Federal Register: February 19, 2003 (Volume 68, Number 33)
DOCID: FR Doc 03-3947
DEPARTMENT OF EDUCATION
Veterans Affairs Department
CFR Citation: 34 CFR Part 34
NOTICE: Part IV
DOCUMENT ACTION: Final regulations.
SUBJECT CATEGORY:
Administrative Wage Garnishment
DATES: These regulations are effective March 21, 2003.
DOCUMENT SUMMARY:
These regulations implement for the Department of Education the provisions for administrative wage garnishment in the Debt Collection Improvement Act of 1996 (DCIA). The DCIA authorizes Federal agencies to garnish administratively, that is, without court order, the disposable pay of an individual who is not a Federal employee to collect a delinquent nontax debt owed to the United States. These regulations implement this authority for a debt owed to the United States under a program administered by the Department of Education.
SUMMARY:
Education Department,
SUPPLEMENTAL INFORMATION
On April 12, 2002, the Secretary published in the Federal Register a notice of proposed rulemaking (NPRM) (67 FR 18072) for implementation of the wage garnishment authority in the DCIA. This document contains the final regulations for the rules that were proposed in that NPRM. These final regulations contain a few changes from the NPRM.
Analysis of Comments and Changes
In response to the NPRM, we received comments from two parties. An analysis of the comments and of the changes in the regulations since publication of the NPRM is published as an appendix at the end of these final regulations.
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have a significant economic impact on a substantial number of small entities.
Although a substantial number of small entities will be subject to these regulations and to the certification requirement in these regulations, as explained in the NPRM, the requirements will not have a significant economic impact on these entities.
Paperwork Reduction Act of 1995
These regulations do not contain any information collection requirements.
Assessment of Educational Impact
In the NPRM we requested comments on whether the proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.
Based on the response to the NPRM and on our review, we have determined that these final regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available.
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(Catalog of Federal Domestic Assistance Number does not apply.) List of Subjects in 34 CFR Part 34
Administrative practice and procedure, Claims, Debts, Garnishment of wages, Hearing and appeal procedures, Salaries, Wages.
Dated: February 12, 2003.
Rod Paige,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary amends
title 34 of the Code of Federal Regulations by adding a new part 34 to read as follows:
PART 34 ADMINISTRATIVE WAGE GARNISHMENT
Sec.
34.1 Purpose of this part.
34.2 Scope of this part.
34.3 Definitions.
34.4 Notice of proposed garnishment.
34.5 Contents of a notice of proposed garnishment.
34.6 Rights in connection with garnishment.
34.7 Consideration of objection to the rate or amount of
withholding.
34.8 Providing a hearing.
34.9 Conditions for an oral hearing.
34.10 Conditions for a paper hearing.
34.11 Timely request for a hearing.
34.12 Request for reconsideration.
34.13 Conduct of a hearing.
34.14 Burden of proof.
34.15 Consequences of failure to appear for an oral hearing. 34.16 Issuance of the hearing decision.
34.17 Content of decision.
34.18 Issuance of the wage garnishment order.
34.19 Amounts to be withheld under a garnishment order.
34.20 Amount to be withheld under multiple garnishment orders. 34.21 Employer certification.
34.22 Employer responsibilities.
34.23 Exclusions from garnishment.
34.24 Claim of financial hardship by debtor subject to garnishment. 34.25 Determination of financial hardship.
34.26 Ending garnishment.
34.27 Actions by employer prohibited by law.
34.28 Refunds of amounts collected in error.
34.29 Enforcement action against employer for noncompliance with garnishment order.
34.30 Application of payments and accrual of interest.
Authority: 31 U.S.C. 3720D, unless otherwise noted. Sec. 34.1 Purpose of this part.
This part establishes procedures the Department of Education uses
to collect money from a debtor's disposable pay by means of
administrative wage garnishment to satisfy delinquent debt owed to the United States.
(Authority: 31 U.S.C. 3720D)
Sec. 34.2 Scope of this part.
(a) This part applies to collection of any financial obligation
owed to the United States that arises under a program we administer.
(b) This part applies notwithstanding any provision of State law.
(c) We may compromise or suspend collection by garnishment of a debt in accordance with applicable law.
(d) We may use other debt collection remedies separately or in
conjunction with administrative wage garnishment to collect a debt. [[Page 8143]]
(e) To collect by offset from the salary of a Federal employee, we
use the procedures in 34 CFR part 31, not those in this part. (Authority: 31 U.S.C. 3720D)
Sec. 34.3 Definitions.
As used in this part, the following definitions apply:
Administrative debt means a debt that does not arise from an individual's obligation to repay a loan or an overpayment of a grant received under a student financial assistance program authorized under Title IV of the Higher Education Act.
Business day means a day Monday through Friday, unless that day is a Federal holiday.
Certificate of service means a certificate signed by an authorized official of the U.S. Department of Education (the Department) that indicates the nature of the document to which it pertains, the date we mail the document, and to whom we are sending the document.
Day means calendar day. For purposes of computation, the last day of a period will be included unless that day is a Saturday, a Sunday, or a Federal legal holiday; in that case, the last day of the period is the next business day after the end of the period.
Debt or claim means any amount of money, funds, or property that an appropriate official of the Department has determined an individual owes to the United States under a program we administer.
Debtor means an individual who owes a delinquent nontax debt to the United States under a program we administer.
Disposable pay. This term
(a)(1) Means that part of a debtor's compensation for personal
services, whether or not denominated as wages, from an employer that
remains after the deduction of health insurance premiums and any amounts required by law to be withheld.
(2) For purposes of this part, ``amounts required by law to be
withheld'' include amounts for deductions such as social security taxes
and withholding taxes, but do not include any amount withheld under a court order; and
(b) Includes, but is not limited to, salary, bonuses, commissions, or vacation pay.
Employer. This term
(a) Means a person or entity that employs the services of another and that pays the latter's wages or salary;
(b) Includes, but is not limited to, State and local governments; and
(c) Does not include an agency of the Federal Government.
Financial hardship means an inability to meet basic living expenses for goods and services necessary for the survival of the debtor and his or her spouse and dependents.
Garnishment means the process of withholding amounts from an employee's disposable pay and paying those amounts to a creditor in satisfaction of a withholding order.
We means the United States Department of Education.
Withholding order. (a) This term means any order for withholding or
garnishment of pay issued by this Department, another Federal agency, a
State or private nonprofit guaranty agency, or a judicial or administrative body.
