§ 121.9. Administrative loan collection review procedures.
(a) This section implements the administrative loan collection review process authorized by the act of April 29, 1982 (P. L. 365, No. 102) (24 P. S. § 5104.3).
(b) Administrative loan collection procedure for those loans which are held by the Agency and which are not reinsured by the United States Secretary of Education is as follows:
(1) A borrower served with a statement of claim shall file a response thereto within 30 days of receipt of the statement of claim. The statement of claim shall inform the borrower of the nature and the amount of the indebtedness, the intention of the Agency to initiate proceedings to collect the debt through garnishment and an explanation of the rights of the borrower under the law. The response shall set forth all defenses and objections which the borrower has to the statement of claim and any objections or defenses not so presented will be deemed to have been waived. The response shall admit or deny all averments contained in the statement of claim. An averment in a statement of claim will be deemed to be denied only if proof thereof is demanded and the borrower states either that:
(i) After reasonable investigation, the borrower is without knowledge or information sufficient to form a belief as to the truth of the averment.
(ii) The borrower is without that knowledge or information because the means of proof are within the exclusive control of an adverse party or hostile person.
(2) When a borrower files a response to a statement of claim filed in the records of the Agency, the borrower will be afforded an opportunity to enter into a written agreement with the Agency, under terms agreeable to the head of the Agency or a designee, to establish a repayment schedule. The borrower will be afforded a hearing if he does not want to enter into a repayment schedule.
(3) Hearings will be conducted by a hearing examiner appointed by the Chairperson of the Board of the Agency or, in the event of the unavailability of the Chairperson, by the Vice Chairperson of the Board of the Agency from a list maintained by the President and Chief Executive Officer and will be held at the offices of the Agency in Harrisburg. The time of the hearing will be fixed by the Agency within a reasonable time, as soon as convenient, after the receipt of the borrower’s response, allowing at least 15 days’ notice to be given to the borrower and the borrower’s attorney, if an attorney has entered an appearance on behalf of the borrower. Notice of the hearing will be sent to the borrower by the hearing examiner, specifying the time and place for hearing. If a borrower wishes to request postponement of a hearing, the borrower shall contact the hearing examiner and provide the hearing examiner with valid reasons for the request. The hearing examiner may approve or disapprove the request in the examiner’s discretion.
(4) The borrower shall have the following rights during the hearing:
(i) To present testimony and arguments in person.
(ii) To be represented by an attorney.
(iii) To confront and cross-examine adverse witnesses.
(iv) To examine all documents and records used by the Agency at the hearing. Copies of materials from the files of the Agency relevant to the hearing shall be provided at a reasonable time prior to the day of the hearing upon request without charge to the borrower.
(v) To have the Agency prove its claim by a preponderance of the evidence.
(5) A request for a hearing may be dismissed by the hearing examiner when it is withdrawn by a borrower in a writing submitted to the hearing examiner. If a borrower fails to appear at a scheduled hearing without good cause as determined by the hearing examiner, the request for a hearing will be considered abandoned and will be dismissed with prejudice by the hearing examiner.
(6) The hearing examiner will have the following powers and duties:
(i) To administer oaths.
(ii) To question witnesses presented by the Agency or the borrower.
(iii) To hear the evidence submitted, review the documents presented, consider the arguments and prepare a report.
(iv) To recommend in the report a proposed adjudication and order, supported by findings of fact and conclusions of law.
(v) To 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 within 60 days of the hearing.
(7) 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 Agency will present its case.
(iii) The borrower or the borrower’s attorney may cross-examine each witness.
(iv) The borrower or the borrower’s attorney will present the borrower’s case.
(v) The Agency may cross-examine each witness presented by the borrower.
(vi) The hearing examiner may question any witness at any time.
(8) The borrower and the President and Chief Executive Officer of the Agency shall 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.
(9) 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.
(10) Any form of written communication to the Agency that may be reasonably construed as exceptions, advising that the borrower is aggrieved and desires a review of the hearing examiner’s report, will be deemed exceptions to the proposed report sufficient to initiate and constitute an appeal to the Board.
(11) When the Board receives notice of an appeal, it will place the appeal on the meeting agenda of the Board at such time in the future as the Board has received a stenographic record of the hearing before the hearing examiner and has had an opportunity to review the record. 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, before rendering a recommendation for action by the Board. The Board will make the final order as appears to it just and proper.
(12) 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. The President and Chief Executive Officer may transfer the record and the order of default to the court of common pleas of the district in which the borrower resides or, when residence within this Commonwealth cannot be ascertained, to the Court of Common Pleas of Dauphin County, to be entered as a judgment.
(13) Within 30 days of the mailing date set forth in the notice of the final order by the Board the borrower who is aggrieved by the final order may appeal the order to the court of common pleas of the district in which the borrower resides or the Court of Common Pleas of Dauphin County. Within 20 days after entry of judgment, the borrower may apply to the court in which the judgment is entered to set aside such judgment.
(14) If no appeal is filed, the Agency may execute upon the wages, salaries or commissions in the hands of an employer or other person including the borrower when self-employed by serving a notice of its intent on the borrower and a notice of execution on the employer. The notice of execution shall include the following:
(i) The total amount to be collected from the borrower.
(ii) That the amount to be remitted to the Agency for a given pay period shall be limited to 10% of the borrower’s disposable pay, that being any pay remaining after the deduction of any amounts required by law to be withheld.
(iii) That the employer is not required to vary its normal pay and disbursement cycles in order to comply with paragraph (2).
(iv) That the employer will be held liable for a civil penalty equivalent to the amount of the notice of execution for wages not properly withheld after receipt of the notice of execution.
(15) This section affects 1 Pa. Code Part II (relating to General Rules of Administrative Practice and Procedure) as follows:
(i) Subsection (b)(1) supersedes 1 Pa. Code § 35.14 (relating to orders to show cause).
(ii) Subsection (b)(3) supersedes 1 Pa. Code § § 35.105 and 35.185 (relating to notice of nonrulemaking proceedings; and designation of presiding officers). Subsection (d) supplements 1 Pa. Code § 31.26 (relating to service on attorneys).
(iii) Subsection (b)(4)(i)—(iii) supplements 1 Pa. Code § 35.126 (relating to presentation by the parties); subsection (b)(4)(iv) supersedes 1 Pa. Code § 35.169 (relating to copies to parties and agency).
(iv) Subsection (b)(6)(i)—(iii) supplements 1 Pa. Code § 35.187 (relating to authority delegated to presiding officers); subsection (b)(6)(iv) supersedes 1 Pa. Code § 35.205 (relating to contents of proposed reports); subsection (b)(6)(v) supersedes 1 Pa. Code § 35.207 (relating to service of proposed reports).
(v) Subsection (b)(7) supplements 1 Pa. Code § 35.125 (relating to order of procedure).
(vi) Subsection (b)(8) supersedes 1 Pa. Code § 35.211 (relating to procedure to except to proposed report).
(vii) Subsection (b)(9) supplements 1 Pa. Code § 35.226 (relating to final orders).
(viii) Subsection (b)(11) supersedes 1 Pa. Code § 35.214 (relating to oral argument on exceptions).
Authority The provisions of this § 121.9 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); and section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); amended 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).
Source The provisions of this § 121.9 adopted February 11, 1983, effective February 12, 1983, 13 Pa.B. 704; amended February 22, 1985, effective February 23, 1985, 15 Pa.B. 670; amended October 4, 1991, effective October 5, 1991, 21 Pa.B. 4637; amended August 4, 2000, effective August 5, 2000, 30 Pa.B. 3924. Immediately preceding text appears at serial pages (218127) to (218130).
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