PURPOSE: This rule sets forth policies and procedures of the Coordinating Board for Higher Education regarding the garnishment of borrowers’ earnings to repay defaulted Missouri guaranteed student loans as authorized by section 173.115, RSMo.

1. (1) Definitions.

   1. (A) Board—the Missouri Coordinating Board for Higher Education as established by the Omnibus State Reorganization Act, Law, 1974 p. 530.
   2. (B) Borrower—any person who has become legally obligated to repay a loan made under the guaranteed student loan programs established under provisions of Title IV, Part B, of the Higher Education Act of 1965 or that person’s guardian, trustee, estate or other person legally responsible for defending against or satisfying a borrower’s obligations under the guaranteed student loan program.
   3. (C) Department—the Missouri Department of Higher Education as established by the Omnibus State Reorganization Act, Law, 1974 p. 530.
   4. (D) Earnings—compensation paid or payable for personal services, whether denominated wages, salary, commission, bonus or otherwise.
   5. (E) Eligible lender—any bank, savings and loan association, credit union, insurance company, pension fund, eligible educational institution lender or the federal Student Loan Marketing Association or other secondary market operation that has executed a lender participation agreement with the department.
   6. (F) Employer—any person, partnership, association, corporation, institution, governmental body, unit or agency, school district or municipal corporation or any other entity employing one (1) or more persons for a salary, wage, commission or other compensation, or any self-employed borrower.

2. (2) Statement of Claim.

   1. (A) After the department has paid a loss on a defaulted loan, it shall enter a statement of claim in which it determines and sets forth the existence, nature and amount of the money due it by the defaulting borrower and a proposed payment schedule. The department shall inform the borrower that the department intends to initiate proceedings to collect the debt through deductions from earnings. The department also shall provide a copy of section 173.115, RSMo or an explanation of the borrower’s rights under that section, and a form by which the borrower may request a hearing on the statement of claim.

   2. (B) The statement of claim shall set forth at least the following for each loan on which a borrower has defaulted:

      1. 1. The name, last known address and

Social Security number of the borrower;

1. 2. The name and address of the eligible

lender by which the loan was made;

1. 3. The date on which the promissory

note was signed by the borrower;

1. 4. The amount of each disbursement

made;

1. 5. A statement that the loan was guaran-

teed by the department pursuant to sections 173.100–173.186, RSMo;

1. 6. A statement of facts on which is

based the department’s determination that the loan is in default;

1. 7. The date on which the loss was paid

under the certificate of guarantee and the amount paid;

1. 8. A statement of the total amount of the

claim constituting the debt of the borrower to the department as of the date of the statement of claim with an itemization including, but not limited to, the following amounts:

1. A. The outstanding balance on the

principal amount of the loan;

1. B. Any capitalized interest;
2. C. The interest paid to the lend er/

noteholder by the department not subsequently paid by the borrower;

1. D. Unpaid interest which has accrued

since the claim was paid to the lender/noteholder;

1. E. Any collection charges;
2. F. Any other fees or charges owed by

the borrower; and

1. G. A statement indicating that the

interest on the amount represented by the principal of the loan and on any capitalized interest will continue to accrue at a particular rate and in a particular manner until the money owed to the department is paid;

1. 9. A statement that the department will

issue an order pursuant to this section to require the borrower’s employer to withhold from his/her pay the amounts required to satisfy the borrower’s debt to the department unless, within fifteen (15) days from the borrower’s receipt of the notice or thirty (30) days from the sending of the notice if the borrower does not accept service or cannot be found at his/her last known address, the borrower files a written request with the department for a hearing on a form prescribed by the board;

1. 10. A proposed agreement to establish a

schedule for the repayment of the debt and a statement that the borrower has the opportunity to enter into a written agreement with the 6 CSR 10-2

department under terms agreeable to the department to establish a schedule for the repayment of the debt;

1. 11. The date of the statement of claim;

and

1. 12. The signature of the commissioner

of higher education or of an employee of the department designated by the commissioner.

1. (3) Inspection of Records. The department shall provide the borrower with an opportunity to inspect and copy records related to the defaulted loans.

2. (4) Appeal Process.

   1. (A) Upon the borrower’s filing of a request for a hearing in compliance with the rules of the board, the department shall provide the borrower with the opportunity to have a hearing before an impartial hearing officer appointed by the department but who is not under the control or supervision of the board or department. The procedures for the hearing shall be the same as those for contested cases under Chapter 536, RSMo. Upon the consent of the parties, the hearing may be conducted by telephone. Upon the proper and timely filing of the request for hearing, the department shall stay the commencement of collection proceedings for the debt described in the statement of claim until the department issues an order provided for in section 173.115.6., 7. or 8., RSMo.
   2. (B) A request for a hearing must be submitted in writing on a form prescribed by the board and must be received by the board within fifteen (15) days of the borrower’s receipt of the statement of claim or thirty (30) days from the sending of the notice if the borrower does not accept service or cannot be found at his/her last known address. The written request for a hearing must state any defense or reason why the debt is not past due or legally enforceable, why any amount set forth in the statement of claim is incorrect or why the terms of the repayment schedule set forth in the statement of claim should be changed. The request must include a statement of facts to support the borrower’s assertions.
   3. (C) At the earliest practicable date but not later than sixty (60) days after the filing of the request for the hearing, the hearing officer shall file with the department his/her written decision which states specifically his/her findings in regard to those matters set forth in the department’s statement of claim. The hearing officer also shall determine and include in his/her decision the terms of the repayment schedule which shall be the same as that set forth by the department in its statement of claim unless s/he finds no good cause AND WORKFORCE DEVELOPMENT

to enter that schedule. Upon receipt of the hearing officer’s decision, the department shall issue an order to pay debt which adopts the findings in the decision as to the existence, nature and amount of the debt and as to the repayment schedule.

