Current through Register Vol. 51, No. 3, September 1, 2024
RELATES TO:
KRS
164.748(14)
NECESSITY, FUNCTION, AND CONFORMITY: The Kentucky Higher
Education Assistance Authority administers programs to provide financial
assistance to students to attend postsecondary institutions. This
administrative regulation sets forth the procedures by which students seeking
financial assistance or individuals indebted to the authority for repayment of
student financial assistance may request a review of decisions made by the
authority's employees which adversely affect their rights, obligations or
benefits or their eligibility to participate in authority administered
programs. This amendment is necessary to clarify hearing procedures and the
applicability of this administrative regulation to certain disputes that may
arise.
Section 1. Definitions.
(1) "Adverse action" shall mean any of the
following actions or decisions by an employee or agent of the authority that
adversely affects the rights, obligations, or benefits of a petitioner:
(a) Denial of an award of student financial
assistance;
(b) Reduction or
revocation of an award of student financial assistance;
(c) Determination of the existence and amount
of a repayment obligation or eligibility for cancellation or deferment of a
repayment obligation authorized by statute or administrative regulation on a
debt to the authority;
(d)
Determination of default or acceleration of repayment of a debt to the
authority;
(e) Accuracy of credit
information;
(f) Establishment of
reasonable and affordable payment terms for rehabilitation of a defaulted
insured student loan or reinstatement of eligibility for additional student
assistance, including consolidation of defaulted insured student loans, after
payment of a claim due to default on an insured student loan;
(g) Denial of rehabilitation of a defaulted
insured student loan or reinstatement of eligibility for additional student
assistance, including consolidation of defaulted insured student loans, after
payment of an insurance claim by the authority due to default on an insured
student loan or nonpayment of any debt to the authority.
(2) The definition of "authority" is governed
by
KRS
164.740(1).
(3) "Default" means the failure of a borrower
to make an installment payment when due, or to meet other terms of a promissory
note under circumstances where the authority finds it reasonable to conclude
that the borrower no longer intends to honor the obligation to repay.
(4) "Petitioner" means an applicant for or
recipient of student financial assistance administered by the authority or a
person, including an endorser, indebted to the authority for financial
assistance who has been affected by an adverse action or decision by the
authority.
(5) The definition of
"endorser" is governed by
KRS
164.740(7).
(6) The definition of "insured student loan"
is governed by
KRS
164.740(11).
(7) "Record" means all of the documentation
filed by the petitioner and all of the information considered by the delegated
employee of the authority in ruling on a request for review pursuant to Section
4(1) of this administrative regulation.
(8) "Request for clarification" is the first
communication, written or oral, from a petitioner for explanation of an adverse
action by the authority.
(9)
"Request for review" is a petitioner's communication challenging the
authority's basis for the adverse action.
Section 2. Scope of Administrative
Regulation. The procedures prescribed in this administrative regulation shall
not apply to:
(1) The setoff of an
individual's tax refund or any payment by the U.S. Treasury or by the
Commonwealth for payment of a debt owed to the authority in accordance with
11 KAR
4:050, except to the extent specified in that
administrative regulation;
(2) The
issuance of an administrative order of wage garnishment by the authority for
recovery of a defaulted insured student loan pursuant to
11 KAR
3:100;
(3)
Any matter pending adjudication by a court or that has previously been
adjudicated by a court, except that a petitioner shall exhaust all
administrative remedies prior to commencement of an action in court;
(4) The dischargeability of a debt to the
authority in bankruptcy;
(5) Denial
of an award of financial assistance due to lack of funds authorized for that
purpose;
(6) Denial of a grant due
to the petitioner's failure to notify the authority of a change of educational
institution by a deadline established in administrative
regulations.
Section 3.
Request for Clarification. A petitioner may, upon any adverse action by the
authority, request from the authority, at any time following notification of
the adverse action, a concise statement of the basis for the action including
citation of statutory or regulatory authority for the adverse action. The
authority's delegated employee, within twenty (20) working days of receipt of
the request for clarification, shall respond in writing to a written request
for clarification and notify the petitioner of his right to request a review of
the adverse action. If the petitioner makes an oral inquiry at any time, the
authority shall not be required to respond in writing. The authority shall not
be required to suspend any activities it has undertaken or, in the ordinary
course of the administration of its programs, may subsequently undertake
related to the adverse action. The authority shall take reasonable steps to
informally resolve any discrepancy in the petitioner's record identified by the
oral or written request for clarification. If the delegated employee responding
to the request for clarification believes that the information available to the
authority indicates a discrepancy and warrants steps to resolve the dispute,
activities related to the adverse action may be suspended at the discretion of
the delegated employee.
