PIERRE, S.D. (AP) - A federal judge has rejected Si Tanka University's
request to prevent the U.S. Education Department from revoking the school's
ability to take part in student financial aid programs.
U.S. District Judge Charles Kornmann agreed with a bankruptcy judge who
refused to make federal officials restore the programs.
A lawyer for the school could not be reached June 27, but officials have
said participation in financial aid programs is essential to its attempt to
reorganize and get a fresh start.
Si Tanka filed for bankruptcy protection in April under Chapter 11 of the
U.S. Bankruptcy Code amid persistent financial troubles. Classes at its
Huron campus ended prematurely this spring.
School officials have said they hope the bankruptcy reorganization filing
will isolate the financial trouble to the now-closed Huron campus. Si Tanka
also has a campus in Eagle Butte.
Si Tanka defaulted on $6.6 million in loans and faces a $2 million federal
The U.S. Education Department informed the university April 25 that it was
revoking the school's rights to take part in a number of student loan and
grant programs. The revocation was based on the university's filing in
bankruptcy court, according to documents filed in court.
U.S. Bankruptcy Judge Irvin Hoyt denied the university's request for a
preliminary order preventing revocation of the school's ability to take
part in student financial aid programs. The school then asked Kornmann to
overturn the bankruptcy judge and restore the financial aid programs.
The school argued that a federal bankruptcy law prohibits the Education
Department from cutting it off from student financial aid because of the
However, federal officials contended that other provisions of federal law
exclude bankrupt schools from taking part in student loan and grant
Kornmann agreed with the federal officials, noting that 1992 changes in
laws dealing with higher education provide that a school cannot take part
in financial aid programs if it has filed for bankruptcy.
He said the 1992 law and previous rulings by other courts mean that there
is no significant difference of opinion on the correctness of the
bankruptcy judge's ruling, so the university cannot appeal the issue in
In the university's request for a court order, it said participation in
student aid programs is essential for the school's attempt to reorganize
The Eagle Butte campus has 92 students enrolled in two summer sessions,
according to court documents.
"It was uncontested that the majority of students would be unable to attend
Debtor's campus without the federal programs," according to the
university's request for a court order.
The school was chartered by the tribe in 1978 as Cheyenne River Community
College. To qualify for more money, it incorporated under South Dakota's
state laws. The university was operating under the state charter in 2001
when it bought Huron University and merged to become Si Tanka University.