oversight

National Education Center - Spartan School of Aeronautics' compliance with Student Financial Assistance program eligibility requirements, under Title IV of the Higher Education Act of 1965, as amended (HEA).

Published by the Department of Education, Office of Inspector General on 2004-02-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       UNITED STATES DEPARTMENT OF EDUCATION 

                                        OFFICE OF INSPECTOR GENERAL 

                                  1999 BRYAN STREET, HARWOOD CENTER, SUITE 2630 

                                             DALLAS, TEXAS 75201·6817 

                                       PHONE: (214) 880·3031 FAX: (214) 880·2492 



                                                  FEB I 9 2004

Mr. Terrell Harrison
President and CEO
National Education Center - Spartan School of Aeronautics
Tulsa International Airport
8820 E. Pine St.
P.O. Box 582833
Tulsa, Oklahoma 74158-2833

Dear Mr. Harrison:

This Final Audit Report (Control Number ED-OIG/A06-DOOI6) presents the results of our
audit of National Education Center - Spartan School of Aeronautics' compliance with Student
Financial Assistance program eligibility requirements, under Title IV of the Higher Education
Act of 1965, as amended (HEA). Our objective was to determine if National Education Center­
Spartan School of Aeronautics (NEC) disbursed Title IV aid to students enrolled in ineligible,
non-degree Federal Aviation Administration (FAA) certified flight-training programs.

A draft of this Office of Inspector General (OIG) report was provided to NEC. NEC did not
agree with our finding and recommendations. We have summarized NEC's comments after the
Recommendation section in this report. A copy of NEC' s response is included as an Attachment
to this report.



 I
NEC is a proprietary school, and its main campus is in Tulsa, Oklahoma. The school received
initial approval to participate in the Title IV, Student Financial Assistance programs on March
24, 1967. The Accrediting Commission of Career Schools and Colleges of Technology
(Accrediting Agency) accredited NEC. The school is licensed by the Oklahoma Board of Private
Vocational Schools (State Agency) and certified by the FAA.

NEC offers flight-training programs in which students may earn baccalaureate degrees, associate
degrees, or Professional Pilot non-degree diplomas. The Professional Pilot non-degree diploma
(diploma) program is intended for individuals with no previous flight experience who want to
obtain the necessary FAA ratings to become a professional pilot. At NEC, these individuals can
enroll in one of three diploma programs, ranging in length from 57 credit hours to 71 credit
hours.




      Our mission is to promote the efficiency, effectiveness, and integrity ofthe Department's programs and operations
ED-OIG/A06-D0016 	                                                                      Page 2 of 8

Each of the three non-degree diploma programs provide core ground school and flight courses
that allow a student to earn a Private Pilot rating, Commercial Pilot rating, and Instrument rating
(Professional Pilot Core Courses) from the FAA. The three non-degree diploma programs also
offer the Certified Flight Instructor rating and the following additional FAA ratings:

   • 	 Certified Flight Instructor Instrument, under the 57-credit-hour Professional Pilot Option
       1 (PP1) program, offered from January 1, 1991, to May 1, 1998, as a 76-credit-hour
       program.

   • 	 Multiengine, under the 57-credit-hour Professional Pilot Option 2 (PP2) program, first
       offered in 1998.

   • 	 Certified Flight Instructor Instrument, Multiengine Flight Instructor, and Multiengine,
       under the 71-credit-hour Professional Pilot Option 3 (PP3) program, first offered in 1998.

NEC also offers other Title IV eligible programs; in total, NEC disbursed over $19 million in
Title IV aid for the award year July 1, 2000, through June 30, 2001. This amount included
$15.51 million in Federal Family Education Loan (FFEL) Program loans (PLUS, Subsidized,
and Unsubsidized Loans), $3.22 million in Federal Pell Grants (Pell), $187,956 in Federal
Supplemental Educational Opportunity Grant (FSEOG), and $86,490 in Federal Work Study
(FWS).


