number of instances have been brought to our attention which represent abuse of our educational programs. Some of these cases involved contracting between non- profit schools and profit schools or organizations whereby courses designed by the latter are offered by the non-profit, accredited school on a semester- or quarter-hour basis. In others, there are arrangements between non-profit, accredited schools and outside profit firms whereby the latter, for a percentage of the tuition payment, perform recruiting services primarily for the establishing of these branch locations for the school. These recruiting efforts are aimed almost exclusively at veterans.' " Ibid.⁸

In recommending adoption of the amendment, the Committee concluded that the situation presented "great potential for abuse and in several instances that potential appear[ed] to have been realized." Id., at 130, U.S.Code Cong. & Admin.News 1976, p. 5352.

II

As the legislative history demonstrates, the 85-15 requirement and the two-year rule are valid exercises of Congress' power. Experience with administration of the veterans' educational assistance program since World War II revealed a need for legislation that wou d minimize the risk, that veterans' benefits would be wasted on educational programs of little value. It was not irrational for Congress to conclude that restricting benefits to established courses that have attracted a substantial number of students whose educations are not being subsidized would be useful in accomplishing this objective and "prevent charlatans from grabbing the veteran's education money." Both restrictions are based upon the rational assumption that if "the free market mechanism [were allowed] to operate," it would "weed out those institutions [which] could survive only by the heavy influx of Federal payments." Id., at 128; U.S.Code Cong. & Admin.News 1976, p. 5350. The otherwise reasonable restrictions...