Appeal from an order of Judge Sofaer (S.D.N.Y.) declaring invalid a state Human Resources Administration Administrative Directive and enjoining the defendants from calculating Aid to Families with Dependent Children eligibility pursuant to that directive. Judgment affirmed.
Before: VAN GRAAFEILAND and MESKILL, Circuit Judges, and STEWART, District Judge*fn*
The crux of the issue presented in this case is whether the definition of "necessary educational costs" for students who receive grants under the Aid to Families with Dependent Children ("AFDC") program is to be determined pursuant to federal regulations promulgated by the Commissioner of Education under the Higher Education Act of 1965, Title IV, Pub. L. 89-329, 20 U.S.C. §§ 1070-1089 ("Higher Education Act") or by the New York State Department of Social Services ("DSS") in accordance with its own more restrictive definition of need. The district court below,in a thorough and thoughtful opinion, held that DSS's administrative directive instituting, inter alia, the practice of recalculating an AFDC student's educational expenses pursuant to its own standard of need interfered with controlling federal statutes and regulations and is thus invalid. For reasons set forth in the opinion of the district court and elaborated on below, the decision and order enjoining the challenged policy and practice is affirmed.
Plaintiffs-appellees in this consolidated action are recipients of grants under two separate but intersecting programs. They receive state and federal educational assistance grants coordinated under the Higher Education Act and implementing regulations, and financial assistance under Title IV of the Social Security Act, known as AFDC, 42 U.S.C. §§ 601-644. Plaintiffs in Hayes v. City University of New York are City University of New York ("CUNY") students who receive AFDC grants as well as SEEK (the Search for Education, Elevation and Knowledge program) and CD (the College Discovery Program) stipends. The named plaintiff in Villanueva v. Harris is an AFDC recipient whose benefits are reduced because of federal and state educational assistance received by her daughter, a student at CUNY. Plaintiffs in Warren v. Brezenoff are a CUNY student who receives educational assistance pursuant to the Higher Education Act and her mother, an AFDC recipient whose family's grant is reduced because of the daughter's educational grants. The three cases were consolidated before Judge Sofaer, and present the same issues concerning the validity of the challenged administrative directive. The former Department of Health, Education and Welfare ("HEW"), now the Department of Health and Human Services and a defendant in this action, joins in appellees' position in this action, as does CUNY.
Title IV of the Higher Education Act
The Higher Education Act was enacted in large part to provide financial assistance to students "of exceptional need who, for lack of such a grant, would be unable to attain the benefits of a post-secondary education" and to provide incentives for qualified students from low income families to obtain post-secondary education. 20 U.S.C. § 1070(a). See 1965 U.S. Code Cong. & Adm. News 4053-4067. The Act was intended to provide "the highest level of coordination among all types and levels of student assistance programs," including federal, state and private programs. Id . at 4055.
To this end, the Commissioner of Education ("Commissioner") is charged with the responsibility of carrying out programs to achieve the goals of the Act, 20 U.S.C. § 1070. However, the district court noted:
the individual educational institutions play the critical role in the federal educational assistance system. Acting pursuant to federal regulations, each participating institution administers the federal programs for its students by constructing individual aid packages. To participate in the federal programs, the institution must agree to comply with governing statutes and regulations.
80 Civ. 2613, 503 F.Supp. 946, 949 (S.D.N.Y. 1980). See 45 C.F.R.§§ 174.14, 175.14, 176.14.
For the individuals constituting the class of plaintiffs in the instant action, the individual financial aid package consists of a composite of grants from different sources. The participating educational institution is obligated to apply standards of need, eligibility and education costs established by the Commissioner for these programs. Federal regulations also specify the sources of income that must be taken into account in calculating the student's available income and resources. See 45 C.F.R. §§ 174.14, 175.14, 176.14. The amount of the student's educational grants is the difference between the educational cost and expected family contribution, determined in accordance with methods or figures prescribed by the Commissioner. Id . §§ 174.12, 174.13, 175.12, 175.13, 176.12, 176.13. This amount includes AFDC benefits in the calculation of available resources.
The structure of the educational assistance program was set forth in the opinion of the district court:
The financial aid package is built upon the so-called Basic Grant. Basic Educational Opportunity Grant program ("BEOG"), 20 U.S.C. § 1070a; 45 C.F.R. Part 190 (1979). Determining the amount of that grant entails two steps. First, the student applies for aid to the Commissioner of Education. The Commissioner calculates the applicant's expected family contribution and issues a student eligibility report, which specifies the proportion of the maximum BEOG award that the applicant may receive. 45 C.F.R. §§ 190.11-190.16 (1979). The applicant then submits the student eligibility report to the financial aid office at the student's school for calculation of the actual grant. Id . §§ 190.61-190.67. That office determines the student's cost of attendance pursuant to a formula promulgated by the Commissioner having three elements: tuition and fees, room and board, and a $400 allowance for books, supplies, and miscellaneous expenses. Id . §§ 190.51-190.55. The financial aid office then awards a grant of whichever of the following amounts is smallest: the difference between $1800 and the expected family contribution; 50 percent of the cost of attendance; or the difference between the cost of attendance and the expected family contribution. Id . §§ 190.62-190.63. The grant may never exceed one-half of the student's financial need, with an absolute maximum of $1800.
If the Basic Grant fails to satisfy the student's educational costs, the financial aid office completes the student's package with additional federal and state grants and loans. Among the federal programs are the Supplemental Educational Opportunity Grant program ("SEOG"), 20 U.S.C. § 1070b; 45 C.F.R. Part 176 (1979), the Guaranteed Student Loan Program ("GSLP"), 20 U.S.C. § 1071; 45 C.F.R. Part 177 (1979), the National Direct Student Loan program ("NDSL"), 20 U.S.C. § 1087aa; 45 C.F.R. Part 174 (1979), and the College Work Study program ("CWS"), 42 U.S.C. § 2751; 45 C.F.R. Part 175, Subpart A (1979). The state programs include the Tuition Assistance Program ("TAP"), the Search for Education, Elevation and Knowledge program ("SEEK"), and the College Discovery program ("CD").
Calculating need for purposes of these federal and state programs differs from calculating the BEOG. The cost of education includes tuition and fees, room and board, books and supplies, transportation, miscellaneous personal expenses, and expenses for the support of the student's dependents. Id . §§ 174.11, 175.11, 176.11. These expenses are based upon Bureau of Labor Statistics data on the cost of living at the low-moderate standard of living. The cost budget is submitted for approval by the Commissioner of Education. TAP awards are given to defray tuition for needy and able students. SEEK and CD awards are for supplementary assistance, and are based on the same cost of living standard used in distributing federal funds.
The regulations also specify several sources of income that must be considered in calculating the student's available resources. Id . §§ 174.14, 175.14, 176.14. The student's financial need is the difference between his cost of education and his expected family contribution. In calculating that contribution, the office must apply either the figure used by the Commissioner in determining the BEOG or a ...