                                      AUDIT RESULTS

NEC disbursed Title IV aid to students enrolled in two ineligible programs. We concluded that
although the Department of Education (Department) approved only one program, the 57-credit-
hour PP1 “Aircraft Pilot and Navigator (Professional)” program, NEC disbursed Title IV aid for
attendance in two additional Professional Pilot programs (PP2 and PP3) that were not approved
by the Department. For the period July 1, 2000, through June 30, 2002, NEC disbursed
approximately $312,000 in Title IV aid to students enrolled in these two ineligible programs.

Title IV Program Eligibility Requirements

If a school adds a program after it has become eligible to participate in the Title IV programs,
that program may, under certain circumstances, be considered eligible for Title IV funds without
notification to the Department. However, this interim program eligibility does not continue
indefinitely. When the school’s eligibility is recertified, the school must report that new program
on the Application for Approval to Participate in the Federal Student Financial Aid Programs
(Application) it submits to the Department.

   • 	 “An eligible institution that adds an educational program after it has been designated as
       an eligible institution by the Secretary does not have to apply to the Secretary to have that
       additional program designated as an eligible program of that institution if the additional
       program . . . [p]repares students for gainful employment in the same or related recognized
ED-OIG/A06-D0016 	                                                                       Page 3 of 8

       occupation as an educational program that has previously been designated as an eligible
       program at that institution by the Secretary . . . .” (34 C.F.R. § 600.10(c)(2))

   • 	 “If an institution participates in the title IV, HEA programs, the Secretary’s designation
       of the institution as an eligible institution under the title IV, HEA programs expires when
       the institution’s program participation agreement . . . expires.” (34 C.F.R.
       § 600.10(d)(1))

   • 	 “A currently designated eligible institution . . . must apply to the Secretary for a
       determination that the institution continues to meet the requirements in this part and in 34
       CFR part 668 if the institution wishes to . . . [c]ontinue to participate in the title IV, HEA
       programs beyond the scheduled expiration of the institution’s current eligibility and
       certification designation . . . .” (34 C.F.R. § 600.20(b)(2)(i))

   • 	 “To satisfy the requirements . . . of this section, an institution must apply in a format
       prescribed by the Secretary for that purpose and provide all the information and
       documentation requested by the Secretary to make a determination of its eligibility and
       certification.” (34 C.F.R. § 600.20(d))

   • 	 Section E of the Department’s Application states, “Please provide the following
       information for each educational program that you are requesting be eligible to
       participate in federal student financial aid programs.” Items 26 through 28 in Section E
       request identifying and other information concerning each program the school wishes to
       be eligible for federal student financial aid.


The Institution Failed to Obtain Approval from the Department for Certificate Programs

According to its Financial Aid Administrator, NEC added the PP2 and PP3 programs to its
curriculum in 1998. Since these programs are similar to the approved PP1 program, already
offered by the school, and since they meet other regulatory requirements, NEC was not required
to inform the Department immediately in order for PP2 and PP3 to be considered eligible
programs, and students were eligible to receive Title IV funds to attend the two new programs.

However, when NEC was required to submit an Application for recertification, the Application it
sent to the Department (updated on March 21, 2000) did not include the PP2 and PP3 programs.
As a result, the Department did not approve PP2 and PP3 as eligible programs. Since NEC’s
previous Program Participation Agreement (PPA) expired on June 30, 2000, the PP2 and PP3
programs lost Title IV eligibility on that date.

NEC may have obtained approval for its PP2 and PP3 programs as late as July 1, 2000, without
an interruption of those programs’ eligibility for Title IV funds. NEC failed to seek this
approval. The PP2 and PP3 programs were not included in NEC’s Application dated March 21,
2000, nor on a subsequent Application dated June 5, 2001, which reported a change of
ownership. NEC’s June 1, 2000, Eligibility and Certification Approval Report (ECAR) reflects
only one eligible Professional Pilot program.
ED-OIG/A06-D0016 	                                                                     Page 4 of 8


On the ECAR, the Department lists programs that meet the program eligibility requirements.
The 2000/2001 Student Financial Aid Handbook (Handbook) states—

       The ECAR contains the most critical of the data elements that form the basis of
       the school’s approval and also a list of the highest level of offering, any
       nondegree program or short-term programs, and any additional locations that have
       been approved for the SFA Programs.