Section 4.
Request for Review.
(1) Initial
administrative review.
(a) If the
applicability of statutes or administrative regulations to the adverse action
or the factual accuracy of information contained in the authority's
notification of adverse action or the response to a request for clarification
pursuant to Section 3 of this administrative regulation, he may request in
writing a review of the adverse action and any response to a request for
clarification. This request for an initial administrative review of the adverse
action may be submitted at any time, but shall not result in a suspension of
any action by the authority pertaining to the petitioner during the review,
except that the authority shall not report information to a credit bureau or
assess collection costs during the review on an insured student loan if the
petitioner submits a written request for an initial administrative review with
relevant documentation attached within sixty (60) days of the date that the
authority sends a notice of default by the petitioner on an insured student
loan upon payment by the authority of an insurance claim to the holder of the
insured student loan. If the delegated employee conducting the initial
administrative review believes that the information available to the authority
indicates a discrepancy and warrants steps to resolve the dispute, activities
related to the adverse action may be suspended at the discretion of the
delegated employee.
(b) The request
for initial administrative review of the adverse action shall specify the
factual basis on which the adverse action is disputed and any legal or
equitable defense the petitioner may have against recovery of a debt to the
authority. The petitioner shall submit with the request for review all
documentation the petitioner believes supports his position and shall submit
any additional documentation that the authority may deem relevant and require.
The petitioner may supplement the written request for review and the
documentation within ten (10) working days of the date the request is received
by the authority. The authority shall not be required to consider a request for
review that is not in writing or is not supplemented by supporting
documentation that has been requested in writing by the authority.
(c) The authority's delegated employee
conducting the review shall consider any documentation submitted by the
petitioner, any documentation of the authority, and information from any other
source that the delegated employee may deem relevant. The documentation
considered shall be made available to the petitioner upon written request. Upon
request of the petitioner at the time of submitting the written request for
review and clarification of why the authority cannot adequately resolve the
issues raised by the petitioner by review of the documentary evidence, the
petitioner or any other witness called by the petitioner or the authority with
relevant factual information may appear in person or by telephone to present
additional facts, if the delegated employee conducting the review determines,
in his discretion, that the issues to be resolved require a determination of
credibility or veracity. The petitioner's request to appear in person or by
telephone shall include identification of any other individuals that the
petitioner wishes to have testify, identification of the specific issues
regarding which the individuals are prepared to provide additional information,
and an explanation of the reasons why each individual's testimony is necessary
to resolve the issues. The documentation considered and the delegated
employee's summary of any in-person or telephonic testimony shall constitute
the entire record of the administrative review, and shall be deemed conclusive
as to all issues in dispute.
(d)
The delegated employee conducting the review shall notify the petitioner in
writing of the results of the administrative review, stating the essential
facts and the applicable laws and administrative regulations upon which the
conclusion is based. The notice shall also indicate that the record of the
administrative review and the written conclusions by the delegated employee
shall be provided to the executive director or his designee for a
redetermination upon request of the petitioner.
(2) Review by executive director.
(a) A review by the executive director or his
designee of the results of the initial administrative review shall consider the
record of the initial administrative review; applicable laws, administrative
regulations, and any federal directives; and any consultation with authority
personnel that he may deem necessary. A request for review by the executive
director shall not result in a suspension of any action by the authority
pertaining to the petitioner during the review, except that if the executive
director or his designee conducting the review believes that the information
available to the authority warrants steps to resolve the dispute, activities
related to the adverse action may be suspended at the discretion of the
executive director or his designee. If the findings warrant, the executive
director or his designee may uphold the adverse action or result of the request
for review or may reverse or modify the adverse action or the result of the
request for review in whole or in part. The executive director or his designee
may, at any time, negotiate a mutually agreeable resolution of the dispute if
in his discretion, the circumstances warrant a settlement.