(b) For purposes of this part, the terms ``wage garnishment order''
and ``garnishment order'' have the same meaning as ``withholding order.''
You means the debtor.
(Authority: 31 U.S.C. 3720D)
Sec. 34.4 Notice of proposed garnishment.
(a) We may start proceedings to garnish your wages whenever we
determine that you are delinquent in paying a debt owed to the United States under a program we administer.
(b) We start garnishment proceedings by sending you a written notice of the proposed garnishment.
(c) At least 30 days before we start garnishment proceedings, we
mail the notice by first class mail to your last known address.
(d)(1) We keep a copy of a certificate of service indicating the date of mailing of the notice.
(2) We may retain this certificate of service in electronic form. (Authority: 31 U.S.C. 3720D)
Sec. 34.5 Contents of a notice of proposed garnishment.
In a notice of proposed garnishment, we inform you of (a) The nature and amount of the debt;
(b) Our intention to collect the debt through deductions from pay
until the debt and all accumulated interest, penalties, and collection costs are paid in full; and
(c) An explanation of your rights, including those in Sec. 34.6,
and the time frame within which you may exercise your rights. (Authority: 31 U.S.C. 3720D)
Sec. 34.6 Rights in connection with garnishment.
Before starting garnishment, we provide you the opportunity
(a) To inspect and copy our records related to the debt;
(b) To enter into a written repayment agreement with us to repay the debt under terms we consider acceptable;
(c) For a hearing in accordance with Sec. 34.8 concerning
(1) The existence, amount, or current enforceability of the debt;
(2) The rate at which the garnishment order will require your employer to withhold pay; and
(3) Whether you have been continuously employed less than 12 months after you were involuntarily separated from employment.
(Authority: 31 U.S.C. 3720D)
Sec. 34.7 Consideration of objection to the rate or amount of withholding.
(a) We consider objections to the rate or amount of withholding
only if the objection rests on a claim that withholding at the proposed
rate or amount would cause financial hardship to you and your dependents.
(b) We do not provide a hearing on an objection to the rate or
amount of withholding if the rate or amount we propose to be withheld
does not exceed the rate or amount agreed to under a repayment
agreement reached within the preceding six months after a previous notice of proposed garnishment.
(c) We do not consider an objection to the rate or amount of
withholding based on a claim that by virtue of 15 U.S.C. 1673, no
amount of wages are available for withholding by the employer. (Authority: 31 U.S.C. 3720D)
Sec. 34.8 Providing a hearing.
(a) We provide a hearing if you submit a written request for a
hearing concerning the existence, amount, or enforceability of the debt or the rate of wage withholding.
(b) At our option the hearing may be an oral hearing under Sec. 34.9 or a paper hearing under Sec. 34.10.
(Authority: 31 U.S.C. 3720D)
Sec. 34.9 Conditions for an oral hearing.
(a) We provide an oral hearing if you
(1) Request an oral hearing; and
(2) Show in the request a good reason to believe that we cannot
resolve the issues in dispute by review of the documentary evidence, by
demonstrating that the validity of the claim turns on the credibility or veracity of witness testimony.
(b) If we determine that an oral hearing is appropriate, we notify you how to receive the oral hearing.
(c)(1) At your option, an oral hearing may be conducted either in person or by telephone conference.
[[Page 8144]]
(2) We provide an inperson oral hearing with regard to administrative debts only in Washington D.C.
(3) We provide an inperson oral hearing with regard to debts based
on student loan or grant obligations only at our regional service centers in Atlanta, Chicago, or San Francisco.
(4) You must bear all travel expenses you incur in connection with an inperson hearing.
(5) We bear the cost of any telephone calls we place in order to conduct an oral hearing by telephone.
(d)(1) To arrange the time and location of the oral hearing, we
ordinarily attempt to contact you first by telephone call to the number you provided to us.
(2) If we are unable to contact you by telephone, we leave a
message directing you to contact us within 5 business days to arrange the time and place of the hearing.
(3) If we can neither contact you directly nor leave a message with you by telephone
(i) We notify you in writing to contact us to arrange the time and place of the hearing; or
(ii) We select a time and place for the hearing, and notify you in writing of the time and place set for the hearing.
(e) We consider you to have withdrawn the request for an oral hearing if
(1) Within 15 days of the date of a written notice to contact us, we receive no response to that notice; or
(2) Within five business days of the date of a telephone message to contact us, we receive no response to that message.
(Authority: 31 U.S.C. 3720D)
Sec. 34.10 Conditions for a paper hearing.
We provide a paper hearing
(a) If you request a paper hearing;
(b) If you requested an oral hearing, but we determine under Sec. 34.9(e) that you have withdrawn that request;
(c) If you fail to appear for a scheduled oral hearing, as provided in Sec. 34.15; or
(d) If we deny a request for an oral hearing because we conclude
that, by a review of the written record, we can resolve the issues raised by your objections.
(Authority: 31 U.S.C. 3720D)
Sec. 34.11 Timely request for a hearing.
(a) A hearing request is timely if
(1) You mail the request to the office designated in the
garnishment notice and the request is postmarked not later than the 30th day following the date of the notice; or
(2) The designated office receives the request not later than the 30th day following the date of the garnishment notice.
(b) If we receive a timely written request from you for a hearing, we will not issue a garnishment order before we
(1) Provide the requested hearing; and
(2) Issue a written decision on the objections you raised.
(c) If your written request for a hearing is not timely (1) We provide you a hearing; and
(2) We do not delay issuance of a garnishment order unless
(i) We determine from credible representations in the request that
the delay in filing the request for hearing was caused by factors over which you had no control; or
(ii) We have other good reason to delay issuing a garnishment order.
(d) If we do not complete a hearing within 60 days of an untimely
request, we suspend any garnishment order until we have issued a decision.
(Authority: 31 U.S.C. 3720D)
Sec. 34.12 Request for reconsideration.
(a) If you have received a decision on an objection to garnishment
you may file a request for reconsideration of that decision.
(b) We do not suspend garnishment merely because you have filed a request for reconsideration.
(c) We consider your request for reconsideration if we determine that
(1) You base your request on grounds of financial hardship, and
your financial circumstances, as shown by evidence submitted with the
request, have materially changed since we issued the decision so that
we should reduce the amount to be garnished under the order; or
(2)(i) You submitted with the request evidence that you did not previously submit; and
(ii) This evidence demonstrates that we should reconsider your
objection to the existence, amount, or enforceability of the debt.
(d)(1) If we agree to reconsider the decision, we notify you.
