KENTUCKY HIGHER EDUCATION ASSISTANCE AUTHORITY

Division of Student and Administrative Services

(Amendment)

 

      11 KAR 3:100. Administrative wage garnishment.

 

      RELATES TO: KRS 164.744(1), 164.748(4), (10), (20), 164.753(2), 34 C.F.R. 682.410(b)(9), 20 U.S.C. 1071-1087-2, 1095a

      STATUTORY AUTHORITY: KRS 164.748(4), 164.753(2), 20 U.S.C. 1095a

      NECESSITY, FUNCTION, AND CONFORMITY: Pursuant to KRS 164.744(1) and 164.748(2), the Kentucky Higher Education Assistance Authority has entered into agreements with the secretary to provide loan guarantees in accordance with 20 U.S.C. 1071 through 1087-2. 20 U.S.C. 1095a permits a student loan guarantee agency to garnish the disposable pay of a borrower to recover a loan guaranteed pursuant to 20 U.S.C. 1071 through 1087-2, notwithstanding a provision of state law. That section also permits the student loan guarantee agency to establish procedures for requesting and conducting a hearing related to the wage garnishment. KRS 164.748(10) authorizes the authority to collect from borrowers loans on which the authority has met its guarantee obligation, and KRS 164.748(20) authorizes the authority to conduct administrative hearings, exempt from KRS Chapter 13B, pertaining to wage garnishment. This administrative regulation establishes the procedures for implementing wage garnishment in accordance with requirements of the federal act.

 

      Section 1(1) Following payment of a claim by the authority to a participating lender by reason of the borrower's default in repayment of an insured student loan, the authority, acting through its executive director or other designee, may issue an administrative order for the withholding of the debtor's disposable pay, which order shall conform to the requirements of this section.

      (2) This administrative regulation shall apply to a debtor who is either a borrower or an endorser of an insured student loan.

      (3) An order for withholding of disposable pay shall not be issued under this section nor become effective less than thirty (30) days after the authority provides a written notice to the debtor by personal service or mail, addressed to the debtor at the residence or employment location last known to the authority. The notice shall include at least the following information:

      (a) The name and address of the debtor;

      (b) The amount of the debt determined by the authority to be due;

      (c) Information sufficient to identify the basis for the debt;

      (d) A statement of the intention of the authority to issue an order for withholding of disposable pay;

      (e) A statement of the right to dispute the existence, [or] amount, or enforceability of the debt or the terms of a proposed repayment schedule under the garnishment order (other than a repayment schedule agreed to in writing pursuant to paragraph (g) of this subsection);

      (f) A statement of the right to inspect and copy any records relating to the debt open to inspection in accordance with KRS 61.870 through 61.884;

      (g) A statement of the opportunity to enter into a written agreement with the authority, on terms satisfactory to the authority, establishing a schedule for repayment of the debt;

      (h) A statement that, unless there is good cause determined by the authority for the debtor's failure to timely request a hearing, the debtor's acquiescence to the withholding of disposable pay shall be presumed; and

      (i) A statement that if the debtor requests a hearing, but fails to appear without good cause determined by the hearing officer, the hearing officer shall affirm the issuance of an order for withholding of disposable pay.

      (4) An amount shall not be withheld from the disposable pay of an individual during the first twelve (12) consecutive months of reemployment commenced within twelve (12) months following an involuntary separation from employment.

      (5) Establishment of a written repayment schedule in accordance with subsection (3)(g) of this section shall be deemed, for purposes of subsection (3)(e) of this section, conclusive acknowledgement by the debtor of the existence and amount of debt agreed to be paid.[(6) Service of the notice required by subsection (3) of this section shall be conclusively presumed to be effected five (5) days after mailing of the notice by the authority, unless the notice is returned to the authority undelivered by the postal service. The date of service of the notice shall otherwise be evidenced by affidavit of a person executing personal service or a delivery receipt.]

 

      Section 2.(1)(a) A hearing shall be provided if the debtor, on or before the 30th[15th] day following the date on which[of service of] the notice required by Section 1(3) of this administrative regulation is mailed, files with the authority a written request for a hearing in accordance with procedures prescribed by this administrative regulation. The timely filing of a request for a hearing (evidenced by a legibly dated U.S. Postal Service postmark or mail receipt) shall automatically stay further collection activity under this administrative regulation pending the outcome of the hearing.

      (b) If the debtor requests a hearing, but the request is not timely filed, a hearing shall be provided, but the request shall not stay further action pending the outcome of the hearing provided a decision is rendered in the case by the 60th day following receipt of the request for a hearing. In the event a final decision is not entered within the sixty (60) day period following receipt of a request for a hearing, the withholding order shall be suspended on the 61st day until such time as a final decision is entered.

      (c) A hearing officer, appointed by the authority (who shall not be an individual under the supervision or control of the board other than an administrative law judge), shall conduct the hearing.

      (d) The hearing shall be held during regular business hours: Monday through Friday between the hours of 9 a.m. and 4 p.m. Eastern Standard Time.

      (e) A hearing officer shall voluntarily disqualify himself and withdraw from a case in which he cannot afford a fair and impartial hearing or consideration.

      1. A party shall request the disqualification of a hearing officer by filing an affidavit, upon discovery of facts establishing grounds for a disqualification, stating the particular grounds upon which he claims that a fair and impartial hearing cannot be accorded.

      2. The request for disqualification and the disposition of the request shall be a part of the official record of the proceeding.

      3. Grounds for disqualification of a hearing officer shall include the following:

      a. Participating in an ex parte communication which would prejudice the proceedings;

      b. Having a pecuniary interest in the outcome of the proceeding; or

      c. Having a personal bias toward a party to a proceeding which would cause a prejudgment on the outcome of the proceeding.

      (f) A dispute hearing shall be conducted in Franklin County or another location agreed to by the parties.

      (g) In lieu of an in-person hearing, upon request of the debtor, a hearing may be conducted by telephone or the hearing officer may conduct a review based solely upon submission of written material by both the debtor and the authority. An in-person or telephonic hearing shall be mechanically, electronically or stenographically recorded.

      (h) Unless required for the disposition of an ex parte matter specifically authorized by this administrative regulation, a hearing officer shall not communicate off the record with a party to the hearing concerning a substantive issue, while the proceeding is pending.

      (2)(a) The hearing officer's decision, reason therefore and an explanation of the appeal process shall be rendered in writing no more than sixty (60) days after receipt by the authority of the request for the hearing. The decision shall establish the debtor's liability, if any, for repayment of the debt and the amount to be withheld from the debtor's disposable pay.

      (b) Subject to subsection (3)(b) of this section, the hearing officer's decision shall be final and conclusive pertaining to the right of the authority to issue an administrative order for the withholding of the debtor's disposable pay.

