Current through Register Vol. 46, No. 39, September 25, 2024
(a) The corporation may garnish the
disposable pay of a borrower who is not making payments on a program loan held
by the corporation in accordance with this section.
(1) At least 30 days before the initiation of
garnishment proceedings, the corporation shall mail to the borrower's last
known address, a written notice of the nature and amount of the debt, the
intention of the corporation to initiate proceedings to collect the debt
through deductions from pay, and an explanation of the borrower's
rights.
(2) The corporation shall
offer the borrower an opportunity to inspect and copy corporation records
related to the debt. Upon receipt of a written request, the corporation will,
within five business days, either mail, fax, e-mail or otherwise send the
documents to the borrower. If the borrower's written request so states, the
borrower may visit the corporation to inspect the documents during regular
business hours at the corporation's headquarters. Upon written request of the
borrower, the corporation shall provide one copy of records in the possession
of the corporation related to the debt at no charge to the borrower.
(3) The corporation shall offer the borrower
an opportunity to enter into a written repayment agreement with the corporation
under terms agreeable to the corporation.
(4) The corporation shall offer the borrower
an opportunity for a hearing concerning the existence or the amount of the debt
and, in the case of a borrower whose proposed repayment schedule under the
garnishment order is established other than by a written agreement, the terms
of the repayment schedule.
(5) The
corporation may not garnish the wages of a borrower whom it knows has been
involuntarily separated from employment until the borrower has been reemployed
continuously for at least 12 months.
(6) Unless the corporation receives
information that the corporation believes justifies a delay or cancellation of
the withholding order, it shall send a withholding order to the employer within
20 days after the borrower fails to make a timely request for a hearing, or, if
a timely request for a hearing is made by the borrower, within 20 days after a
final decision is made by the corporation to proceed with
garnishment.
(7) The corporation
shall provide a hearing, which, at the borrower's option, may be oral or
written, 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
time and location of the hearing shall be established by the corporation. An
oral hearing may, at the borrower's option, be conducted either in-person or by
telephone conference. All telephonic charges must be the responsibility of the
corporation.
(8) If the borrower's
written request is received by the corporation on or before the 15th day
following the borrower's receipt of the notice the corporation may not issue a
withholding order until the borrower has been provided the requested hearing.
In the absence of evidence to the contrary, a borrower shall be considered to
have received the notice five days after it was mailed by the corporation. The
corporation shall provide a hearing to the borrower in sufficient time to
permit a decision, in accordance with the procedures that the corporation may
prescribe, to be rendered within 60 days.
(9) If the borrower's written request is
received by the corporation after the 15th day following the borrower's receipt
of the notice the corporation shall provide a hearing to the borrower in
sufficient time that a decision, in accordance with the procedures that the
corporation may prescribe, may be rendered within 60 days, but may not delay
issuance of a withholding order unless the corporation determines that the
delay in filing the request was caused by factors over which the borrower had
no control, or the corporation receives information that the corporation
believes justifies a delay or cancellation of the withholding order. In the
absence of evidence to the contrary, a borrower shall be considered to have
received the notice five days after it was mailed by the corporation.
(10) The hearing official appointed by the
corporation to conduct the hearing may be any qualified individual, as approved
by the corporation, including an administrative law judge, or other qualified
individual as approved by the corporation, not under the supervision or control
of the head of the corporation.
(11) The hearing official shall issue a final
written decision at the earliest practicable date, but not later than 60 days
after the corporation's receipt of the borrower's hearing request.
(b)
(1) The notice given to the employer must
contain only the information as may be necessary for the employer to comply
with the withholding order.
(2) The
employer shall deduct and pay to the corporation from a borrower's wages an
amount that does not exceed the lesser of 15 percent of the borrower's
disposable pay for each pay period or the amount by which a debtor's disposable
pay exceeds an amount equal to 30 times the minimum wage as specified in
15 U.S.C.
1673(a)(2) or the amount
permitted by the program, unless the borrower provides the agency with written
consent to deduct a greater amount. For this purpose, the term disposable pay
means that part of the borrower's compensation from an employer remaining after
the deduction of any amounts required by law to be withheld.
(3) The corporation may sue any employer for
any amount that the employer, after receipt of the garnishment notice provided
by the corporation fails to withhold from wages owed and payable to an employee
under the employer's normal pay and disbursement cycle.
(c) The borrower may seek judicial relief,
including punitive damages, if the employer discharges, refuses to employ, or
takes disciplinary action against the borrower due to the issuance of a
withholding order.
(d) Receipt of
notices from the corporation by the borrower. Notices sent by the corporation
to the borrower under this program shall be sent by first class U.S. mail and
shall be deemed to be served upon and received by the borrower on the fifth day
after the date it was mailed by the corporation. This includes Notices of Wage
Withholding and Notices of Hearings.
(e) Hearing request timeframes. In order to
hold a hearing before a wage garnishment is implemented, the borrower's request
for a hearing must be received by the corporation within 20 days of the date
the Notice of Wage Withholding was mailed by the corporation.
(f) Percentage of withholding. In determining
the percentage of disposable income to be withheld, the hearing officer shall
consider all documents submitted as evidence and shall look to the borrower's
documented specific financial circumstances, including the overall
circumstances of the borrower's household, when deciding the amount of a wage
garnishment. At a minimum, a borrower must submit copies of two recent paystubs
and a monthly budget for the hearing officer to consider. If a borrower fails
to provide the required paystubs and monthly budget for the hearing officer to
consider, the hearing officer shall garnish the full fifteen percent of the
borrower's disposable pay.
(g)
Order of withholding. Within 20 days of receipt by the corporation of a
decision from a hearing officer ordering or authorizing a wage garnishment
under this program, the corporation will generate an order of withholding and
deliver it to the borrower's employer.
(h) References to the borrower in this
section shall include any cosigner on the program loan.