(2)(i) We may reconsider based on the request and supporting evidence you have presented with the request; or
(ii) We may offer you an opportunity for a hearing to present evidence.
(Authority: 31 U.S.C. 3720D)
Sec. 34.13 Conduct of a hearing.
(a)(1) A hearing official conducts any hearing under this part.
(2) The hearing official may be any qualified employee of the
Department whom the Department designates to conduct the hearing.
(b)(1) The hearing official conducts any hearing as an informal proceeding.
(2) A witness in an oral hearing must testify under oath or affirmation.
(3) The hearing official maintains a summary record of any hearing.
(c) Before the hearing official considers evidence we obtain that
was not included in the debt records available for inspection when we
sent notice of proposed garnishment, we notify you that additional
evidence has become available, may be considered by the hearing official, and is available for inspection or copying.
(d) The hearing official considers any objection you raise and evidence you submit
(1) In or with the request for a hearing;
(2) During an oral hearing;
(3) By the date that we consider, under Sec. 34.9(e), that a request for an oral hearing has been withdrawn; or
(4) Within a period we set, ordinarily not to exceed seven business days, after
(i) We provide you access to our records regarding the debt, if you
requested access to records within 20 days after the date of the notice under Sec. 34.4;
(ii) We notify you that we have obtained and intend to consider additional evidence;
(iii) You request an extension of time in order to submit specific
relevant evidence that you identify to us in the request; or
(iv) We notify you that we deny your request for an oral hearing. (Authority: 31 U.S.C. 3720D)
Sec. 34.14 Burden of proof.
(a)(1) We have the burden of proving the existence and amount of a debt.
(2) We meet this burden by including in the record and making available to the debtor on request records that show that
(i) The debt exists in the amount stated in the garnishment notice; and
(ii) The debt is currently delinquent.
(b) If you dispute the existence or amount of the debt, you must prove by a preponderance of the credible evidence that
(1) No debt exists;
(2) The amount we claim to be owed on the debt is incorrect, or (3) You are not delinquent with respect to the debt.
(c)(1) If you object that the proposed garnishment rate would cause
financial hardship, you bear the burden of proving by a preponderance of the credible evidence that withholding the
[[Page 8145]]
amount of wages proposed in the notice would leave you unable to meet the basic living expenses of you and your dependents.
(2) The standards for proving financial hardship are those in Sec. 34.24.
(d)(1) If you object on the ground that applicable law bars us from
collecting the debt by garnishment at this time, you bear the burden of proving the facts that would establish that claim.
(2) Examples of applicable law that may prevent collection by
garnishment include the automatic stay in bankruptcy (11 U.S.C.
362(a)), and the preclusion of garnishment action against a debtor who
was involuntarily separated from employment and has been reemployed for
less than a continuous period of 12 months (31 U.S.C. 3720D(b)(6)).
(e) The fact that applicable law may limit the amount that an
employer may withhold from your pay to less than the amount or rate we
state in the garnishment order does not bar us from issuing the order. (Authority: 31 U.S.C. 3720D)
Sec. 34.15 Consequences of failure to appear for an oral hearing.
(a) If you do not appear for an inperson hearing you requested, or
you do not answer a telephone call convening a telephone hearing, at
the time set for the hearing, we consider you to have withdrawn your request for an oral hearing.
(b) If you do not appear for an oral hearing but you demonstrate
that there was good cause for not appearing, we may reschedule the oral hearing.
(c) If you do not appear for an oral hearing you requested and we
do not reschedule the hearing, we provide a paper hearing to review
your objections, based on the evidence in your file and any evidence you have already provided.
(Authority: 31 U.S.C. 3720D)
Sec. 34.16 Issuance of the hearing decision.
(a) Date of decision. The hearing official issues a written opinion
stating his or her decision, as soon as practicable, but not later than
60 days after the date on which we received the request for hearing.
(b) If we do not provide you with a hearing and render a decision within 60 days after we receive your request for a hearing
(1) We do not issue a garnishment order until the hearing is held and a decision rendered; or
(2) If we have already issued a garnishment order to your employer,
we suspend the garnishment order beginning on the 61st day after we
receive the hearing request until we provide a hearing and issue a decision.
(Authority: 31 U.S.C. 3720D)
Sec. 34.17 Content of decision.
(a) The written decision is based on the evidence contained in the hearing record. The decision includes
(1) A description of the evidence considered by the hearing official;
(2) The hearing official's findings, analysis, and conclusions
regarding objections raised to the existence or amount of the debt;
(3) The rate of wage withholding under the order, if you objected
that withholding the amount proposed in the garnishment notice would cause an extreme financial hardship; and
(4) An explanation of your rights under this part for
reconsideration of the decision.
(b) The hearing official's decision is the final action of the
Secretary for the purposes of judicial review under the Administrative Procedure Act (5 U.S.C. 701 et seq.).
(Authority: 31 U.S.C. 3720D)
Sec. 34.18 Issuance of the wage garnishment order.
(a)(1) If you fail to make a timely request for a hearing, we issue
a garnishment order to your employer within 30 days after the deadline for timely requesting a hearing.
(2) If you make a timely request for a hearing, we issue a
withholding order within 30 days after the hearing official issues a decision to proceed with garnishment.
(b)(1) The garnishment order we issue to your employer is signed by an official of the Department designated by the Secretary.
(2) The designated official's signature may be a computergenerated facsimile.
(c)(1) The garnishment order contains only the information we
consider necessary for your employer to comply with the order and for
us to ensure proper credit for payments received from your employer.
(2) The order includes your name, address, and social security
number, as well as instructions for withholding and information as to where your employer must send the payments.
(d)(1) We keep a copy of a certificate of service indicating the date of mailing of the order.
(2) We may create and maintain the certificate of service as an electronic record.
(Authority: 31 U.S.C. 3720D)
Sec. 34.19 Amounts to be withheld under a garnishment order.
(a)(1) After an employer receives a garnishment order we issue, the
employer must deduct from all disposable pay of the debtor during each
pay period the amount directed in the garnishment order unless this
section or Sec. 34.20 requires a smaller amount to be withheld.
(2) The amount specified in the garnishment order does not apply if
other law, including this section, requires the employer to withhold a smaller amount.
(b) The employer must comply with our garnishment order by withholding the lesser of
(1) The amount directed in the garnishment order; or
(2) The amount specified in 15 U.S.C. 1673(a)(2) (Restriction on
Garnishment); that is, the amount by which a debtor's disposable pay
exceeds an amount equal to 30 times the minimum wage. (See 29 CFR 870.10.)