      (c) A person, upon request, shall receive a copy of the official record at the cost of the requester. The party requesting a recording or transcript of the hearing shall be responsible for transcription costs. The official record of the hearing shall consist of:

      1. All notices, pleadings, motions, and intermediate rulings;

      2. Any prehearing order;

      3. Evidence received and considered;

      4. A statement of matters officially noticed;

      5. Proffers of proof and objections and rulings thereon;

      6. Ex parte communications placed upon the record by the hearing officer;

      7. A recording or transcript of the proceedings; and

      8. The hearing officer's decision or an order of the hearing officer issued pursuant to Section 3(2)(e) of this administrative regulation.

      (3)(a) Following the issuance of the hearing officer's decision, the debtor or the authority may petition the board to review the decision.

      (b) An adverse decision by the hearing officer shall be appealed in writing to the board not later than twenty (20) calendar days after the date of the hearing officer's decision. A petition for review of the hearing officer's decision shall be timely filed if received by the executive director within twenty (20) calendar days after the date of the hearing officer's decision. If there is no appeal to the board within twenty (20) days, the findings of the hearing officer shall be conclusive and binding upon the parties.

      (c) A petition for review of the hearing officer's decision shall not stay a final order pending the outcome of the review. If the debtor's liability is established by the hearing officer's decision, an administrative order for withholding of disposable pay shall be issued by the authority within sixty (60) days after the date of the hearing officer's decision. If the debtor petitions the board to review the hearing officer's decision and obtains reversal, modification, or remand of the hearing officer's decision, the authority shall return to the debtor any money received pursuant to the withholding order contrary to the final order of the board.

      (d) The respondent may, within ten (10) calendar days from the date the petition was received by the executive director, provide a brief statement to the board responding to the petition of review. The response shall be timely filed if received by the executive director within ten (10) calendar days from receipt by the executive director of the petition for review.

      (e) A petition for review of the hearing officer's decision shall contain the following information:

      1. A concise statement of the reason that the petitioner asserts as the basis pursuant to paragraph (g) of this subsection for reversing, modifying, or remanding the hearing officer's decision or an order of the hearing officer issued pursuant to Section 3(2)(e) of this administrative regulation;

      2. A statement specifying the part of the official record that the petitioner relies upon to support reversing, modifying, or remanding the hearing officer's decision pursuant to paragraph (g) of this subsection; and

      3. A statement of whether the petitioner believes that oral argument to the board is necessary.

      (f) The board shall review the hearing officer's decision at its next regularly scheduled meeting convened at least thirty (30) days after the petition for review of the hearing officer's decision is received or at a special meeting convened for that purpose within ninety (90) days after receipt of the petition for review of the hearing officer's decision, whichever first occurs.

      (g) The board shall decide the dispute upon the official record, unless there is fraud or misconduct involving a party, and may consider oral arguments by the debtor and the authority. The board shall:

      1. Not substitute its judgment for that of the hearing officer as to the weight of the evidence on questions of fact; and

      2.a. Uphold the hearing officer's decision unless it is clearly unsupported by the evidence and the applicable law;

      b. Reject or modify, in whole or in part, the hearing officer's decision; or

      c. Remand the matter, including an order of the hearing officer issued pursuant to Section 3(2)(e) of this administrative regulation, in whole or in part, to the hearing officer for further proceedings as appropriate if it finds the hearing officer's final order is:

      (i) In violation of constitutional or statutory provisions;

      (ii) In excess of the statutory authority of the agency;

      (iii) Without support of substantial evidence on the whole record;

      (iv) Arbitrary, capricious, or characterized by abuse of discretion; or

      (v) Based on an ex parte communication which substantially prejudiced the rights of a party and likely affected the outcome of the hearing.

      (h) The final order of the board shall be in writing. If the final order differs from the hearing officer's decision, it shall include separate statements of findings of fact and conclusions of law.

      (4) The remedies provided in this section shall not:

      (a) Preclude the use of other judicial or administrative remedies available to the authority under state or federal law; and

      (b) Be construed to stay the use of another remedy.

 

      Section 3. Hearing Procedure. (1) The debtor shall have the right to be heard by the hearing officer, be represented by counsel, present evidence, cross examine, and make both opening and closing statements.

      (2)(a) Upon request of a party, the hearing officer may issue a subpoena for the production of a document or attendance of a witness.

      (b)1. Not more than ten (10) business days after the date of filing the request for a hearing or a review of written material, the debtor shall submit to the counsel for the authority a written statement specifically stating the basis of dispute.

      2. Not less than fifteen (15) business days prior to the hearing, the parties shall:

      a. Confer and jointly stipulate the issues that are in controversy to be resolved by the hearing officer;

      b. Discuss the possibility of informal resolution of the dispute;

      c. Exchange a witness list of the names, addresses, and phone numbers of each witness expected to testify at the hearing and a brief summary of the testimony of each witness that the party expects to introduce into evidence; and

      d. Exchange an exhibit list identifying documents to be admitted into evidence at the hearing and provide a legible copy of all exhibits.

      3.a. If the debtor is unavailable or otherwise fails to confer and jointly stipulate the issues pursuant to subparagraph 2 of this paragraph, the authority shall serve upon the debtor proposed stipulation of issues. If within five (5) calendar days, the debtor fails to respond to the proposed stipulation of issues, the debtor shall be precluded from raising an additional issue not identified in the proposed stipulation of issues.

      b. If the debtor is unavailable or otherwise fails to cooperate in a timely manner for the exchange of the witness or exhibit lists, the debtor shall be precluded from admitting the information as part of the evidence at the hearing.

      4. The authority shall provide to the hearing officer the documentation submitted in accordance with subparagraph 1 of this paragraph and shall report to the hearing officer the results of the discussions between the parties described in subparagraphs 2 and 3 of this paragraph.

      5. Additional time for compliance with the requirements of this paragraph may be granted by the hearing officer, upon request, if it does not prejudice the rights of the authority or delay the rendering of a hearing decision within the time prescribed in this subsection.

      6. If the debtor requests a hearing, but the debtor's written statement and supporting documentation, considered from a viewpoint most favorable to the debtor, does not reflect a genuine issue of fact or prima facie defense to the legal enforceability of the authority's claim, the hearing officer, on petition of the authority and notice to the debtor, may enter an order dismissing the request for a hearing and authorizing issuance of the order described in Section 5 of this administrative regulation.

      (c) Facts recited in the authority's notice pursuant to Section 1(3) of this administrative regulation that are not denied shall be deemed admitted. Each party shall remain under an obligation to disclose new or additional items of evidence or witnesses which may come to their attention as soon as practicable.

      (d)1. Either party, without leave of the hearing officer, may depose a witness, upon reasonable notice to the witness and the opposing party, and submit to the opposing party interrogatories or request for admissions.

      2. The party receiving interrogatories or request for admissions shall respond within fifteen (15) calendar days.

      3. Each matter of which an admission is requested shall be deemed admitted unless, within fifteen (15) days after service of the request or a shorter or longer time that the hearing officer may allow, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter.