For the purpose of our audit, we are questioning the approximately $312,000 in Title IV aid
disbursed to students enrolled in the PP2 and PP3 programs for the time period of July 1, 2000,
through June 30, 2002, and the Title IV aid disbursed after June 2002, for periods during which
the PP2 and PP3 programs were not approved by the Department.



                                 RECOMMENDATIONS

We recommend that the Chief Operating Officer for Federal Student Aid require NEC to—

1. 	 Take appropriate action to ensure that funds are not disbursed to students in PP2 and PP3
     until program eligibility is established.

2. 	 Refund to lenders PLUS loan funds of $114,090, subsidized loan funds of $71,034, and
     unsubsidized FFEL loans of $82,622 for award years 2000/2001 and 2001/2002, plus
     applicable interest.

3. 	 Refund to the Department Pell funds of $37,203 and FSEOG funds of $7,200 for award years
     2000/2001 and 2001/2002.

4. 	 Calculate and pay the amount of all Title IV funds disbursed to students at NEC enrolled in
     the PP2 and PP3 programs after June 30, 2002, plus applicable interest, for periods during
     which the Department did not approve those programs.


                                   NEC’S COMMENTS

NEC did not concur with our finding and recommendations. A copy of the letter from NEC is
included as an Attachment to this report. In its letter, NEC stated that—

   • 	 At the time of recertification in March 2000, the Case Management Team in Dallas
       advised NEC that since the three Professional Pilot Programs offered were essentially the
       same program, with three options, the program only needed to be reported once on the
       institution’s application. NEC continued to act on this advice when it submitted its
       change of ownership application in July 2001, and did not list the programs separately.
ED-OIG/A06-D0016 	                                                                     Page 5 of 8


   • 	 OIG auditors stated twice during the exit interview that PP2 and PP3 were in fact eligible
       programs, except for the reporting omission. The programs were approved by both the
       state licensing authority and accrediting agency. PP1 and PP2 have the same number of
       credit hours and include nearly identical courses, and there is no reason that the
       Department would not have approved the programs if NEC had included them on its
       application. NEC states, “The OIG argument elevates form over substance and is
       unreasonable.”

   • 	 The OIG has no basis for contending that program eligibility expired when NEC applied
       for recertification. According to 34 C.F.R. § 600.10(c)(3) an institution is only liable to
       repay the Secretary if it incorrectly determines a program meets all regulatory
       requirements. NEC does not believe that it made the wrong determination for the two
       additional Professional Pilot programs.

   • 	 External audits have not raised any issues related to program eligibility. Since March
       2000 NEC has had three external audits conducted, none of which had any liability
       assessed or any findings related to program eligibility.

In addition, NEC did not agree with our recommendations. NEC asked us to recommend that the
Chief Operating Officer for Federal Student Aid require NEC to submit a new application to the
Department, which would include the two other versions of the Professional Pilot programs, and
not require NEC to pay any amounts to lenders or to the Department.


                                     OIG’S RESPONSE

We have not changed our finding or recommendations. NEC’s response did not provide any
information to contradict the fact that the programs PP2 and PP3 have not been on its ECAR
since March 2000.

NEC’s response stated that it was advised by the Dallas Case Management Team not to list the
two additional programs on the ECAR; however, NEC did not provide sufficient detail or
evidence to corroborate its position that it relied on advice from Case Management. NEC also
stated that the three programs were essentially the same programs; however, NEC’s catalog
shows the programs as separate programs, and each program received separate approval by the
accrediting and state agencies. Although the programs’ core courses are the same, the ratings
required for graduating are different and a student must specify one of the programs at
registration. Since the three programs are separate programs, and all non-degree programs must
be included on the ECAR, PP2 and PP3 are not eligible for Title IV.

The OIG auditors did not state at the exit conference that the programs were eligible, but that it
appeared they may have been eligible, if they had been included on NEC’s Application. Section
E of the Application states, “Please provide the following information for each educational
program that you are requesting be eligible to participate in federal student financial aid
ED-OIG/A06-D0016 	                                                                        Page 6 of 8

programs.” Since the two programs were not on the institution’s ECAR or Application, the two
programs have not been approved by the Department and are not eligible for Title IV funds.