(Authority: 31 U.S.C. 3720D)
Sec. 34.20 Amount to be withheld under multiple garnishment orders.
If a debtor's pay is subject to several garnishment orders, the
employer must comply with our garnishment order as follows:
(a) Unless other Federal law requires a different priority, the
employer must pay us the amount calculated under Sec. 34.19(b) before
the employer complies with any later garnishment orders, except a family support withholding order.
(b) If an employer is withholding from a debtor's pay based on a
garnishment order served on the employer before our order, or if a
withholding order for family support is served on an employer at any
time, the employer must comply with our garnishment order by withholding an amount that is the smaller of
(1) The amount calculated under Sec. 34.19(b); or
(2) An amount equal to 25 percent of the debtor's disposable pay
less the amount or amounts withheld under the garnishment order or orders with priority over our order.
(c)(1) If a debtor owes more than one debt arising from a program we administer, we may issue multiple garnishment orders.
(2) The total amount withheld from the debtor's pay for orders we
issue under paragraph (c)(1) of this section does not exceed the
amounts specified in the orders, the amount specified in Sec.
34.19(b)(2), or 15 percent of the debtor's disposable pay, whichever is smallest.
[[Page 8146]]
(d) An employer may withhold and pay an amount greater than that
amount in paragraphs (b) and (c) of this section if the debtor gives the employer written consent.
(Authority: 31 U.S.C. 3720D)
Sec. 34.21 Employer certification.
(a) Along with a garnishment order, we send to an employer a
certification in a form prescribed by the Secretary of the Treasury.
(b) The employer must complete and return the certification to us within the time stated in the instructions for the form.
(c) The employer must include in the certification information
about the debtor's employment status, payment frequency, and disposable pay available for withholding.
(Authority: 31 U.S.C. 3720D)
Sec. 34.22 Employer responsibilities.
(a)(1) Our garnishment order indicates a reasonable period of time
within which an employer must start withholding under the order.
(2) The employer must promptly pay to the Department all amounts the employer withholds according to the order.
(b) The employer may follow its normal pay and disbursement cycles in complying with the garnishment order.
(c) The employer must withhold the appropriate amount from the
debtor's wages for each pay period until the employer receives our notification to discontinue wage garnishment.
(d) The employer must disregard any assignment or allotment by an
employee that would interfere with or prohibit the employer from
complying with our garnishment order, unless that assignment or allotment was made for a family support judgment or order.
(Authority: 31 U.S.C. 3720D)
Sec. 34.23 Exclusions from garnishment.
(a) We do not garnish your wages if we have credible evidence that you
(1) Were involuntarily separated from employment; and
(2) Have not yet been reemployed continuously for at least 12 months.
(b) You have the burden of informing us of the circumstances surrounding an involuntary separation from employment.
(Authority: 31 U.S.C. 3720D)
Sec. 34.24 Claim of financial hardship by debtor subject to garnishment.
(a) You may object to a proposed garnishment on the ground that
withholding the amount or at the rate stated in the notice of
garnishment would cause financial hardship to you and your dependents. (See Sec. 34.7)
(b) You may, at any time, object that the amount or the rate of
withholding which our order specifies your employer must withhold causes financial hardship.
(c)(1) We consider an objection to an outstanding garnishment order
and provide you an opportunity for a hearing on your objection only
after the order has been outstanding for at least six months.
(2) We may provide a hearing in extraordinary circumstances earlier
than six months if you show in your request for review that your
financial circumstances have substantially changed after the notice of
proposed garnishment because of an event such as injury, divorce, or catastrophic illness.
(d)(1) You bear the burden of proving a claim of financial hardship by a preponderance of the credible evidence.
(2) You must prove by credible documentation
(i) The amount of the costs incurred by you, your spouse, and any dependents, for basic living expenses; and
(ii) The income available from any source to meet those expenses.
(e)(1) We consider your claim of financial hardship by comparing
(i) The amounts that you prove are being incurred for basic living expenses; against
(ii) The amounts spent for basic living expenses by families of the same size and similar income to yours.
(2) We regard the standards published by the Internal Revenue
Service under 26 U.S.C. 7122(c)(2) (the ``National Standards'') as
establishing the average amounts spent for basic living expenses for
families of the same size as, and with family incomes comparable to, your family.
(3) We accept as reasonable the amount that you prove you incur for
a type of basic living expense to the extent that the amount does not
exceed the amount spent for that expense by families of the same size and similar income according to the National Standards.
(4) If you claim for any basic living expense an amount that
exceeds the amount in the National Standards, you must prove that the amount you claim is reasonable and necessary.
(Authority: 31 U.S.C. 3720D)
Sec. 34.25 Determination of financial hardship.
(a)(1) If we conclude that garnishment at the amount or rate
proposed in a notice would cause you financial hardship, we reduce the
amount of the proposed garnishment to an amount that we determine will allow you to meet proven basic living expenses.
(2) If a garnishment order is already in effect, we notify your
employer of any change in the amount the employer must withhold or the rate of withholding under the order.
(b) If we determine that financial hardship would result from
garnishment based on a finding by a hearing official or under a
repayment agreement we reached with you, this determination is
effective for a period not longer than six months after the date of the finding or agreement.
(c)(1) After the effective period referred to in paragraph (b) of
this section, we may require you to submit current information regarding your family income and living expenses.
(2) If we conclude from a review of that evidence that we should increase the rate of withholding or payment, we
(i) Notify you; and
(ii) Provide you with an opportunity to contest the determination
and obtain a hearing on the objection under the procedures in Sec. 34.24.
(Authority: 31 U.S.C. 3720D)
Sec. 34.26 Ending garnishment.
(a)(1) A garnishment order we issue is effective until we rescind the order.
(2) If an employer is unable to honor a garnishment order because
the amount available for garnishment is insufficient to pay any portion of the amount stated in the order, the employer must
(i) Notify us; and
(ii) Comply with the order when sufficient disposable pay is available.
(b) After we have fully recovered the amounts owed by the debtor,
including interest, penalties, and collection costs, we send the debtor's employer notification to stop wage withholding.
(Authority: 31 U.S.C. 3720D)
Sec. 34.27 Actions by employer prohibited by law.
An employer may not discharge, refuse to employ, or take
disciplinary action against a debtor due to the issuance of a garnishment order under this part.
(Authority: 31 U.S.C. 3720D)
Sec. 34.28 Refunds of amounts collected in error.