(b) Time frame. The review by the executive
director shall be requested in writing within thirty (30) days of the date of
the notice described in subsection (1)(d) of this section.
(c) Notice. The written decision of the
executive director or his designee shall be sent to the petitioner, with a
notice that shall inform the petitioner of the right to request a hearing
pursuant to KRS Chapter 13B within thirty (30) days on all issues raised by the
petitioner in the request for review. Service of the notice of the decision
shall be conclusively presumed to be effected five (5) days after mailing of
the notice by the authority, if sent by U.S. first class mail, unless the
notice is returned to the authority undelivered by the postal service. The date
of service of the notice may otherwise be evidenced by affidavit of an
individual executing personal service or a postal delivery receipt.
Section 5. Request for
Hearing.
(1)
(a) If an adverse action is upheld by the
executive director or his designee, the petitioner may request a hearing
pursuant to KRS Chapter 13B. A request for a hearing shall not result in a
suspension of any action by the authority pertaining to the
petitioner.
(b) The request for a
hearing shall be served on the authority within thirty (30) days after receipt
of notice of the executive director's decision.
(2) Upon receipt of a timely request for a
hearing, the authority shall, in accordance with the procedures prescribed in
KRS Chapter 13B, arrange for a hearing before a hearing officer appointed by
the authority. The hearing officer, following submission of the report
described in subsection (3)(b) of this section, shall establish a schedule for
any discovery, prehearing conferences, and the time and place of the hearing.
The place of the hearing shall be in Franklin County, unless another location
is agreed on by the parties.
(3)
(a) Not more than fifteen (15) days following
service upon the authority of the request for a hearing, the parties shall
confer and jointly stipulate the issues to be resolved by the hearing officer,
discuss the possibility of informal resolution of the dispute, develop a
proposed discovery plan, exchange or arrange for the exchange of a list of the
names, addresses, and phone numbers of any witnesses expected to testify at the
hearing and a brief summary of the testimony of each witness that the party
expects to introduce into evidence, and agree to possible dates for a
prehearing conference and the hearing.
(b) The authority shall report to the hearing
officer the results of the discussions between the parties described in
paragraph (a) of this subsection.
(c) Upon the request of either party, at any
time, the hearing officer may issue a subpoena for the production of documents
or the attendance of witnesses. Either party may depose witnesses, upon
reasonable notice to the witness and the opposing party, without leave of the
hearing officer, except that attendance of witnesses that are not parties to
the hearing may be compelled by subpoena issued by the hearing officer, either
party may, without leave of the hearing officer, submit interrogatories and
request for admissions to the opposing party. The party receiving the
interrogatories or request for admissions shall respond within twenty (20)
days, or upon such shorter or longer time as the hearing officer may allow.
Each matter of which an admission is requested shall be deemed admitted unless,
within twenty (20) days after service of the request, or upon such shorter or
longer time as the hearing officer may allow, the party to whom the request is
directed serves upon the party requesting the admission a written answer or
objection addressed to the matter.
(4) At the hearing, the record of the
administrative review, described in Section 4(1) of this administrative
regulation, and the decision of the executive director or his designee,
described in Section 4(2) of this administrative regulation, shall be submitted
to the hearing officer and the taking of proof shall commence first with the
presentation of evidence by the petitioner and then by the authority, with
opportunities for cross-examination, rebuttal, and closing
statements.
Section 6.
Final Order of Board. The board shall review the hearing officer's recommended
order and the record of the hearing at the next regularly scheduled meeting of
the board, unless a special meeting is necessary for this purpose to render a
final order within the time required by
KRS 13B.120. The
board shall adopt the hearing officer's recommended order unless it is clearly
unsupported by the evidence presented at the hearing and the applicable law.
The board shall only consider the record adduced at the hearing, including all
documents, briefs, and transcripts of the hearing, as well as the evidence
presented at the hearing, but may, at the discretion of the board's chairman,
permit counsel for the petitioner and the authority, or the petitioner if not
represented by counsel, to submit briefs and make oral arguments pertaining to
the issues addressed in the hearing officer's recommended order.
STATUTORY AUTHORITY:
KRS
13B.070(3),
13B.170,
164.748(4)