NEC stated that it did not incorrectly determine the eligibility of PP2 and PP3 programs when
the programs were started in 1998. We are not questioning whether NEC incorrectly determined
the eligibility of PP2 and PP3 when the programs started in 1998. Our audit looked at whether
the additional programs were subsequently approved by the Department when the school was
recertified. As we describe in our report, when the PPA expired in June 2000, the institution was
required to include PP2 and PP3 on its Application, in order for those programs to continue their
eligibility for Title IV funding. NEC did not include those programs in March 2000, and failed
to include the two programs again during recertification for change in ownership in June 2001.
As a result, PP2 and PP3 are not eligible to receive Title IV funds.

NEC did obtain the required annual compliance audit reports since March 2000, and we
reviewed the compliance audit for the period of January 1, 2001, through December 31, 2001.
Although the audit report did not have a finding related to program eligibility, that does not
preclude the Office of Inspector General from reviewing program eligibility to ensure the
institution meets applicable laws and regulations.

In response to NEC’s comment that OIG should recommend that NEC submit a new Application
to add PP2 and PP3 to its ECAR, we added a recommendation that FSA take appropriate action
to ensure that funds are not disbursed to students in these programs until eligibility is established.


                   OBJECTIVE, SCOPE, AND METHODOLOGY

Our objective was to determine if NEC disbursed Title IV aid to students enrolled in ineligible,
non-degree FAA certified flight-training programs. To achieve our objective, we—

    • 	 Reviewed the program eligibility requirements contained in the HEA and regulations.
    • 	 Interviewed the NEC Financial Aid Administrator regarding the Title IV eligibility of
        flight training programs offered by the school.
    • 	 Reviewed licensing certifications from the Accrediting Agency, the State Agency, and
        the FAA to determine if the PP1, PP2, and PP3 programs were approved by other
        agencies.
    • 	 Reviewed the school’s 2000 catalog to determine what programs were offered.
    • 	 Reviewed the school’s Applications (last revised on 06/05/2001); 1997, 2000, and 2001
        ECAR; and 2001 PPA to determine if offered programs were approved for Title IV
        eligibility.

NEC provided us with a universe of 62 students that school officials identified as Title IV
recipients who were enrolled in the PP1, PP2, or PP3 program from July 1, 1998, through June
30, 2002. We judgmentally selected the first ten students listed in each of the three programs.
ED-OIG/A06-D0016                                                                       Page 7 of 8

We reviewed the administrative and financial aid files for the 30 Title IV recipients to determine
if NEC disbursed Title IV aid to students enrolled in ineligible programs.

Since we relied on computer-processed data obtained from school officials to identify our
universe of 62 students enrolled in PP1, PP2, and PP3, we performed limited data reliability
testing to ensure the completeness of this universe. To test for completeness, we extracted 5,298
Title IV recipients from the National Student Loan Data System (NSLDS) who were enrolled at
NEC from July 1, 1998, through June 30, 2002. From the universe of 5,298, we selected a
random sample of 50 Title IV recipients. We concluded that none of the students from the
sample of the 50 recipients were enrolled in the PP1, PP2, or PP3 program from July 1, 1998,
through June 30, 2002. Consequently, we concluded that the computer-processed universe of 62
Title IV recipients appeared to be complete and sufficiently reliable to formulate conclusions
associated with the objectives of our audit.

We also relied on computer-processed data obtained from NSLDS for background information.
To verify reliability, we performed limited tests of the data by comparing the data obtained from
NSLDS to information obtained from NEC officials.

Our review of Title IV program eligibility requirements covered the period July 1, 1998, through
June 30, 2002. Audit work was performed at NEC, Tulsa, Oklahoma, during March and April
2003. We discussed our preliminary results with NEC officials on April 4, 2003, and we held an
exit conference with NEC officials on November 4, 2003. Our audit was conducted in
accordance with generally accepted government auditing standards appropriate to the scope
described.