(a) If a hearing official determines under Sec. Sec. 34.16 and
34.17 that a person does not owe the debt described in our notice or
that an administrative wage garnishment under this part was barred by law at the time of the collection
[[Page 8147]]
action, we promptly refund any amount collected by means of this garnishment.
(b) Unless required by Federal law or contract, we do not pay interest on a refund.
(Authority: 31 U.S.C. 3720D)
Sec. 34.29 Enforcement action against employer for noncompliance with garnishment order.
(a) If an employer fails to comply with Sec. 34.22 to withhold an
appropriate amount from wages owed and payable to an employee, we may sue the employer for that amount.
(b)(1) We do not file suit under paragraph (a) of this section
before we terminate action to enforce the debt as a personal liability of the debtor.
(2) However, the provision of paragraph (b)(1) of this section may
not apply if earlier filing of a suit is necessary to avoid expiration of any applicable statute of limitations.
(c)(1) For purposes of this section, termination of an action to
enforce a debt occurs when we terminate collection action in accordance
with the FCCS, other applicable standards, or paragraph (c)(2) of this section.
(2) We regard termination of the collection action to have occurred
if we have not received for one year any payments to satisfy the debt,
in whole or in part, from the particular debtor whose wages were subject to garnishment.
(Authority: 31 U.S.C. 3720D)
Sec. 34.30 Application of payments and accrual of interest.
We apply payments received through a garnishment in the following order
(a) To costs incurred to collect the debt;
(b) To interest accrued on the debt at the rate established by
(1) The terms of the obligation under which it arises; or (2) Applicable law; and
(c) To outstanding principal of the debt.
(Authority: 31 U.S.C. 3720D)
Note: The following appendix will not appear in the Code of Federal Regulations.
Appendix
Analysis of Comments and Changes
An analysis of the comments and of the changes in the regulations since publication of the NPRM follows.
We discuss issues according to subject, under the sections of the regulations to which they pertain.
Scope of Garnishment Authority; Collection of Student Loans (Sec. Sec. 34.1 and 34.2)
Comment: One commenter contended that the Department lacks legal
authority to use the garnishment power in the DCIA to collect
student loans, because the commenter views section 488A of the Higher Education Act, 20 U.S.C. 1095a, as restricting the
Department's garnishment authority to ten percent of disposable pay.
Discussion: The commenter bases this contention not on the terms
of the DCIA, but on a rule of statutory construction that where two
statutes authorize an action, the more specific of the two sets the
limits to that authority. Section 488A of the HEA authorizes the
Secretary of Education and guaranty agencies to garnish up to ten
percent of debtor pay to collect student loans, while the DCIA
authorizes Federal agencies to garnish up to fifteen percent of
debtor pay. The commenter views the HEA as the more specific of the
two statutes, and contends that the HEA limits the Department's
garnishment power to the ten percent rate it authorizes. We disagree
that the HEA is the more specific of the two statutes; both statutes
apply to a distinctive category of entities. The HEA extended
garnishment authority to the Department and to some 36 separate
State and nonprofit entities operating as guaranty agencies, and
empowers the latter group to collect both on their own behalf and on
behalf of the Federal government.\1\ The DCIA applies only to
Federal agencies, and applies exclusively to collection of debts owed to the Federal Government.
\1\ Guarantors are authorized to collect ``the amount owed'' by
the defaulter, 20 U.S.C. 1095a(a), which includes that portion of
the loan debt not covered by Federal reinsurance, as well as that
portion of the recovery that the guarantor is authorized to retain. 20 U.S.C. 1078(c)(1), 1078(c)(6).
Even if the HEA were the more specific of the two authorities, the rule that the more specific of two potentially applicable statutes controls is merely one of several tools used to discern the intent of Congress. Another way to determine the intent of Congress when two potentiallyapplicable statutes adopt inconsistent terms is to view the more recent of the two as embodying the current intent of Congress. The 1996 DCIA is the more recent of the two statutes. Thus, Congress' intent to allow garnishment at 15 percent supersedes the HEA's more limited authority.
Looking to the more recent of two statutes to discern Congress' intent is particularly apt because the DCIA garnishment provision is both more recently enacted and part of a comprehensive scheme inconsistent with the limits of the earlier HEA authority. The DCIA supersedes the more limited authority in HEA section 488A because the DCIA garnishment authority is an addition to a comprehensive statutory scheme (31 U.S.C. 37013720E) for enforcement of Federal debts, including student loan debts. That scheme includes, for example, authority under 31 U.S.C. 3720A to collect Federal debt by tax refund offset, and, under 31 U.S.C. 3711(g), to report delinquent Federal debt to credit bureau. Thus, because Congress intended this statutory scheme as in effect before the 1996 DCIA amendments to apply to student loans, there is no reason to infer that Congress did not intend the garnishment provision added by the DCIA to this scheme in 1996 to apply to student loans as well.
Changes to the roles of specific Federal agencies made by the DCIA show that Congress intended that the tools available under this statutory scheme, including garnishment, be used to collect student loans. For the first time, the DCIA required Federal agencies to transfer collection responsibility for their delinquent debt to Treasury, or to other Federal agencies which were designated ``debt collection centers.'' The DCIA authorizes Treasury, as well as these designated ``debt collection centers,'' to use all the collection tools provided in the DCIA, including its garnishment provision, to collect debts which they ``crossservice.'' Education has been designated a debt collection center for student loans, thus, it is illogical to infer any congressional intent to bar Education from using the same DCIA garnishment authority to collect Federal student loan debts that Treasury and other agencies are meant to use to collect Federal debts.
Moreover, if Education had not been designated a debt collection center, the DCIA would have required Education to transfer its student loan debts to Treasury (or another agency designated as a collection center) for crossservicing. Treasury plainly has full authority to use DCIA garnishment to collect any debts transferred to it for servicing, including student loans from Education. Thus, because Treasury or other Federal agencies would have power to collect those very student loans at the 15 percent rate, it is illogical to infer any congressional intent to restrict garnishment to the lesser HEA level when those same loans are serviced by Education itself.
The text of the DCIA itself shows that the absence of any language excluding student loans from garnishment under 31 U.S.C. 3720D was no oversight. The DCIA expanded the scope of Federal offsets by amending 31 U.S.C. 3716 to authorize offset by Treasury against such Federal payments as Social Security benefits, 31 U.S.C. 3716(b)(3), but expressly excluded title IV HEA student assistance payments from offset. 31 U.S.C. 3716(b)(1)(C). That express exclusion of student aid from the DCIA offset provision, contrasted against the absence of any reference to student loans in the DCIA garnishment provisiona provision copied almost verbatim from HEA section 488Ashows that Congress spoke clearly when it meant to exclude student aid from the reach of the DCIA tools, and intended no exclusion of student loans from the DCIA garnishment provision.
