Section 121.10. Administrative wage garnishment procedures for Federal loans

(a) This section implements and incorporates by reference the Federal administrative wage garnishment process authorized under section 488A of the Higher Education Act of 1965 (20 U.S.C.A. § 1095a) and 34 CFR 682.410(b)(10) (relating to fiscal, administrative, and enforcement requirements).

(b) Loan collection procedure for those loans which are held by the Agency and which qualify as loans under the Federal Family Education Loan Program (FFELP) are as follows:

(1) If the Agency decides to garnish the disposable pay of a borrower who is not making payments on a loan held by the Agency, on which the United States Secretary of Education (Secretary) has paid a reinsurance claim, it shall do so in accordance with the procedures in section 488A of the Higher Education Act of 1965.

(2) Unless the Agency receives information that justifies a delay or cancellation of the order of withholding, it will send an order of withholding to the employer within 20 days after the borrower fails to request a hearing within 20 days of the date of mailing of the notice, or if a timely request for a hearing is made by the borrower, within 20 days after a final decision is made by the Agency to proceed with garnishment.

(3) The Agency will provide a hearing if the borrower submits a written request for a hearing on the existence or amount of the debt or the terms of the repayment schedule. The borrower may request an oral hearing or a written hearing. The time and location of the hearing will be established by the Agency. An oral hearing may, at the borrower’s option, be conducted either in-person or by telephone conference. Telephonic charges are the responsibility of the Agency.

(4) If the borrower’s written request is received by the Agency on or before the 15th day following the borrower’s receipt of the notice the Agency may not issue an order of withholding until the borrower has been provided the requested hearing. For purposes of this subsection, in the absence of evidence to the contrary, a borrower will be considered to have received the notice 5 days after it was mailed by the Agency. The Agency will provide a hearing to the borrower in sufficient time to permit a decision to be rendered within 60 days from the day of receipt of the borrower’s hearing request.

(5) The hearing examiner appointed by the Agency to conduct the hearing may be any qualified individual not under the supervision or control of the President and Chief Executive Officer of the Agency and have the power and duty to:

(i) Administer oaths.

(ii) Question witnesses presented by the Agency or by the borrower.

(iii) Hear evidence submitted, review the documents presented, consider arguments and prepare a report.

(iv) Recommend in the report a proposed adjudication and order, supported by findings of fact and conclusions of law.

(v) Provide copies of the report to the President and Chief Executive Officer of the Agency and to the borrower or the borrower’s attorney of record at the earliest practicable date, but not later than 60 days after the Agency’s receipt of the borrower’s hearing request.

(6) The proceedings of a hearing will be conducted in the following order:

(i) The hearing examiner will state the purpose of the hearing, the procedure to be followed, and the manner in which the report will be transmitted to the parties.

(ii) The borrower or the borrower’s attorney will present the borrower’s case.

(iii) The Agency may cross-examine each witness presented by the borrower.

(iv) The Agency will present its case.

(v) The borrower or the borrower’s attorney may cross-examine each witness presented by the Agency.

(vi) The hearing examiner may question any witness at any time.

(7) The borrower and the President and Chief Executive Officer of the Agency will each have the right to file exceptions to the hearing examiner’s report within 15 days after the service of a copy of the report. Failure to file exceptions within the time allowed shall constitute a waiver of all objections to the report.

(8) The period of time may, for good cause, be extended upon motion made before the expiration of the 15-day time period and filed with the hearing examiner.

(9) The period of time may be extended upon motion made after the expiration of the 15-day time period where reasonable grounds are shown for failure to act. The motion shall be filed with the hearing examiner.

(10) Requests for the extension to time in which to file briefs shall be filed with the hearing examiner at least 5 days before the time fixed for filing the briefs.

(11) Upon consideration of the record, the hearing examiner’s report, and any exceptions and briefs filed by the borrower and the President and Chief Executive Officer of the Agency, the Board will enter a final order.

(12) When the Board receives notice of an appeal, it will place the appeal on the meeting agenda of the Board after the Board has reviewed a stenographic record of the hearing before the hearing examiner. The Board may delegate to the review committee, comprised of three or more Board members designated by the Chairperson of the Board, the responsibility to review the record and hearing examiner’s report to the Board and to make a recommendation for action by the Board. The review committee will provide an opportunity for the borrower and the Agency to present oral argument, when requested by either party, before rendering a recommendation for action by the Board. Oral argument may be conducted either in-person or by telephone conference. Telephonic charges are the responsibility of the Agency. The Board will make a final order that is just and proper.

(13) Notice of the entry of a final order by the Board will be mailed promptly to the borrower at the borrower’s last known post office address.

(c) The Agency will sue any employer for any amount that the employer, after receipt of the order of withholding provided by the Agency, fails to withhold from wages owed and payable to an employe under the employer’s normal pay and disbursement cycle.

(d) This section affects 1 Pa. Code Part II (relating to General Rules of Administrative Practice and Procedure) as follows:

(1) Subsection (b)(3) supersedes 1 Pa. Code § 35.105 (relating to notice of nonrulemaking proceedings).

(2) Subsection (b)(5)(i)—(iii) supplements 1 Pa. Code § 35.187 (relating to authority delegated to presiding officers); subsection (b)(5)(iv) supersedes 1 Pa. Code § 35.205 (relating to contents of proposed reports); subsection (b)(5)(v) supersedes 1 Pa. Code § 35.207 (relating to service of proposed reports).

(3) Subsection (b)(6) supplements 1 Pa. Code § 35.125 (relating to order of procedure).

(4) Subsection (b)(7) supersedes 1 Pa. Code § 35.211 (relating to procedure to except to proposed reports).

(5) Subsection (b)(8)—(10) supersedes 1 Pa. Code § 31.15(a) (relating to extensions of time) and supplements 1 Pa. Code Chapter 35, Subchapter D (relating to motions).

(6) Subsection (b)(11) supplements 1 Pa. Code § 35.226 (relating to final orders).

(7) Subsection (b)(12) supersedes 1 Pa. Code § 35.214 (relating to oral argument on exceptions).

The provisions of this § 121.10 adopted August 4, 2000, effective August 5, 2000, 30 Pa.B. 3924.

Notation

Authority

The provisions of this § 121.10 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); The Institutional Assistance Grants Act (24 P. S. § § 5181—5189); the Urban and Rural Teacher Loan Forgiveness Act (24 P. S. § § 5191—5197); and the Agriculture Education Loan Forgiveness Act (24 P. S. § § 5198.1—5198.7).