                 STATEMENT ON MANAGEMENT CONTROLS

We did not assess the adequacy of NEC’s management control structure applicable to the
program eligibility requirement because this step was not necessary to achieve our audit
objective. Instead, we relied on reviews of appropriate licenses and student files to determine if
Title IV was disbursed to students enrolled in ineligible programs. Our testing disclosed
instances of non-compliance with Federal regulations that led us to believe weaknesses existed.
These weaknesses and their effects are discussed in the AUDIT RESULTS section of this report.



                            ADMINISTRATIVE MATTERS

Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report represent the opinions of the Office of the Inspector General.
Determinations of corrective action to be taken will be made by the appropriate Department of
Education officials.
ED-OIG/A06-D0016                                                                       Page 8 of 8

If you have any additional comments or information that you believe may have a bearing on the
resolution of this audit, you should send them directly to the following U.S. Department of
Education official, who will consider them before taking final Departmental action on this audit:

               Ms. Theresa S. Shaw, Chief Operating Officer 

               Federal Student Aid       

               U.S. Department of Education       

               Union Center Plaza, Rm. 112G1 

               830 First Street, NE 

               Washington, DC 20202 


It is the policy of the U.S. Department of Education to expedite the resolution of audits by
initiating timely action on the findings and recommendations contained therein. Therefore,
receipt of your comments within 30 days would be greatly appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by the
Office of Inspector General are available to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

If you have any questions or wish to discuss the contents of this report, please contact me, at
214-880-3031. Please refer to the control number in all correspondence related to this report.

                                      Sincerely,

                                      /Signed/
                                      Sherri L. Demmel
                                      Regional Inspector General
                                       for Audit


Attachment
                                                                                  Attachment

                 .sP~TAN
                SCHCCL C .. ·AI!~CNAUTIt:s
                 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ FOUNDEO 1928




December 30, 2003


Ms. Sheni L. Demmel
Regional Inspector General for Audit
U. S. Department of Education
Office of Inspector General
1999 Bryan Street, Suite 2630
Dallas, TX 75201-6817

RE: 	   National Education Center - Spartan School of Aeronautics
        Tulsa International Airport
        Control Number ED-OIG/A06-DOOI6

Dear Ms. Demmel:

NEC - Spartan School of Aeronautics ("Spartan") is presenting our response to the Draft
Audit Report cited above. It appears, from our conversations with the auditors, this audit
is one of many audits being performed by the OIG specifically targeting flight schools.



\1 	
                                     BACKGROUND                                              1\



Spartan was founded in 1928 and is celebrating its 75 th Anniversary this year. Nearly
80,000 graduates have been employed in aviation and related industries as a result of
their training at Spartan. We take great pride in delivering a quality education to our
students and are equally proud of our track record regarding the administration of Title
IV aid to students. Over the past four years our independent audits have had only minor
findings and zero liability to the SFA programs. During this same period we have
reduced our Perkins loan default rate from over 44% to less than 15% and have
maintained our FFEL rate at an average rate ofjust over 15% for the past three years.
Clearly, our primary objective is the proper administration ofTitle IV student aid and
Spartan has committed significant resources to ensure this result.




        8820 EAST PINE STREET· P.O. Box 582833. TULSA, OKLAHOMA 74158-2833
        PHONE: 918-836-6886 • TOLL FREE: 1-800-331-1204 • FAX: 1-918-831-5287
                                                                                   Attachment
                                   AUDIT RESPONSE
II                                                                                           II

Spartan disagrees with the findings in the audit for the following reasons:

       1. Spartan was advised by the Dallas Regional Office of the Department of
       Education to only list Professional Pilot once on the application because the
       programs are essentially the same.