In addition to the language of the statute itself, the
legislative context of the garnishment provision shows that Congress
intended the Department to use this DCIA authority to collect
student loans. The subcommittee in which the provision originated
understood from testimony before it that the provision would increase Education's authority to 15 percent to garnish
[[Page 8148]]
debtor wages to collect student loans.\2\ Subsequent oversight
action by that subcommittee \3\ and by the General Accounting Office \4\ at the request of the subcommittee demonstrate the
subcommittee's expectation, and Education's intention, that
Education would implement the DCIA 15 percent wage garnishment authority to collect student loans.
\2\ Hearing on H.R. 2234, the Debt Collection Improvement Act of
1995, before the Subcommittee on Government Management, Information
and Technology of the Committee on Government Reform and Oversight,
104th Cong., 1st Sess. on H.R. 2234, Sept. 8, 1995 at 70, 159, 253.
Moreover, the Congressional Budget Office estimated substantial
increased recoveries on defaulted loans from these DCIA proposals.
See 142 Cong. Rec. S1825 (Memorandum from John Righter, CBO, to Patrick Windham, Sen. Committee on Commerce, Science, and
Transportation, regarding Preliminary scoring of the ``Debt
Collection Improvement Act of 1996,'' Chapter 2 of a proposed
amendment to H.R. 3019). As explained by cognizant staff, CBO based
its estimates on the understanding that Education would use fully
these DCIA tools, including garnishment, to collect defaulted student loans.
\3\ Hearing on Federal Debt Collection Practices before the
Subcommittee on Government Management, Information and Technology of
the Committee on Government Reform and Oversight, 105th Cong., 1st Sess., Nov. 12, 1997, at 90, 91.
\4\ General Accounting Office: Debt Collection Improvement Act of 1996: Status of Selected Agencies' Implementation of
Administrative Wage Garnishment (GAO02313).
For these reasons, the Department considers unfounded the view
that the HEA garnishment authority precludes use of the DCIA garnishment authority to collect student loans.
Changes: None.
Comment: One commenter objected that the explanation for the Department's implementation of DCIA garnishment authority in these regulations left confusion about whether current FFELP regulations, which address garnishment under HEA section 488A by student loan guarantors, will continue to apply to those guarantors, and invited speculation about whether student loan guarantors would continue to garnish to collect debts they held, and if so, whether the HEA, rather than the DCIA, authorized them to do so.
Discussion: The statements made by the Department regarding its
intention to use DCIA garnishment authority make no suggestion that
the role and authority of student loan guarantors has changed. The
HEA expressly authorizes student loan guarantors to collect by
garnishment, and nothing in the DCIA expressly or implicitly
addresses the authority of guarantors to garnish. Regulations
adopted under the Federal Family Education Loan Program (FFELP) at
34 CFR 682.410(b)(9) to implement that authority for guarantors
expressly apply to action by FFELP loan guarantors to conduct
garnishment under HEA section 488A. Those regulations do not state
or imply that they apply to the Department, either when the
Department conducted garnishment under HEA section 488A or under any
other authority. Because the FFELP regulations in most instances
closely track the language of HEA section 488A, the Department, by
following the provisions of the statute itself, generally conformed
to those regulations. Because the DCIA garnishment provision mirrors
HEA section 488A, the Department's reasons for interpreting and
implementing several DCIA provisions apply with equal force to
identical terms of HEA section 488A, which the Department has
authority to interpret. That reasoning therefore helps clarify the
intent of identical language found in both statutes. Discussion of
the HEA in the explanation for this rule did not suggest that the
Department considered student loan guarantors to be authorized to collect under the DCIA authority.
Changes: None.
Computation of Time and System Changes (Sec. 34.3)
Comment: A commenter objects that adopting definitions of ``day'' and ``business day'' may require modification of current systems for mailings. As an example, the commenter stated that the garnishment order cannot be issued until 30 days after the date of the notice, and the proposed rule provides that if the last day of a period is a Saturday, Sunday, or Federal holiday, the period runs to the next business day. Thus, the rule would be violated if a contractor were to mail a garnishment order exactly 30 days after the date of the notice, if that 30th day fell on a Saturday or Sunday.
Discussion: These rules adopt verbatim the definitions and
approach adopted by Treasury in its rule, which mirror rules almost
invariably applied in litigation. The only act we take under this
rule within a specified number of days after an event or deadline is
the issuance of the garnishment order; Sec. 34.4 states that we
provide notice of the proposed garnishment ``at least'' 30 days
before we begin garnishment, and Sec. 34.18(a)(1) provides that we
issue a garnishment order ``within 30 days after the deadline for timely requesting a hearing'' or ``within 30 days after a
decision.'' The Department is responsible for ensuring that its
garnishment activities, and the actions of contractors as needed to
support those activities, conform to this rule. We therefore see no
basis for the complaint that the rule would require modification of
systems used to create and mail the notices and orders Education now uses in its garnishment process.
Changes: None.
Rights in Connection With Garnishment (Sec. 34.6)
Comment: A commenter objected that the regulations do not articulate specific defenses that may be available to the debtor as grounds for objection to the proposed garnishment, and urged that the rule should mandate use of a form request for hearing of the kind now used by the Department for garnishment action to collect student loans.
Discussion: The Department has used, and will continue to use
for collection of student loan debts, a form Request for Hearing
that lists potentially available grounds for objection. Because this
regulation applies to garnishment to collect any debts held by the
Department, the Department did not consider it necessary to adopt
any specific provisions applicable only to some debts. The
Department has no intention to change this procedure for student
loans. However, neither the statute, Treasury regulations, nor due
process requires use of a notice that lists potentially available
defenses. There is no need to include in these regulations provisions that would imply that such a duty exists.
Changes: None.
Comment: A commenter urged that the regulations should specifically require the Department to give notice that a debtor may object to garnishment on the ground that the debtor was recently reemployed after involuntary separation.
Discussion: The Department agrees that debtors may not be aware that they may object on the grounds that the debtor has been recently been reemployed after involuntary separation from employment. The notice and the request for hearing now used by the Department for HEA garnishment explain this option. Because this objection applies regardless of the nature of the debt to be collected, the Department agrees that the regulations should commit to providing express notice of this option.