      (e) Sufficient grounds for entry of an appropriate order by the hearing officer, including postponement, exclusion of evidence, dismissal of the appeal, quashing the withholding order, or vacating the stay, shall exist if there is:

      1. Noncompliance with this subsection;

      2. Failure of the authority to:

      a. Timely appoint a hearing officer; or

      b. Respond to a request for inspection of records; or

      3. Failure of the debtor to submit information in accordance with paragraph (b) of this subsection.

      (3) Order of proceeding.

      (a) The hearing officer shall:

      1. Convene an in-person or telephonic hearing;

      2. Identify the parties to the action and the persons participating;

      3. Admit into evidence the notice required by Section 1(3) of this administrative regulation and the debtor's statement and the stipulations required by subsection (2)(b)1 and 2 of this section;

      4. Solicit from the parties and dispose of any objections or motions;

      5. Accept into evidence any documentary evidence not objected to;

      6. Solicit opening statements; and

      7. Proceed with the taking of proof.

      (b) The taking of proof shall commence first by the debtor and then by the authority, with opportunities for cross-examination, rebuttal, and closing statements.

      (4) Rules of evidence.

      (a) All testimony shall be made under oath or affirmation.

      1. The hearing officer shall not admit evidence that is excludable as a violation of an individual's constitutional or statutory rights or a privilege recognized by the courts of the Commonwealth.

      2. Statutes or judicial rules pertaining to the admission of evidence in a judicial proceeding shall not apply to a hearing under this section.

      3. The hearing officer may receive evidence deemed reliable and relevant, including evidence that would be considered hearsay if presented in court, except that hearsay evidence shall not be sufficient in itself to support the hearing officer's decision.

      4. A copy of a document shall be admissible if:

      a. There is minimal authentication to establish a reasonable presumption of its genuineness and accuracy; or

      b. It is admitted without objection.

      5. The hearing officer may exclude evidence deemed unreliable, irrelevant, incompetent, immaterial, or unduly repetitious.

      (b) An objection to an evidentiary offer may be made by any party and shall be noted in the record.

      (c) The hearing officer:

      1. May take official notice of:

      a. Statutes and administrative regulations;

      b. Facts which are not in dispute; and

      c. Generally-recognized technical or scientific facts;

      2. Shall notify all parties, either before or during the hearing of a fact so noticed and its source; and

      3. Shall give each party an opportunity to contest facts officially noticed.

      (d) At the discretion of the hearing officer, the parties may be allowed up to fifteen (15) days following the hearing to submit written arguments or briefs.

      (5) Upon request of either party, the record of the hearing shall be transcribed, and shall be available to the parties at their own expense.

      (6) Burden of proof.

      (a) The authority shall have the burden to establish the existence and amount of the debt.

      (b) The debtor shall have the burden to establish an affirmative defense.

      (c) The party with the burden of proof on an issue shall have the burden of going forward and the ultimate burden of persuasion as to that issue. The ultimate burden of persuasion shall be met by a prima facie establishment of relevant, uncontroverted facts or, if relevant facts are disputed, a preponderance of evidence in the record.

      (d) Failure to meet the burden of proof shall be grounds for a summary order from the hearing officer.

 

      Section 4. Defenses. (1) Except as provided in subsection (2) of this section, a debtor may assert a defense to the issuance of an administrative order to withhold the debtor's disposable pay, legal or equitable, pertaining to the existence,[or] amount, or enforceability of the debt or the terms of a proposed repayment schedule under the garnishment order (other than a repayment schedule agreed to in writing pursuant to Section 1(3)(g) of this administrative regulation).

      (2) The hearing officer shall not consider as a defense a question of law or fact that has previously been adjudicated by a court of competent jurisdiction or by an independent third-party trier of fact in an administrative proceeding involving the debtor and the authority pertaining to the existence, amount, or the debtor's liability on the particular debt in question or the terms of a prior repayment schedule.

      (3) If the debtor asserts as a defense a question of law or fact that was previously raised in an administrative proceeding before the authority pursuant to 11 KAR 4:030 or 11 KAR 4:050, the hearing officer:

      (a) Shall:

      1. Consider the matter; and

      2. Give deference to the prior decision by the authority in the same manner that a court would give deference in reviewing the decision of an administrative agency; and

      (b) May reverse the prior decision if the debtor presents evidence that:

      1. Circumstances have changed or new information is available; or

      2. The prior decision:

      a. Substantially disregarded or ignored the defense; or

      b. Was arbitrary, capricious, not supported by the facts, or made through fraud.

      (4) If the debtor asserts as a defense a claim of entitlement to discharge of the particular debt pursuant to 34 C.F.R. 682.402, except for reason of bankruptcy, but has not previously sought discharge by the authority for that specific reason, the hearing officer shall stay the hearing for a period sufficient to permit the debtor to submit documentation to the authority for a determination of eligibility for entitlement to the discharge. At the expiration of the period of stay, the hearing officer shall review the circumstances and:

      (a) Uphold the right of the authority to issue an order of wage withholding if the debtor has failed to submit documentation to the authority for review of entitlement to discharge;

      (b) Dismiss the request for hearing if the debtor has submitted documentation and the authority has approved discharge of the debt; or

      (c) Proceed with the hearing if the debtor submitted documentation and the authority denied discharge, except that the hearing officer shall consider the defense of entitlement to discharge in accordance with subsection (3) of this section.

      (5) If the debtor asserts as a defense a claim that the debt was dischargeable in a previous bankruptcy pursuant to 11 U.S.C. 523(a)(8), but the debtor did not previously seek discharge by the bankruptcy court, the hearing officer shall stay the hearing for a period sufficient to permit the debtor to reopen the bankruptcy case. At the expiration of the period of stay, the hearing officer shall review the circumstances and:

      (a) Uphold the right of the authority to issue an order of wage withholding if the debtor has failed to obtain the bankruptcy court's permission to reopen the bankruptcy case to seek discharge of the particular debt; or

      (b) Dismiss the request for hearing if the bankruptcy court has reopened the bankruptcy case to consider discharge of the particular debt.

      (6)(a) If the debtor asserts as a defense a claim that withholding of his disposable pay would constitute an extreme financial hardship, the debtor shall submit documentation of all available resources and actual expenses and shall have the burden of demonstrating the necessity of actual expenses.

      (b) The hearing officer shall compare the debtor's available resources and the necessary expenses and current debt obligations of the debtor and debtor's dependents. The hearing officer shall determine that extreme financial hardship exists if the debtor currently is not able to provide at least minimal subsistence for the debtor and debtor's dependents that could be claimed on a federal income tax return. The hearing officer shall consider as available resources of the debtor income of the debtor, the debtor's spouse, and debtor's dependents from all sources, including nontaxable income and government benefits, expenses paid on behalf of the debtor by another person, and the cash value of any current liquid assets, such as bank accounts and investments. The hearing officer shall consider the claim of extreme financial hardship in accordance with the presumptions established in this paragraph.