1. (D) When a borrower who makes timely request for a hearing fails to appear at the time and place set for the hearing and upon a showing that the department complied with section 173.115.8., RSMo concerning the service of the notice on the borrower, the hearing officer, at the earliest practicable date but not later than sixty (60) days after the filing of the request for the hearing, shall enter his/her findings and decision in accordance with the provisions of the department’s statement of claim and proposed repayment schedule unless s/he determines that no good cause exists. Upon receipt of the hearing officer’s decision, the department shall issue an order to pay debt which contains as its provisions the content of the statement of claim, including the proposed repayment schedule.
2. (E) When a borrower properly requests a hearing under the board’s rules and when the hearing officer does not issue a decision within sixty (60) days of the department’s having received the request for the hearing, the department shall issue an order withdrawing the statement of claim and serve it upon the borrower with a copy of section 173.115, RSMo. After that order is entered, the department shall not use the provisions of that section in regard to the loans set forth in the statement of claim, but may use any other remedy provided by law to recover the moneys owed the department.
3. (F) When the delay of the hearing officer’s decision beyond the sixty (60)-day period is brought about by the acts or omissions of the borrower and without the consent of the department, the hearing officer, at any time within thirty (30) days after the expiration of that period, may enter a decision setting forth how the borrower brought about the delay and setting forth his/her findings and decision in accordance with the provisions of the department’s statement of claim and proposed repayment schedule unless s/he determines that no good cause exists. The department may proceed as in subsection (5)(A) of this rule upon receipt of the hearing officer’s decision.

1. (5) Order to Pay Debt.

   1. (A) When a borrower does not make a proper timely request for a hearing, the department may issue and serve on the borrower an order to pay debt which contains as its provisions the content of the statement of claim, including the proposed repayment schedule.
   2. (B) Any order to pay debt and any amended order shall be served on the borrower along with a copy of the hearing officer’s decision, if one was issued, and along with a statement informing the borrower of his/her right to seek judicial review. This latter statement may consist of a copy of section 173.100, RSMo, a copy of section 173.115, RSMo and a copy of sections 536.100– 536.140, RSMo.

2. (6) Order to Withhold Earnings.

   1. (A) Upon issuing an order to pay debt, but not less than thirty (30) days after the statement of claim was served on the borrower, the department may issue an order to withhold earnings which directs any employer of the borrower to withhold and pay over to the department money due or to become due the borrower.

   2. (B) The order to withhold earnings shall state—

      1. 1. The name of the borrower;
      2. 2. The borrower’s Social Security num-

ber;

1. 3. The amount of the debt as determined

by the order to pay debt issued by the department; and

1. 4. Instructions regarding transmitting

the payments to the department.

1. (C) A copy of section 173.115, RSMo shall be appended to the order.
2. (D) The order to withhold earnings shall be served on the employer and shall be binding on the employer two (2) weeks after the employer’s receipt of the order for earnings or other income payable to the borrower on or after the receipt date.

1. (7) Withholding Policy.

   1. (A) The employer shall withhold from the earnings the amount specified in the order, except that the total amount withheld shall not exceed ten percent (10%) of the borrower’s earnings after deduction from those earnings of any amount required by law to be withheld. When the borrower voluntarily makes a written request that money due or to become due him/her be withheld or applied to the debt or that more than the ten percent (10%) maximum be withheld from his/her earnings, the employer shall comply with that request as if so ordered by the department.
   2. (B) The employer shall transmit the payments as directed in the order within ten (10) calendar days of the date the earnings or other income are payable to the borrower. With each payment, the employer shall submit a statement on a form prepared by the department setting forth information about the amount of earnings and deductions used to compute the amount withheld.
   3. (C) The order to withhold wages is a continuing order and remains in effect and is binding on the employer until further notice from the department. The department shall notify an employer upon whom the order has been directed whenever the debt has been paid-in-full, as determined by the order to pay debt, and whenever, for any other reason, the amount required to be withheld and paid over to the department under the order as to future pay periods is to be reduced or redirected.
   4. (D) An employer who fails or refuses to withhold or pay the amounts as ordered under this section shall be liable to the department in an amount equal to the amount which became due the department during the relevant period and which, under the order, should have been withheld and paid over.
   5. (E) An employer shall not discharge, refuse to hire or otherwise discipline an employee as a result of an order to withhold and pay over certain money authorized by this section.
   6. (F) When a borrower for whom an order to withhold earnings has been issued terminates his/her employment, the employer, within ten
2. (10) days of the termination, shall notify the department of the termination, shall provide to the department the last known address of the borrower, if known to the employer, and shall provide to the department the name and address of the borrower’s new employer, if known. When the department determines the identity of the borrower’s new employer, the department may issue an order to withhold to the new employer and serve it upon him/her.

3. (8) Service Policy.

   1. (A) Service on the borrower or on the employer will be made pursuant to section 173.115.14., RSMo.
   2. (B) In computing any period of time prescribed or allowed by these rules, by order issued under them, or by any applicable statute, the day of the act, event or default after which the designated period of time begins to run is not to be included. The last day of the period so computed is to be included, unless it is a Saturday, Sunday or legal holiday, in which event the period runs until the end of the next day which is neither a Saturday, Sunday nor legal holiday.

AUTHORITY: section 173.115, RSMo 1994.* Original rule filed July 18, 1989, effective Oct. 15, 1989.

*Original authority: 173.115, RSMo 1988.