Due to the requirement in Title IV to add any non-degree programs to its application to
participate, Spartan contacted the Case Management Team ("CMT") at the Dallas
Regional Office of the Department of Education when completing the electronic
application in March, 2000. Atthat time, Spartan's Director of Financial Aid solicited
the advice of the CMT on how to list the Professional Pilot Diploma Program on the
application. We explained the Professional Pilot Program, as described in the OIG Draft
Report and the core courses that composed the majority of the Program. It was further
explained that due to the nature of flight programs in general, students often selected
various ratings depending upon their career goals at graduation. Spartan identified three
options or electives of flight ratings that a student could choose to complete a
Professional Pilot Program.. The first and second options have exactly the same number
o(credit hours (Le. 57 credit hours, see Exhibit A) even though different ratings are
earned. The third option is a culmination of the first two with one additional rating. All
three programs prepare the student to become employed as a Professional Pilot. The
direction received at that time from the CMT was not to separately list Professional Pilot
three times on the application because it was essentially the same program with three
options, and as stated previously the credit hours for the first and second options are
exactly the same. Spartan continued to act on the advice received when SUbmitting the
change of ownership application in July, 2001. We do not believe Spartan should be
punished for following the Department of Education's advice.

       2. The Office of Inspector General's auditors acknowledge all of the
       Professional Pilot options are, in fact, eligible programs.

Notwithstanding the fact that Professional Pilot Option One ("PP1") and Professional
Pilot Option Two ("PP2") have the exact same number of credit hours, and that Spartan
was told to list Professional Pilot only once on the application, the OIG auditors stated
twice in the exit interview that Professional Pilot Option Two and Professional Pilot
Option Three ("PP3") were in fact eligible programs, except for the reporting omission.
The programs were approved by both the state licensing authority and the accrediting
agency before ever being offered. As such, to later say in the audit report they are
somehow now "ineligible" is inaccurate.

Without admitting any wrongdoing (because we sincerely believe we properly complied
with all Federal regulations on the subject) Spartan insists that any omission which may
have occurred on the ECAR at any given time (Le. March 2000, July 2001) was not
harmful, was in accordance with regulation, and to the extent that any error was



                                              2

                                                                                     Attachment
committed was due solely to a miscommunication/misguidance with the Department.
The OIG argument elevates form over substance and is unreasonable. There is no reason
these programs would not have been approved by the Department of Education had the
guidance received been to list the Professional Pilot Diploma Program three times on the
application.
It is clear that "PPl" and "PP2" are exactly the same number of credit hours in length and
consist of nearly identical courses. (See Illustration of Programs, Exhibit A) The notation
"PPl" as opposed to "PP2" merely helps designate an option a student may choose to
achieve a different flight rating at the culmination of their training. To now say that
failing to separately list "PP2" from "PPl" should require repayment of hundreds of
thousands of dollars, especially after Spartan was advised by the Department of
Education it need not do so, is not factually or legally supportable. Simply put, this cause
cannot constitute a finding of any liability on the issue.


       3. Spartan did not incorrectly determine the eligibility of the programs.

As stated previously, the programs were approved by both the state licensing authority
and the accrediting agency before ever being offered. Both programs are clearly within
the scope of other programs already offered by Spartan. The OIG has no basis for the
contention that the program eligibility expired upon applying for recertification. These
programs were clearly eligible prior to recertification, even according to the OIG, and
retain their eligibility on the same basis after recertification.

According to 34 C.F.R. 600.l0(c)(3), the only reference that an " .. .institution is liable to
repay to the Secretary all HEA program funds received," is "If an institution incorrectly
determines under paragraph (c)(2) of this section that an educational program satisfies the
applicable statutory and regulatory eligibility provisions without applying to the
Secretary for approval."

Here, Spartan correctly determined PP2 and PP3 are in fact eligible programs because
they clearly satisfied applicable statutory and regulatory eligibility provisions at issue.
Further, the OIG auditors orally stated twice during the exit interview their agreement
that the programs were eligible, but for the reporting omission. As such, any attempt to
assert a liability here is inappropriate and unreasonable.

        4. 	 External audits conducted annually raised no issue with regard to
             program eligibility.

As mentioned in the backgroimd section, Spartan School of Aeronautics has a good track
record with regard to audits. An independent, third party regularly conducts a thorough
audit of the Student Financial Aid Programs and the issue of program eligibility has not
been raised. Since the alleged omission first occurred, according to the OIG, March
2000, there have been three audits conducted. Not only has there been no liability cited
in any of these audits, there has been no mention of any issue related to program
eligibility.