      1. Withholding of an amount of disposable pay shall constitute an extreme financial hardship if the debtor’s available resources from all sources do not exceed the applicable poverty guideline, multiplied by 125 percent, based on the debtor’s family size and state of residence. The poverty guidelines to be utilized for this purpose are the most recently published version promulgated by the Federal Department for Health and Human Services under the authority of 42 U.S.C. 9902(2).[:

a. The debtor resides in the District of Columbia or a state other than Alaska or Hawaii and the debtor's available resources do not exceed the applicable poverty guideline, multiplied by 125 percent, based on the debtor's family size:

 Size of family unit

Poverty guideline

1

$11,490

2

$15,510

3

$19,530

4

$23,550

5

$27,57

6

$31,590

7

$35,610

8

$39,630

Each additional person

Add $4,020

b. The debtor resides in Alaska and the debtor's available resources do not exceed the applicable poverty guideline, multiplied by 125 percent, based on the debtor's family size:

 Size of family unit

Poverty guideline

1

$14,350

2

$19,380

3

$24,410

4

$29,440

5

$34,470

6

$39,500

7

$44,530

8

$49,560

Each additional person

Add $5,030

c. The debtor resides in Hawaii and the debtor's available resources do not exceed the applicable poverty guideline, multiplied by 125 percent, based on the debtor's family size:

 Size of family unit

Poverty guideline

1

$13,230

2

$17,850

3

$22,470

4

$27,090

5

$31,710

6

$36,330

7

$40,950

8

$45,570

Each additional person

Add $4,620]

 

      2. The debtor’s actual monthly expenses shall be compared to the most recently revised Collection Financial Standards issued by the Internal Revenue Service based on the debtor’s family size and state of residence. Actual expenditures by the debtor’s family that exceed the applicable amount for a category shall be presumed unnecessary.[a. If the debtor resides in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, or Vermont, except for a metropolitan area listed in clause b of this subparagraph, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

 Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Annual Expenditures

Owned dwellings

1,068

1,170

1,589

2,789

3,390

4,494

4,962

7,108

13,516

Rented dwellings

4,530

3,803

3,778

3,854

4,191

4,581

4,265

3,984

2,670

Other lodging

343

54

248

92

338

321

358

607

1,488

Utilities, fuels, and public services

1,642

1,862

2,086

2,794

3,136

3,390

3,759

4,222

5,513

Household operations

288

330

3,001

488

586

778

696

957

2,143

Housekeeping and miscellaneous supplies

286

255

293

362

389

362

464

547

1,042

Household furnishings and equipment

463

452

380

540

793

940

1,071

1,666

2,563

Vehicle purchases (net outlay)

657

870

161

1,562

1,118

1,723

2,345

2,622

4,074

Gasoline and motor oil

693

711

647

962

1,442

1,678

2,229

2,357

3,313

Vehicle maintenance and repairs

217

264

245

426

435

572

783

846

1,301

Vehicle insurance

751

584

437

519

630

826

722

1,287

1,386

Vehicle rental, lease, license and other charges

148

1137

87

166

314

350

439

469

1,130

Public transportation

269

263

215

269

320

470

512

569

1,274

b. If the debtor resides in one (1) of the following metropolitan areas, actual annual expenditures by the debtor's family that exceed the applicable amount for a category shall be presumed unnecessary:

New York

Philadelphia

Boston

Owned dwellings

9,312

8,158

8,260

Rented dwellings

5,360

3,218

3,499

Other lodging

807

631

1,104

Utilities, fuels, and public services

4,273

4,442

4,121

Household operations

1,384

1,201

1,569

Housekeeping and miscellaneous supplies

610

701

641

Household furnishings and equipment

1,408

1,460

1,859

Vehicle purchases (net outlay)

1,891

2,289

3,382

Gasoline and motor oil

2,006

2,147

2,489

Other vehicle expenses (repairs, insurance, lease, license, and other charges)

2,813

2,457

2,579

Public transportation

1,133

444

678

3.a. If the debtor resides in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, or Wisconsin, except for a metropolitan area listed in clause b of this subparagraph, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

 Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000

to

$19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Annual Expenditures

Owned dwelling

1,201

1,145

1,519

2,324

2,744

4,265

4,905

6,570

10,685

Rented dwellings

3,164

2,675

2,880

2,816

2,807

2,477

2,079

1,669

1,140

Other lodging

439

248

113

135

296

341

270

542

1,295

Utilities, fuels and public services

1,525

1,705

2,074

2,540

2,999

3,297

3,576

3,761

4,587

Household operations

286

220

305

490

471

539

720

834

1,739

Housekeeping and miscellaneous supplies

264

257

280

404

407

497

613

590

1,037

Household furnishings and equipment

537

355

380

585

709

856

1,085

1,555

2,556

Vehicle purchases (net outlay)

822

1,166

444

543

1,209

2,070

2,214

2,748

4,871

Gasoline and motor oil

1,024

988

1,080

1,267

1,792

2,109

2,395

2,683

3,501

Vehicle maintenance and repairs

212

245

349

432

589

582

798

819

1,213

Vehicle insurance

316

62

367

687

672

680

1,060

789

1,277

Vehicle lease, license, and other charges

140

99

137

160

251

280

324

352

755

Public transportation

139

147

151

184

191

219

225

364

943

b. If the debtor resides in one (1) of the following metropolitan areas, actual annual expenditures by the debtor's family that exceed the applicable amount for a category shall be presumed unnecessary:

Chicago

Detroit

Minneapolis

St. Paul

Cleveland

Owned dwelling

8,770

6,455

7,407

5,569

Rented dwelling

3,156

2,240

2,174

2,315

Other lodging

1,137

646

671

670

Utilities, fuels, and public services

3,981

4,036

3,315

3,434

Household operations

1,332

891

1,260

577

Housekeeping and miscellaneous supplies

666

631

883

728

Household furnishings and equipment

1,478

1,368

1,877

1,360

Vehicle purchases (net outlay)

2,624

2,705

2,908

2,598

Gasoline and motor oil

2,445

2,606

2,538

2,086

Other vehicle expenses (repairs, insurance, lease, license, and other charges)

2,412

2,956

2,818

2,572

Public transportation

861

523

545

559

4.a. If the debtor resides in Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, or West Virginia, except for a metropolitan area listed in clause b of this subparagraph, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

Debtor’s Available

Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Owned dwelling

1,524

1,354

1,535

1,758

2,463

3,152

4,281

5,327

10,313

Rented dwelling

2,631

2,682

2,559

2,785

3,047

2,876

2,888

2,301

1,694

Other lodging

117

264

61

99

204

191

288

397

1,246

Utilities, fuels, and other charges

2,349

2,442

2,602

3,107

3,257

3,522

3,744

4,189

5,136

Household operations

301

308

340

456

547

696

755

957

1,811

Housekeeping and miscellaneous supplies

235

348

342

461

424

481

502

632

845

Household furnishings and equipment

534

612

513

704

849

1,166

1,104

1,382

2,529

Vehicle purchases (net outlay)

831

846

421

1,000

1,446

2,344

2,374

2,726

5,163

Gasoline and motor oil

1,115

1,098

1,206

1,625

1,944

2,188

2,625

2,878

3,658

Vehicle maintenance and repairs

268

348

305

376

469

480

649

752

1,170

Vehicle insurance

351

443

562

854

750

821

1,116

1,263

1,544

Vehicle lease, license, and other charges

128

83

105

132

153

219

261

263

584

Public transportation

125

86

100

116

148

147

213

276

734

b. If the debtor resides in one (1) of the following metropolitan areas, actual annual expenditures by the debtor's family that exceed the applicable amount for a category shall be presumed unnecessary:

Washington, D.C.

