Inter-American University of Puerto Rico, Inc. v. Concepcion, INTER-AMERICAN

• Decision Date: 13 September 1983
• Docket Number: No. 82-1826,INTER-AMERICAN,82-1826
• Citation: 716 F.2d 933
• Parties: 13 Ed. Law Rep. 602 TheUNIVERSITY OF PUERTO RICO, INC. (National Direct Student Loan), Plaintiff, Appellant, v. Rafael Alicia CONCEPCION, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 933

716 F.2d 933

13 Ed. Law Rep. 602

The INTER-AMERICAN UNIVERSITY OF PUERTO RICO, INC. (National Direct Student Loan), Plaintiff, Appellant, v. Rafael Alicia CONCEPCION, et al., Defendants, Appellees.

No. 82-1826.

United States Court of Appeals First Circuit.

Submitted May 6, 1983.

Decided Sept. 13, 1983.

Felix A. Pellicier-Figueroa, Mayaguez, P.R., on brief, for plaintiff, appellant.

Before CAMPBELL, Chief Judge, COFFIN and BOWNES, Circuit Judges.

COFFIN, Circuit Judge.

The Inter-American University (IAU) brings this appeal from the order of the United States District Court for the District of Puerto Rico dismissing, for lack of subject matter jurisdiction, IAU's action to collect money loaned to defendants under the National Direct Student Loan Program, 20 U.S.C. Sec. 1087aa-1087ii. IAU contends that the district court has jurisdiction to entertain the suit under the federal question jurisdiction conferred in 28 U.S.C. Sec. 1331. We disagree, and we affirm the order of the district court.

The National Direct Student Loan program (NDSL) is one of the student loan programs established under the Higher Education Act of 1965, 20 U.S.C. Sec. 1071 et seq. Under the NDSL program, both the Department of Education and an eligible lending institution such as IAU make capital contributions to a loan fund. The lending institution makes loans from the fund directly to its students in exchange for promissory notes payable to the institution. The Department of Education has promulgated regulations prescribing the procedures for making and collecting the loans. 34 C.F.R. Sec. 674.1-.59.

In the other student loan programs established by the Higher Education Act, the government's participation is that of a guarantor. See, e.g., United States v. Bellard, 674 F.2d 330 (5th Cir.1982); Grove City College v. Harris, 500 F.Supp. 253 (W.D.Pa.1980). Appellant argues that the government's participation in the NDSL program is more substantial because the government makes a capital contribution to the NDSL loan fund. The fact that the NDSL fund is derived in part from federal contributions does not, however, automatically give the federal courts jurisdiction to hear any dispute arising from the NDSL loan agreement. It is the nature of the action before the court, not the nature of the loan program, that establishes the existence or absence of federal jurisdiction.

In order to give rise to federal jurisdiction, a case must involve "a substantial claim founded 'directly' upon federal law". Keaukaha-Panaewa Community Association v. Hawaiian Homes Commission, 588 F.2d 1216, 1225 (9th Cir.1978) (quoting Mishkin, The Federal "Question" in...