                                              3
                                                                                     Attachment


                                          SUMMARY 


Spartan appreciates the opportunity to respond to the Draft Audit Report. Spartan
realizes the OIG reviews many cases involving fraud and abuse, but that is not the
situation at Spartan. Indeed, the auditors identified in their exit interview that the proper
licensing and accreditation authorizations were obtained for both programs, which fell
within the scope of Spartan's other program offerings. Accordingly, Spartan disbursed
Title IV student aid to eligible students in two eligible programs. We should not be
penalized for a technicality due to a miscommunication and urge the Office of Inspector
General to revise their monetary recommendations to a recommendation of no repayment
needed or sought.

If the result of this audit boils down to a mere scrivener's error of six (6) keystroke
combinations on a computer, then Spartan readily agrees that the terms "PP2" and "PP3"
were not listed separately. If the result of this audit boils down to the issue of
correctness, fairness and accuracy, then the omission of the keystrokes "PP2" and "PP3"
should not be cause for a finding of monetary liability.


                            PROPOSED RECOMMENDATIONS
  II 	                                                                                          II

Spartan does not agree with the recommendations in the Draft and proposes the Office of
Inspector General recommend the following to resolve the alleged findings:

     1. 	 Require Spartan to immediately submit a new application to the Department of
          Education adding the two other versions of Professional Pilot to the ECAR.
     2. 	 Not require repayment of any Title IV Plus loan funds, FFEL loan funds, Pell 

          Grant funds or FSEOG funds for any student or any award year. 


We sincerely value our excellent regulatory relationship with the Department of
Education and the privilege of administering Title IV funds. Hopefully upon review of
this correspondence we can move toward a fair and final resolution of this matter. If we
may be of further assistance, please feel free to contact us at 1-918-836-6886.

                                               Sincerely,



                                               Terrell "Terry" W. Harrison
                                               President & CEO




                                              4
                                                                                Attachment
                                              Exhibit A


                     Illustration of Professional Pilot Diploma Programs


Professional Pilot Core Courses                                        PPI      PP2     PP3

AVE 1503 
      Aviation Regulations I 
                                    3     3       3

AVE 1513 
      Basic Aerodynamics & Systems 
                              3     3       3

AVE 1553 
      Basic Meteorology & Navigation 
                            3     3       3

AVE 1573 
      Basic Instruments 
                                         3     3       3

AVE 1613 
      Planning & Navigation 
                                     3     3       3

AVE 2503 
      Aviation Regulations II 
                                   3     3       3

AVE 2513 
      Advanced Aerodynamics 
                                     3     3       3

AVE 2553 
      Advanced Meteorology 
                                      3     3       3

AVE 2563 
      Advanced Aircraft Systems 
                                 3     3       3

AVE 2573 
      Advanced Instruments 
                                      3     3       3

AVE 2603 
      Air Traffic Control Operations & Procedures 
               3     3       3

AVF 1562 
      Private Pilot Certification Flying 
                        2     2       2

AVF 1763 
      Commercial Pilot Certification Flying, Part I 
             3     3       3

AVF 2572 
      Instrument Rating Flying 
                                  2     2       2

AVF 2583 
      Commercial Pilot Certification Flying, Part II 
            3     3       3


Electives

AVE 2613 
      Testing and Measurement                                     3     3       3

AVE 2633 
      Practical Certified Flight Instructor                       3     3       3

AVE 2623 
      Educational Psychology                                      3             3

AVE 2643 
      Practical Certified Flight Instructor Instrument            3             3

AVE 2713 
      Multiengine Aerodynamics & Maneuvers                              3       3

AVE 2753 
      Multiengine Systems & Operations                                  3       3

AVE 2823 
      Multiengine Fundamentals of Instruction                                   3

AVE 2833 
      Practical Multiengine Flight Instructor                                   3

AVF 2651 
      Certified Flight Instructor Flying                          1     1       1

AVF 2671 
      Certified Flight Instructor Instrument Flying               1             1

AVF 2751 
      Multiengine Rating Flying                                         1       1

AVF 2831 
      Multiengine Flight Instructor Flying                                      1


Total Credits                                                              57    57 
    71