Baltimore

Atlanta

Miami

Dallas

Forth Worth

Houston

Owned dwelling

10,724

8,829

7,301

5,245

6,407

6,487

Rented dwelling

4,309

2,921

2,879

4,813

3,371

2,853

Other lodging

1,596

1,196

502

334

470

585

Utilities, fuels, and public services

4,254

4,424

4,348

3,496

4,461

4,472

Household operations

1,740

1,024

1,166

701

1,237

1,483

Housekeeping and miscellaneous supplies

720

687

724

458

739

620

Household furnishings and equipment

2,247

1,615

,1528

865

1,557

1,788

Vehicle purchases (net outlay)

3,176

1,962

2,761

1,149

3,175

2,542

Gasoline and motor oil

2,479

2,401

2,645

2,268

2,918

3,050

Other vehicle expenses (repairs, insurance, lease, license, and other charges)

4,009

1,877

2,060

2,205

2,833

2,975

Public transportation

1,224

366

533

418

388

578

5.a. If the debtor resides in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, or Wyoming, except for a metropolitan area listed in clause b of this paragraph, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

 Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Annual Expenditures

Owned dwelling

3,393

1,433

1,892

2,070

2,634

4,211

5,089

7,039

13,133

Rented dwelling

3,532

4,604

4,693

4,594

4,840

4,640

5,061

4,510

3,421

Other lodging

509

199

128

153

249

378

438

527

1,541

Utilities, fuels, and public services

2,139

1,558

1,843

2,331

2,516

2,958

3,237

3,604

4,453

Household operations

989

442

518

723

818

783

953

1,008

2,253

Housekeeping and miscellaneous supplies

384

356

359

362

438

420

574

642

913

Household furnishings and equipment

692

596

671

696

764

1,166

1,094

1,708

2,803

Vehicle purchases (net outlay)

1,111

65

524

993

1,331

1,807

1,410

2,374

4,667

Gasoline and motor oil

1,100

1,121

1,157

1,323

1,655

2,097

2,203

2,735

3,269

Vehicle maintenance and repairs

402

460

411

577

515

664

746

941

1,425

Vehicle insurance

587

277

416

618

531

946

834

1,259

1,410

Vehicle lease, license, and other charges

195

158

168

234

221

373

373

471

849

Public transportation

292

196

201

224

229

427

445

539

1,257

b. If the debtor resides in one (1) of the following metropolitan areas, actual annual expenditures by the debtor's family that exceed the applicable amount for a category shall be presumed unnecessary:

Los Angeles

San Francisco

San Diego

Seattle

Phoenix

Owned dwelling

6,808

11,051

8,075

8,557

5,879

Rented dwelling

6,235

6,594

6,694

3,631

2,772

Other lodging

731

1,537

441

1,424

584

Utilities, fuels, and public services

3,150

3,318

3,251

3,630

3,832

Household operations

1,447

2,201

1,210

1,677

1,098

Housekeeping and miscellaneous supplies

644

604

488

688

762

Household furnishings and equipment

1,420

1,684

1,480

1,951

1,714

Vehicle purchases (net outlay)

2,464

2,351

2,106

3,390

3,046

Gasoline and motor oil

2,615

2,340

2,673

2,411

2,409

Other vehicle expenses (repairs, insurance, lease, license, and other charges)

3,079

3,417

2,651

2,502

2,546

Public transportation

626

1,241

469

1,182

371

6. If the debtor is the only member of the household, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

 Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Food

2,547

2,537

2,388

2,671

2,989

3,535

4,136

4,750

6,672

Apparel

611

457

458

640

632

1,031

1,076

1,433

2,063

Health insurance

530

598

1,024

1,398

1,346

1,429

1,424

1,394

1,608

Medical services

293

186

253

412

460

439

523

555

1,043

Prescription drugs

186

175

325

410

340

387

306

344

392

Medical supplies

59

43

80

74

81

99

85

106

170

Personal care products and services

192

245

210

275

307

406

439

537

827

Education

1,780

914

393

390

563

406

268

540

1,314

Life and other personal insurance

58

45

89

110

275

142

159

219

333

7. If the debtor's household consists of two (2) persons, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Annual Expenditures

Food

3,978

3,520

3,956

3,993

4,198

4,952

4,911

6,156

8,740

Apparel

976

897

742

617

991

1,049

1,123

1,337

2,845

Health insurance

1,072

993

1,224

1,514

2,528

2,389

2,442

2,759

2,711

Medical services

361

46

430

416

674

771

829

848

1,269

Prescription Drugs

236

342

558

483

665

635

745

704

727

Medical supplies

26

51

46

78

113

128

146

127

238

Personal care products and services

299

281

317

379

410

446

506

609

1,012

Education

298

1,021

675

467

412

482

466

551

1,300

Life and other personal insurance

128

72

115

165

200

250

253

345

618

8. If the debtor’s household consists of three (3) persons, actual annual expenditures by the debtor’s family that exceed the applicable amount for a category, based on the debtor’s available resources, shall be presumed unnecessary:

 Debtor’s Available Resources

Less than $5,000

$5,000 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Food

6,056

5,636

4,730

4,636

5,172

6,078

5,868

6,671

9,509

Apparel

1,128

2,296

1,280

1,179

1,402

1,895

1,238

1,979

2,631

Health insurance

1,080

560

374

553

1,159

1,627

1,839

2,199

2,711

Medical services

173

155

233

93

563

495

491

1,189

1,276

Prescription drugs

315

172

220

283

309

375

441

523

650

Medical supplies

82

46

23

39

77

93

100

91

206

Personal care products and services

411

448

304

339

426

583

520

580

1,052

Education

2,621

1,172

152

266

315

410

805

783

2,588

Life and other personal insurance

209

103

37

112

127

176

219

320

725

9. If the debtor’s household consists of four (4) persons, actual annual expenditures by the debtor’s family that exceed the applicable amount for a category, based on the debtor’s available resources, shall be presumed unnecessary:

Debtor’s Available Resources

Less than $10,000

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Food

5,196

5,175

6,395

5,362

6,796

7,003

7,513

11,103

Apparel

2,749

1,255

2,364

1,547

1,616

1,665

1,935

3,094

Health insurance

578

299

614

746

1,367

1,515

1,901

2,585

Medical services

209

134

202

433

449

589

692

1,142

Prescription drugs

100

163

358

233

245

341

387

571

Medical supplies

37

78

10

49

108

99

103

179

Personal care products and services

407

280

255

457

442

529

681

1,054

Education

293

264

154

463

469

609

847

2,972

Life and other personal insurance

80

36

65

75

120

140

268

623

10. If the debtor's household consists of five (5) or more persons, actual annual expenditures by the debtor's family that exceed the applicable amount for a category, based on the debtor's available resources, shall be presumed unnecessary:

