1. (a)

   1. (1)

      1. (A) Accounts will be retained by the Financial Aid Division of the Division of Higher Education until the individual is no longer eligible for deferment, at which point the account will be turned over to a vendor for repayment.
      2. (B) The student will:

2. (i) Be notified by mail that their account is being placed with a vendor for collections; and

   1. (ii) Receive a loan amortization schedule.

   2. (2)

      1. (A) The account will remain with the vendor until repaid or one hundred twenty (120) days past due.
      2. (B) Loan recipients who are determined by the Division of Higher Education to be one hundred twenty (120) days delinquent will be mailed their first letter of notification ten (10) days after the installment payment is due.
      3. (C) If payment is not forthcoming within sixty (60) days from the original payment due date, a second letter of notification will be sent to the loan recipient declaring their account is delinquent and requesting that the account be immediately brought up to date.
   3. (3) If the loan recipient has not responded within ninety (90) days from the original payment due date, the third and final letter of notification will be sent to the recipient informing them that the account will officially be in default if outstanding payments are not made within thirty (30) days.

3. (b) Skip tracing mechanisms. The Division of Higher Education will use the following steps to locate recipients if communications are returned as undelivered:

   1. (1) Contact the Office of Motor Vehicle of the Arkansas Department of Finance and Administration;
   2. (2) Contact references listed on the recipient's application;
   3. (3) Utilize telephone directory or check with directory assistance in the area of the recipient’s last known address;
   4. (4) Contact institutional offices (alumni office, admissions office, registrar's office, fraternity or sorority, and the department that the recipient majored in) at the campus where the recipient last attended;
   5. (5) Contact creditors, such as credit card companies, credit bureaus, or GSL lender;

   6. (6) Contact recipient's:

      1. (A) Field of study;
      2. (B) Professional organization;
      3. (C) Union; or
      4. (D) Licensing board;
   7. (7) Contact post office;
   8. (8) Contact utility companies; and

   9. (9) Contact Chamber of Commerce.

      1. (c) Credit reporting agencies.

   10. (1) Defaulted recipients will be reported to the following credit reporting agencies:

       1. (A) CSC Credit Reporting Services, Inc.;
       2. (B) TRW Credit Data; and
       3. (C) Trans Union Credit Reporting.

   11. (2)

       1. (A) Forms for reporting defaulted loan recipients are located in the collections file.

       2. (B) The Division of Higher Education will respond promptly to any inquiries it receives from credit reporting agencies concerning delinquent or defaulted loan recipients.

          1. (d) State income tax set-off. By the authority of Acts 1993, No. 345, the Division of Higher Education has been included as a claimant agency for the setoff of debts against state tax refunds.

4. (e) Litigation.

   1. (1) No sooner than thirty (30) days after sending the third letter of notification, the Division of Higher Education shall institute a civil suit against the recipient for repayment of the loan.
   2. (2) Small claims courts will be used to satisfy debts of accounts up to three thousand dollars ($3,000).
   3. (3) If the account is over three thousand dollars and one cent ($3,000.01), the Division of Higher Education must use circuit court.
   4. (4) If the account is three thousand dollars and one cent ($3,000.01) or above, the Division of Higher Education may choose to use small claims courts and waive the difference because of the expense involved in going to circuit court.
   5. (5) If the Division of Higher Education chooses to waive the difference, it cannot later try to collect the difference.
   6. (6) Forms to take the recipient to small claims court are requested from the recipient's county of residence.

5. (f) Write-offs.

   1. (1) Arkansas Future Grants that convert to loans may be written off as uncollectible if the Division of Higher Education shows due diligence to satisfy the collection of the debt, and documents in the recipient's file that:

      1. (A) The cost of litigation would exceed the likely recovery if litigation were commenced; or
      2. (B) The recipient does not have the means to satisfy a judgment on the debt, or a substantial portion thereof.
   2. (2) Proof of due diligence collection activities must be submitted to the Administrator of the Department of Finance and Administration and approval from the administrator must be received before Arkansas Future Grant loan accounts may be written off.
6. (g) Nonpayment penalties. Loan recipients who fail to meet their repayment obligations may have added to their total obligation any costs for collection of the debt.

Codification Notes: “GLS” means global lending services.