68 FR 8142, Feb. 19, 2003, unless otherwise noted.
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.
(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.
(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.
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 -
(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.
(a) This term means any order for withholding or garnishment of pay issued by this Department, another Federal agency, a State or private non-profit 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.
(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.
(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.
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 § 34.6, and the time frame within which you may exercise your rights.
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 § 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.
(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.
(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.
(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.
(1) At your option, an oral hearing may be conducted either in-person or by telephone conference.
(2) We provide an in-person oral hearing with regard to administrative debts only in Washington D.C.
(3) We provide an in-person 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 in-person hearing.
(5) We bear the cost of any telephone calls we place in order to conduct an oral hearing by telephone.
(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.
We provide a paper hearing -
(a) If you request a paper hearing;
(b) If you requested an oral hearing, but we determine under § 34.9(e) that you have withdrawn that request;
(c) If you fail to appear for a scheduled oral hearing, as provided in § 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.
(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.
(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
(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.
(1) If we agree to reconsider the decision, we notify you.
(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.
(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.
(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 § 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 § 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.
(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.
(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 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 § 34.24.
(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.
(a) If you do not appear for an in-person 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.
(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.
(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.).
(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.
(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 computer-generated facsimile.
(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.
(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.
(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 § 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 -
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 § 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 § 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.
(1) If a debtor owes more than one debt arising from a program we administer, we may issue multiple garnishment orders.
(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.
(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.
(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.
(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 § 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.
(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.
(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.
(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.
(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.
(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 § 34.24.
(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.
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.
(a) If a hearing official determines under §§ 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 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.
(a) If an employer fails to comply with § 34.22 to withhold an appropriate amount from wages owed and payable to an employee, we may sue the employer for that amount.
(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.
(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.
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.