Debtor’s Available Resources

Less than $10,000

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $69,999

$70,000 and over

Food

6,161

6,009

6,880

7,143

7,716

7,232

8,518

11,702

Apparel

2,539

1,632

1,536

2,268

2,466

1,982

2,314

3,343

Health insurance

558

267

473

481

993

1,546

1,674

2,590

Medical services

490

222

153

366

399

607

711

1,160

Prescription drugs

299

126

190

228

303

348

366

598

Medical supplies

46

19

34

53

68

89

94

195

Personal care products and services

278

323

511

466

419

586

554

1,003

Education

411

161

185

374

480

665

575

2,652

Life and other personal insurance

102

41

49

58

149

215

233

581]

 

      Section 5.(1) An administrative order issued by the authority to withhold disposable pay shall be served upon the debtor's employer personally or by mail. A notice of the issuance of the order shall be provided to the debtor by regular first class mail. The order shall require the withholding and delivery to the authority of not more than fifteen (15) percent of the debtor's disposable pay, except that a greater percentage may be deducted upon the written consent of the debtor.

      (2) The order shall state the amount or percentage to be withheld and the amount of the debt, the statutory and regulatory basis therefore, and the time withholding is to begin.

      (3) The order shall continue to operate until the debt is paid in full with interest accrued and accruing thereon at the prescribed rate in the promissory note or applicable law and collection costs that may be charged to the borrower under the promissory note or applicable law. The order shall have the same priority as provided to a judicially ordered garnishment prescribed in KRS 425.506.

      (4) An employer who has been served with an administrative order for withholding of earnings shall answer the order within twenty (20) days, and shall provide a copy to the debtor the first time that withholding occurs and each time thereafter that a different amount is withheld. The employer shall be liable to the authority for a lawfully due amount which the employer fails to withhold from disposable pay due the debtor following receipt of the order, plus attorneys' fees, costs, and, in the discretion of a court of competent jurisdiction, punitive damages.

      (5) A withholding under this section shall not be grounds for discharge from employment, refusal to employ or disciplinary action against an employee subject to withholding under this section.

      (6) The employer shall have no liability or further responsibility after properly, completely, and timely fulfilling the duties under this section.

 

      Section 6.(1) Whenever this administrative regulation requires delivery of a notice, subpoena, or other communication by personal service, the service shall be made by:

      (a) An officer authorized under KRS 454.140 to serve process; or

      (b) A person over the age of eighteen (18) years of age, who shall prove service by affidavit or by the signature of the person being served.

      (2) Receipt of a notice or other communication by the debtor shall be rebuttably presumed if the person to be served or another adult with apparent authority at the place of residence or employment last known to the authority signs a receipt or refuses to accept the notice or communication after identification and offer of delivery to the person so refusing.

      (3) For an administrative order to withhold disposable pay served upon an employer, receipt shall provide a rebuttable presumption if:

      (a) The person to whom the order is directed signs or refuses to sign a receipt; or

      (b) His employee or agent with apparent authority signs or refuses to sign a receipt.

 

LISA PAYNE, Chair

      APPROVED BY AGENCY: August 28, 2014

      FILED WITH LRC: September 11, 2014 at 10 a.m.

      PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on October 21, 2014, at 10:00 a.m. Eastern Time at 100 Airport Road, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by 5 workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until October 31, 2014. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.

      CONTACT PERSON: Ms. Diana L. Barber, General Counsel, Kentucky Higher Education Assistance Authority, P.O. Box 798, Frankfort, Kentucky 40602-0798, phone (502) 696-7298, fax (502) 696-7293.

 

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

 

Contact Person: Diana L. Barber

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: This administrative regulation establishes the procedures to be followed by the Authority in garnishing a defaulted student loan borrower’s wages for payment of the borrower’s student loan debt, as well as the procedures for a borrower to request a hearing on a garnishment and procedures for conducting that hearing.

      (b) The necessity of this administrative regulation This administrative regulation is necessary to comply with the requirements of the Higher Education Act of 1965, as amended, and its accompanying regulations regarding the collection of defaulted student loan debts.

      (c) How this administrative regulation conforms to the content of the authorizing statutes: The authorizing statutes permit the Authority to collect defaulted student loan debts through administrative wage garnishment and to conduct administrative hearings relating to the wage garnishment.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This administrative regulation assists in the effective administration of the statutes by setting forth the procedures to be followed during the administrative wage garnishment process as well as the hearing process.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: The amendment to this administrative regulation incorporates a number of changes to 34 C.F.R. §682.410, the federal regulation which sets forth the procedures the Authority is required to follow in collecting on defaulted guaranteed student loans through administrative wage garnishment. These changes were effective as of July 1, 2014. Specifically, the changes enable a defaulted borrower to challenge the enforceability of the debt through the administrative hearing process, extends the deadline for submitting a timely hearing request from twenty (20) days to thirty (30) days following the mailing of the First Notice Prior to Wage Withholding, and requires the Authority to release a garnishment order on the 61st day after receipt of an untimely request for hearing if a final decision has not been rendered within 60 days of receipt of the hearing request until such time as a final decision is rendered. Additionally, the amendment incorporates by reference the most recent version of the Collection Financial Standards for consumer expenditures published by the Internal Revenue Service. Per the newly updated federal regulation, these standards are to be used both by the Authority and any administrative hearing officer in evaluating a defaulted borrower’s claim of extreme financial hardship based on the inadequacy of financial resources verses monthly household living expenses with respect to administrative wage garnishment. These standards replace the Consumer Expenditure Tables produced by the U.S. Department of Labor, Bureau of Labor Statistics previously utilized by the Authority in making hardship determinations in garnishment cases. Finally, per the relevant federal regulation, his amendment incorporates the most recent iteration of the poverty guidelines published by the Federal Department of Health and Human Services for evaluating extreme financial hardship claims based on income verses the poverty level.

      (b) The necessity of the amendment to this administrative regulation: The amendment to this administrative regulation is necessary in order to bring the regulation into alignment with the newly amended federal regulation authorizing the Authority utilize the administrative wage garnishment process to collect on defaulted student loans.

      (c) How the amendment conforms to the content of the authorizing statutes: The amendment to this administrative regulation conforms to the requirements of federal and state law that authorize the Authority to promulgate regulations establishing the procedures for utilizing the administrative garnishment process in collection of defaulted student loans and the conducting of hearings pertaining thereto.

      (d) How the amendment will assist in the effective administration of the statutes. The amendment to this administrative regulation will assist in the effective administration of the statutes by incorporating changes to the federal regulation governing the administrative wage garnishment process.