Changes: The regulations are modified in Sec. 34.6 to provide that the pregarnishment notice includes an explanation of the availability of objection on the grounds of recent reemployment after involuntary separation.
Comment: A commenter urged that the regulations should specifically require notice to the debtor that limits on withholding imposed by 15 U.S.C. 1671 et seq. may preclude actual withholding of pay.
Discussion: Neither the Department, nor any other garnishing
creditor, can reliably determine whether, and for what period, 15
U.S.C. 1673 may bar an employer from honoring a particular
garnishment order. That statute imposes the duty on the employer to
honor its limits, because only the employer actually knows both the
amount of the debtor's disposable pay and the number, amount,
relative priority, and duration of all withholding orders that may
affect the debtor. The court or administrative body that issues a
garnishment order meets its duty under 15 U.S.C. 1673(c) by stating
in the garnishment order that the employer must pay no more than the amount permitted by that statute. Standard Form 329B, the
garnishment order prescribed for Federal agencies by Treasury, thus
directs the employer to pay the lesser of the amount permitted under
15 U.S.C. 1673 or the amount determined by the agency (either 15 percent of disposable pay or a lesser amount).
Therefore, these regulations, consistent with Treasury
regulations, do not recognize as a valid defense to a garnishment
action a contention by the debtor that the proposed withholding
order, if honored by the employer, would result in withholding
amounts greater than those permitted by 15 U.S.C. 1673. Because this
statute provides no defense to the debtor in a proceeding under this
part, it does not affect the debtor's ability to respond in a
meaningful manner in the proposed garnishment. We note that neither
15 U.S.C. 1671 et seq., the garnishment statutes themselves (HEA section 488A or 31
[[Page 8149]]
U.S.C. 3720D), nor Treasury regulations require the creditor who
intends to garnish to include in the notice or complaint initiating
collection action an explanation of the effect of 15 U.S.C. 1673.
There appears to be little value in including an explanation of this
statute in the notice, which is intended to explain the debtor's rights in the garnishment proceeding.
Changes: None.
Comment: A commenter stated that the regulations lacked language to mirror the assurance in the preamble that the Department provides hearings even if the request for a hearing is not made timely, and that the regulations should include this assurance.
Discussion: Section 34.8 requires the debtor to make any request
for a hearing in writing, regardless of the type of hearing sought.
Section 34.11(c)(1) expressly states that we provide a hearing even
if that written request for a hearing is untimely. That provision
contains the assurance that the commenter describes, and no additional language is needed to ensure that right.
Changes: None.
Comment: A commenter stated that regulations should require that the Department make available for inspection by the debtor prior to the hearing any evidence on which the Department intends to rely to establish the existence and amount of the debt.
Discussion: The proposed rule, in Sec. Sec. 34.5 and 34.6(a),
stated that the Department would explain in the pregarnishment
notice that the debtor may inspect and copy records regarding the
debt, and in Sec. 34.14(a)(2) further provided that the Department
would, on request, make available to the debtor, as part of the
hearing process, the evidence which we believe establishes the
existence and amount of the debt. These provisions ensure that the
debtor has an opportunity to examine the evidence on which the
Department's claim rests, in a timely manner, that permits the
debtor effectively to respond with evidence and argument before a decision is issued. No change is needed.
Changes: None.
Conditions for an Oral Hearing (Sec. 34.9)
Comment: A commenter objected to the requirement that the objecting debtor who seeks an oral hearing must state reasons why the objection cannot be satisfactorily reviewed based on the records, including any material provided by the debtor. The commenter objected that this requirement places an unfair burden on borrowers, many of whom may be lowincome or unsophisticated.
Discussion: By requiring the debtor to show that an oral hearing is actually needed to resolve the disputed facts, the regulations adopt the same approach used in judicial proceedings, the paradigm of due process. Courts routinely dispose of defensesincluding those raised by pro se or unsophisticated defendantsthrough summary judgment rulings, and that disposition meets constitutional due process standards. The Department has limited resources available to conduct oral hearings; published statistics show that the Department received approximately 9000 requests for hearings in its HEA garnishment actions in FY 2000. General Accounting Office: Debt Collection Improvement Act of 1996: Status of Selected Agencies' Implementation of Administrative Wage Garnishment (GAO02 313) p. 16. Limitations on resources do not warrant curtailing the rights of debtors, but do militate in favor of the Department, like Federal courts exercising summary judgment authority, avoiding unnecessary hearings.
Consistent with Treasury regulations applicable to offset proceedings, 31 CFR 901.3(e), and to DCIA garnishment actions, 31 CFR 285.11(e), the Department in these regulations simply requires the debtor who seeks an oral hearing to show a good reason why we cannot resolve the disputed issues by reviewing the debt records. This is a commonsense standard that we have generously applied for years in Federal offset proceedings. The Department sees no readily articulated and sensible lesser standard, and no reason to commit in these regulations to provide an oral hearing on request regardless of the nature of the objection or the kind of evidence available.
Proposed Sec. 34.10(a) stated that a paper hearing would be held upon request, but inadvertently omitted the word ``or'' before stating that paper hearings would be provided if we conclude that we can resolve the issues raised by an objection without an oral hearing.
Changes: Section 34.10(a) of the proposed rule is revised to state that we provide a paper hearing upon request by the debtor or if an oral hearing was requested but we determine that we can resolve the issues raised by the objection through a review of the written record regarding the debt.
Comment: A commenter urged that, for inperson or telephone hearings, the regulations be revised to state that the Department must send a copy of the hearing file to the debtor prior to the hearing.
Discussion: The Department has used, and will continue to use, a
pregarnishment notice that encourages the debtor to request copies
of the records that pertain to the debt to be collected by
garnishment, and to do so before the hearing, and indeed before the
submission of the actual objection to the proposed garnishment. The
proposed rule in Sec. 34.5(c)(1) provides that the Department makes
these records available on request. If the debtor does not choose to
request and review these records, we see no need to incur the expense of sending the records to the debtor.
Changes: None.
Conduct of Hearings (Sec. 34.13)
Comment: One commenter disagreed with the statement in the preamble that contractors cannot rule on debtor objections. The commenter considered the statement that this activity was an inherently governmental function to imply that student loan guarantors could not use independent hearing officials, including administrative law judges and other parties, whom they retain by contract.
