[Code of Federal Regulations]

[Title 34, Volume 1]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 34CFR31.8]



[Page 64-65]

 

                           TITLE 34--EDUCATION

 

PART 31_SALARY OFFSET FOR FEDERAL EMPLOYEES WHO ARE INDEBTED TO THE 

UNITED STATES UNDER PROGRAMS ADMINISTERED BY THE SECRETARY OF EDUCATION

--Table of Contents

 

Sec.  31.8  Rules of decision.



    (a) Enforceability of debt by offset. In deciding whether the 

Secretary has established that the debt described in the pre-offset 

under Sec.  31.3 is owed by the employee, or whether the employee has 

established that the debt is not enforceable by offset, the hearing 

official shall apply the principles in this paragraph.

    (1) The statutes and Department regulations authorizing and 

implementing the program under which the debt arose must be applied in 

accordance with official written interpretations by the Department.

    (2) The principles of res judicata and collateral estoppel apply to 

resolution of disputed facts in those instances in which the debt or 

material facts in dispute have been the subject of prior judicial 

decision.

    (3) The act or omission of an institution of higher education at 

which the employee was enrolled does not constitute a defense to 

repayment of an obligation with regard to a grant or loan under a 

program authorized under Title IV of the Higher Education Act or similar 

authority, except to the extent that--

    (i) The act or omission constitutes a defense to the debt under 

applicable Federal or State law;

    (ii) The institution owed the employee a refund under its refund 

policy and failed to pay that refund to the employee or to a lender 

holding a loan made to the employee; or

    (iii) The institution ceased teaching activity while the employee 

was in attendance and during the academic period for which the grant or 

loan was made, and failed to refund to the employee or holder of a loan 

to the employee a proportionate amount of the grant or loan funds used 

to pay tuition and other institutional charges for that academic period.

    (4)(i) A debt otherwise established as owed by the employee is 

enforceable by offset under this part if the Secretary sends the pre-

offset notice for the debt within the ten year period following the 

later of--

    (A) The date on which the Secretary acquired the debt by assignment 

or referral, or

    (B) The date of a subsequent partial payment reaffirming the debt.

    (ii) Periods during which the statute of limitations applicable to a 

lawsuit to collect the debt has been tolled under 11 U.S.C. 108, 28 

U.S.C. 2416, 50 U.S.C. App. 525, or other authority are excluded from 

the calculation of the ten year period described in paragraph (a)(4)(i) 

of this section.

    (b) Extreme financial hardship. (1) In deciding whether an employee 

has established that the amount of the proposed offset would cause 

extreme financial hardship to the employee, the hearing official shall 

determine whether the credible, relevant evidence submitted demonstrates 

that the proposed offset would prevent the employee from meeting the 

costs necessarily incurred for essential subsistence expenses of the 

employee and his or her spouse and dependents.

    (2) For purposes of this determination, essential subsistence 

expenses include costs incurred only for food, housing, clothing, 

essential transportation and medical care.

    (3) In making this determination, the hearing official shall 

consider--

    (i) The income from all sources of the employee, and his or her 

spouse and dependents;

    (ii) The extent to which the assets of the employee and his or her 

spouse and dependents are available to meet the offset and the essential 

subsistence expenses;



[[Page 65]]



    (iii) Whether these essential subsistence expenses have been 

minimized to the greatest extent possible;

    (iv) The extent to which the employee and his or her spouse and 

dependents can borrow to satisfy the debt to be collected by offset or 

to meet essential expenses; and

    (v) The extent to which the employee and his or her spouse and 

dependents have other exceptional expenses that should be taken into 

account, and whether these expenses have been minimized.



(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)