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: Student loan borrowers who have defaulted on their repayment obligations, whose wages are otherwise eligible for administrative wage garnishment and who are claiming that such garnishment will cause them extreme financial hardship. During calendar year 2013, approximately 4,023 notices of wage garnishment were sent and received by student loan borrowers. During the same period, eighty-one (81) of those student loan borrowers requested a hearing regarding the wage garnishment. Of the eighty-one (81) hearing requests received, seventy-three (73) were requested on the basis of extreme financial hardship.

      (4) Provide an analysis of how the entities identified in (3) above will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including: Those individuals identified in (3) above will be impacted by the amendment to this administrative regulation in that they will have an additional basis for challenging an administrative wage withholding order – enforceability of the debt-, will be granted a longer period of time in which to submit a timely hearing request, and will be entitled to release of a garnishment order if a decision is not rendered under a hearing request within sixty (60) days of receipt of the request for hearing. Additionally, any claim of extreme financial hardship will be evaluated under the most recent version of the Federal Poverty Guidelines and the current Federal Collection Financial Standards.

      (5) Provide an estimate of how much it will cost to implement this administrative regulation:

      (a) Initially: There are no costs to student loan borrowers associated with the implementation of the amendment to this administrative regulation. Forms for requesting a hearing and for providing financial information to the Authority are provided to the borrowers at no cost to the borrower. The Authority bears any costs associated with the request for hearing process.

      (b) On a continuing basis: Same as (5)(a) above.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: The Authority maintains a federally restricted trust fund pursuant to 20 U.S.C. Section 1072b for operation of the insured student loan program.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No increase in fees is necessary for the implementation of the amendment to this administrative regulation. The amendment to this administrative regulation merely adopts the most recent economic standards, as determined by the federal government, for evaluating a student loan borrower’s assertion that administrative wage garnishment will create an extreme financial hardship.

      (8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This administrative regulation neither establishes any fees nor directly or indirectly increases any fees.

      (9) TIERING: Is tiering applied? Tiering was not applied to the amendment of this administrative regulation. The concept is not applicable to this amendment of this administrative regulation. The administrative regulation is intended to provide equal opportunity to participate within parameters, and consequently does not inherently result in disproportionate impacts on certain classes of regulated entities or address a particular problem to which certain regulated entities do not contribute. Disparate treatment of any person or entity affected by this administrative regulation could raise questions of arbitrary action on the part of the agency. The "equal protection" and "due process" clauses of the Fourteenth Amendment of the U.S. Constitution may be implicated as well as Sections 2 and 3 of the Kentucky Constitution. The regulation provides equal treatment and opportunity for all applicants and recipients.

 

FISCAL NOTE ON STATE AND LOCAL GOVERNMENT

 

      1. What units, parts or division of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? This administrative regulation will impact the Finance and Administration Cabinet, Kentucky Higher Education Assistance Authority.

      2. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 164.744(1), KRS 164.748(2), (4), (10), and (20), 164.753(2), 20 U.S.C. §1071 through 1087(2), §1095a, 34 C.F.R. §682.410(b)(9).

      3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? This regulation will not generate any revenue.

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? This regulation will not generate any revenue.

      (c) How much will it cost to administer this program for the first year? No costs are associated with this regulation.

      (d) How much will it cost to administer this program for subsequent years? No costs are associated with this regulation.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

      Revenues (+/-):

      Expenditures (+/-):

      Other Explanation:

 

FEDERAL MANDATE ANALYSIS COMPARISON

 

      1. Cite the federal statute or regulation constituting the federal mandate. 20 U.S.C. §1095a, 34 C.F.R. §682.410(b)(9)

      2. State in sufficient detail the state compliance standards. This regulation provides for the garnishment of the disposable pay of a borrower who has defaulted in making payments on a loan guaranteed pursuant to Title IV, Part B, of the federal act and establishes the procedures for requesting and conducting a hearing related to the garnishment of the disposable pay. At least thirty (30) days before the initiation of garnishment proceedings, the Authority shall mail to the borrower’s last known address a written notice of the nature and amount of the debt, the intention of the Authority to initiate proceedings to collect the debt through deductions from the borrower’s pay, and an explanation of the borrower’s rights. The Authority shall offer the borrower an opportunity to inspect and copy Authority records related to the debt and an opportunity to enter into a written repayment agreement with the Authority under terms agreeable to the Authority. The Authority shall offer the borrower an opportunity for a hearing concerning the existence, the amount, or the enforceability of the debt, and the terms of the repayment schedule under the garnishment order. The Authority shall provide a hearing, which, at the borrower’s option, may be oral or written, if the borrower submits a written request for such a hearing. The time and location of the hearing shall be established by the Authority. An oral hearing may, at the borrower’s option, be conducted either in person or by telephone conference. The Authority shall provide a hearing to the borrower in sufficient time to permit a decision, in accordance with the procedures prescribed in the administrative regulation, to be rendered within sixty (60) days after the Authority’s receipt of the borrower’s hearing request. The hearing official appointed by the Authority to conduct the hearing may not be under the supervision or control of the head of the Authority. The hearing official shall issue a final written decision. If the borrower’s written request is received by the Authority on or before the 30th day following the Authority’s mailing of the notice of the nature and amount of the debt, the intention of the Authority to initiate proceedings, and an explanation of the borrower’s rights, the Authority may not issue a withholding order until the borrower has been provided the requested hearing. If the borrower’s written request is received by the Authority after the 30th day following the mailing of the notice, the Authority shall provide a hearing to the borrower in sufficient time that a decision, in accordance with the procedures prescribed in the administrative regulation, may be rendered within sixty (60) days, but shall not delay issuance of a withholding order. In the event that a final decision is not rendered within sixty (60) days of the receipt by the Authority of an untimely request for hearing, the Authority shall release the withholding order on the 61st day following receipt of the hearing request until such time as a final decision is entered. This administrative regulation further provides that if the debtor does not submit required documentation in a timely fashion, then he has not met his burden of substantiating his case. Additionally, if a defense has previously been raised and refuted by the Authority, then the hearing officer must give deference to a prior decision of the Authority. Also, if the debtor is raising for the first time in the administrative wage garnishment hearing a defense that should have been raised at the point of default or some prior action, then the debtor shall be deemed to have not exhausted his appropriate remedies, and the hearing officer may stay the hearing pending consideration of the dispute through the appropriate remedy. Finally, the administrative regulation provides the hearing officer with guidelines to follow which allow him to consistently construe and apply the concept of "extreme financial hardship." In order to prove "extreme financial hardship," a debtor must show, if his income is above 125 percent of the poverty level, that his expenses are necessary to the health, safety, or continued employment of the debtor. If the expenses of the debtor exceed the Collection Financial Standards published by the Internal Revenue Service, then the excess expenses are presumed unnecessary and are not considered in the determination unless the debtor can demonstrate that the expenses are necessitated as the result of extraordinary circumstances beyond his control, such as the cost of unreimbursed medical care. The final decision of the hearing officer may be appealed to and reviewed by the Authority Board on request of either party. An appeal from the hearing officer’s decision shall follow the standard that the Board shall uphold the hearing officer’s decision unless it is clearly unsupported by the evidence. The Authority may not garnish the wages of a borrower whom it knows has been involuntarily separated from employment until the borrower has been re-employed continuously for at least twelve (12) months. Unless the Authority receives information that the Authority believes justifies a delay or cancellation of the withholding order, it shall send a withholding order to the employer within twenty (20) days after the borrower fails to make a timely request for a hearing, or, if a timely request for a hearing is made by the borrower, within twenty (20) days after a final decision is made by the Authority to proceed with garnishment. The employer shall deduct and pay to the Authority from a borrower’s wages an amount that does not exceed the lesser of fifteen (15) percent of the borrower’s disposable pay for each pay period or the amount permitted by 15 U.S.C. §1673, unless the borrower provides the Authority with written consent to deduct a greater amount.