Discussion: The Department intended no inference that student
loan guarantors could not use contracts to retain independent
hearing officials. HEA section 488A requires student loan guarantors
to appoint administrative law judges or to retain independent
hearing officials, not under the supervision or control of the
guarantor, to adjudicate debtor objections to the proposed
garnishment; that retainer agreement will obviously be embodied in a contract with the hearing official. As Treasury stated in
promulgating controlling regulations, Federal agencies ``may not
contract out `inherently governmental functions,' . . . [but]
contractors can[ ] assist agencies'' by mailing notices, orders
authorized by the agency, receiving documents from debtors and
employers, and arranging repayment agreements approved by the
agency. 63 FR 25137. Unlike these supporting functions, adjudication
of debtor disputes to the compulsory taking of a portion of their
wages by garnishment is an inherently governmental function. The
Department therefore cannot use contractors to decide debtor
objections. The Department recognizes that the HEA requires
guarantors to use individuals, including administrative law judges,
who are independent of the guarantor to perform this adjudication
function. We fully agree that guarantors can arrange for these services by contracts.
Changes: None.
Comment: One commenter agreed with the statement that only qualified employees of the Department may conduct hearings, but objected to the statement that the Department may use contracted services to analyze debtor objections and propose appropriate findings to those objections. The commenter requested that the Department clarify that any findings proposed by contractors are not final, and that Department hearing officials must exercise independent judgment and provide independent rationales for decisions. The commenter further urged that the regulations bar use of employees of collection agencies or other agencies collecting debts on behalf of the Department to analyze objections. The commenter urged that contractors receive specific training on borrower defenses and other critical hearing procedures.
Discussion: The Department agrees with the commenter that Department contractors cannot conduct hearings or rule on objections to garnishment, because those are inherently governmental functions. As discussed earlier, HEA section 488A expressly requires guarantors to use independent hearing officials not under the control of the guarantor to judge debtor objections to garnishment. In contrast, both HEA section 488A and 31 U.S.C. 3720D direct the Department itself to provide a hearing and decide debtor objections. The Department cannot, therefore, delegate this duty to a contractor. This does not, however, preclude use of contractors to analyze debtor objections and propose resolutions on those objections.
Department officials must therefore consider the objections raised by each debtor, and must issue a decision on those
objections. Unless and until a Department official makes findings
and issues a decision, there is no ruling on a debtor's objections. [[Page 8150]]
The Department agrees that contractors used to prepare
recommendations should be trained to properly analyze debtor
objections. However, because contractor analyses of those objections
are clearly no more than recommendations to Department staff and
have no binding effect whatever on the debtor, we see no need to
include language in the regulations to characterize contractor analyses.
Debtors have the right, under these regulations, to avoid
garnishment by entering a voluntary repayment agreement. The
Department uses its collection contractors to negotiate repayment
terms with those debtors sent notice of garnishment who wish to
repay voluntarily. Collection contractors have a financial interest
in recovery, whether by garnishment or by voluntary payment, and the
Department does not use them to prepare recommended analysis for a
hearing on any objection, including hardship objections. These
regulations ensure a hearing by a designated Department official for
any debtor who does not agree to repay voluntarily and has requested a hearing.
Changes: None.
Comment: A commenter opined that the regulations should adopt guidelines and training procedures for any Department staff designated to conduct hearings of debtor objections. The commenter urged that the regulations should require the Department to provide debtors a list of hearing officials available for review of their objections so that they may object to those they consider
unqualified or biased.
Discussion: Any decision issued by the Department on debtor objections to garnishment is subject to judicial review under Administrative Procedure Act (APA). The Department has a strong interest in seeing that Department staff who conduct hearings do so in conformance with applicable substantive and procedural law. Therefore, the Department sees little value in adding generalized language to this part that would purport to govern its own internal training procedures.
The commenter points to no administrative or judicial tribunal that allows debtors to select the individual to hear their cases, and shows no good reason to adopt that course in this part. The commenter urged that this would permit a debtor to reject a particular individual who the debtor considers biased against the debtor. A debtor who objects to a hearing official as biased, can object as part of the hearing process to that individual serving as hearing official.\5\ Hearings under this part are not subject to 5 U.S.C. 556, which requires the agency to consider and include in the administrative record its ruling on any objection to a proposed hearing official. However, the Department must meet that test, because it must consider and rule on any objection raised by the debtor, including an objection that the hearing official is biased. That determination, and any claim that a decision was the result of bias by the hearing official, may be tested on judicial review. \5\ Grounds for disqualification in proceedings under this part would include those applicable to Federal court proceedings; as pertinent here, Federal law requires disqualification of a judge in a Federal court proceeding who has personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts. 28 U.S.C. 455(b)(1).
No Department hearing official benefits financially from the outcome of a hearing, and Federal ethics rules prohibit a hearing official from participating in a matter in which the individual has a financial interest. 5 CFR 2635.402(a). The Department therefore sees no need to add provisions to these regulations offering debtors a choice of hearing officials as a remedy for speculation that some Department official may harbor bias against a particular debtor.
Changes: None.
Content of Decision; Basis of Decision on Evidence Considered at Hearing (Sec. 34.17)
Comment: A commenter stated that regulations should require that hearing decisions be based only on evidence presented at the hearing and should clearly state the grounds for denial of an objection.
Discussion. Section 34.17 of the proposed rule provided that the decision would include the hearing official's conclusions and reasoning for each objection presented. We agree that the decision must rest on evidence presented in the hearing, but that hearing process is informal and may extend beyond the actual oral hearing. The regulations do not bar debtors from presenting in oral hearings objections not raised in the request for hearing, and do not require debtors who seek oral hearings to disclose all the evidence on which they will rely to support an objection. Because new objections and evidence first presented by the debtor during an oral hearing may require the Department to obtain further evidence in order to evaluate, the hearing official may leave the record open both for the Department and for the debtor. We may need to obtain additional evidence to respond to objections and evidence submitted by a debtor in either an oral or paper hearing.
To ensure that evidence we may obtain after the notice is sent is fairly considered in the hearing process, the debtor must have an opportunity to examine and respond to that evidence before the hearing official makes his or her decision. Therefore, if we intend to consider evidence that was not included in our records of the debt that were available for inspection prior to the hearing, the hearing official will consider that evidence only after we notify the debtor, make that evidence available to the debtor, and provide a reasonable period for rebuttal evidence and argument by the debtor.
The proposed regulations did not address the situation in whi
FOR FURTHER INFORMATION CONTACT
Marian E. Currie, U.S. Department of Education, Union Center Plaza Room 41B4, 830 First Street NE, Washington DC 20202, Telephone: (202) 3773212 or via Internet: marian.currie@ed.gov.
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