      3. State in sufficient detail the minimum or uniform standards contained in the federal mandate. The federal statute and regulation require the Authority, as the designated state guarantee agency, to ensure by adoption of standards, policies and procedures that a borrower has an opportunity for a hearing to dispute the existence, amount, enforceability, or repayment of the debt and that the regulations and procedures for such a hearing meet the requirements of the applicable federal statute (20 U.S.C.S. §1095a) and the applicable federal regulation (34 C.F.R. §682.410(b)(9)). Specifically, the statute and regulation require that in order to issue an administrative order of wage garnishment under the authority of the federal statute:

At least thirty (30) days before the initiation of garnishment proceedings, the Authority shall mail to the borrower’s last known address, a written notice of the nature and amount of the debt, the intention of the Authority to initiate proceedings to collect the debt through deductions from the borrower’s pay, and an explanation of the borrower’s rights. The Authority shall offer the borrower an opportunity to inspect and copy Authority records related to the debt and an opportunity to enter into a written repayment agreement with the Authority under terms agreeable to the Authority. The Authority shall offer the borrower an opportunity for a hearing concerning the existence, the amount, or the enforceability of the debt and the terms of the repayment schedule under the garnishment order. The Authority shall provide a hearing, which, at the borrower’s option, may be oral or written, if the borrower submits a written request for such a hearing. The time and location of the hearing shall be established by the Authority. An oral hearing may, at the borrower’s option, be conducted either in person or by telephone conference. The Authority shall provide a hearing to the borrower in sufficient time to permit a decision, in accordance with the procedures that the Authority may prescribe, to be rendered within sixty (60) days after the Authority’s receipt of the borrower’s hearing request. The hearing official appointed by the Authority to conduct the hearing may not be under the supervision or control of the head of the Authority. The hearing official shall issue a final written decision. If the borrower’s written request is received by the Authority on or before the 30th day following the Authority’s mailing of the notice of the nature and amount of the debt, the intention of the Authority to initiate proceedings, and an explanation of the borrower’s rights, the Authority may not issue a withholding order until the borrower has been provided the requested hearing. If the borrower’s written request is received by the Authority after the 30th day following the mailing of the notice, the Authority shall provide a hearing to the borrower in sufficient time that a decision, in accordance with the procedures that the Authority may prescribe, may be rendered within sixty (60) days, but shall not delay issuance of a withholding order. In the event that a final decision is not rendered within sixty (60) days of the receipt by the Authority of an untimely request for hearing, the Authority shall release the withholding order on the 61st day following receipt of the hearing request until such time as a final decision is entered. The Authority may not garnish the wages of a borrower whom it knows has been involuntarily separated from employment until the borrower has been re-employed continuously for at least twelve (12) months. Unless the Authority receives information that the Authority believes justifies a delay or cancellation of the withholding order, it shall send a withholding order to the employer within twenty (20) days after the borrower fails to make a timely request for a hearing, or, if a timely request for a hearing is made by the borrower, within twenty (20) days after a final decision is made by the Authority to proceed with garnishment. The employer shall deduct and pay to the Authority from a borrower’s wages an amount that does not exceed the lesser of fifteen (15) percent of the borrower’s disposable pay for each pay period or the amount permitted by 15 U.S.C. §1673, unless the borrower provides the Authority with written consent to deduct a greater amount.

      4. In detail, state whether this administrative regulation will impose stricter requirements, or additional or different responsibilities or requirements, than those required by the federal mandate. If the promulgating administrative body is permitted to select from within a range, state the reasons for the specific selection. Discuss each state requirement that is stricter than the federal mandate in a separate paragraph. The administrative regulation does not impose stricter requirements than the federal mandate. The federal statute and regulation do not specify specific hearing procedures with the exception that the hearing must be conducted by an independent hearing officer and not an employee of the Authority, the hearing must be conducted and a decision rendered within sixty (60) days after the receipt of the request for a hearing, and that the hearing officer’s decision is final (in contrast to KRS Chapter 13B that specifies that the hearing officer renders a "recommended" order subject to finalization by the board). The administrative regulation complies with these requirements. The remaining policies and procedures for requesting and conducting a hearing are left to the discretion of the guaranty agency under the language that the hearing must be conducted "in accordance with the procedures that the agency may prescribe." The Authority provides the debtor with the opportunity for a hearing to dispute the existence, amount or repayment of the debt. The administrative regulation sets out the procedures for requesting a hearing, the appointment of an impartial hearing officer, the time limits for requesting a hearing and the procedures for conducting a hearing, and the procedures for appealing the decision of the hearing officer to the board. This administrative regulation further provides that if the debtor does not submit required documentation in a timely fashion, then he has not met his burden of substantiating his case. Additionally, if a defense has previously been raised and refuted by the Authority, then the hearing officer must give deference to a prior decision of the Authority. Also, if the debtor is raising for the first time in the administrative wage garnishment hearing a defense that should have been raised at the point of default or some prior action, then the debtor shall be deemed to have not exhausted his appropriate remedies, and the hearing officer may stay the hearing pending consideration of the dispute through the appropriate remedy. Finally, the administrative regulation provides the hearing officer with guidelines to follow which allow him to consistently construe and apply the concept of "extreme financial hardship." In order to prove "extreme financial hardship," a debtor must show, if his income is above 125 percent of the poverty level, that his expenses are necessary to the health, safety, or continued employment of the debtor. If the expenses of the debtor exceed the Collection Financial Standards published by the Internal Revenue Service, then the excess expenses are presumed unnecessary and are not considered in the determination unless the debtor can demonstrate that the expenses are necessitated as the result of extraordinary circumstances beyond his control, such as the cost of unreimbursed medical care. The final decision of the hearing officer may be appealed to and reviewed by the Authority board on request of either party. An appeal from the hearing officer’s decision shall follow the standard that the Board shall uphold the hearing officer’s decision unless it is clearly unsupported by the evidence.

      5. For each state requirement that is stricter than the federal mandate, state the justification for the imposition of the stricter standard, or additional or different responsibilities or requirements.

There are no requirements in this administrative regulation that are stricter than the federal mandate.