(a) The Secretary may charge a debtor for the costs associated with the collection of a particular debt. These costs include, but are not limited to—
(1) Salaries of employees performing Federal loan servicing and debt collection activities;
(2) Telephone and mailing costs;
(3) Costs for reporting debts to credit bureaus;
(4) Costs for purchase of credit bureau reports;
(5) Costs associated with computer operations and other costs associated with the maintenance of records;
(6) Bank charges;
(7) Collection agency costs;
(8) Court costs and attorney fees; and
(9) Costs charged by other Governmental agencies.
(b) Notwithstanding any provision of State law, if the Secretary uses a collection agency to collect a debt on a contingent fee basis, the Secretary charges the debtor, and collects through the agency, an amount sufficient to recover—
(1) The entire amount of the debt; and
(2) The amount that the Secretary is required to pay the agency for its collection services.
(c)(1) The amount recovered under paragraph (b) of this section is the entire amount of the debt, multiplied by the following fraction:
(2) In paragraph (c)(1) of this section, cr equals the commission rate the Department pays to the collection agency.
(d) If the Secretary uses more than one collection agency to collect similar debts, the commission rate (cr) described in paragraph (c)(2) of this section is calculated as a weighted average of the commission rates charged by all collection agencies collecting similar debts, computed for each fiscal year based on the formula
where—
(1) Xi equals the dollar amount of similar debts placed by the Department with an individual collection agency as of the end of the preceding fiscal year;
(2) Yi equals the commission rate the Department pays to that collection agency for the collection of the similar debts;
(3) Z equals the dollar amount of similar debts placed by the Department with all collection agencies as of the end of the preceding fiscal year; and
(4) N equals the number of collection agencies with which the Secretary has placed similar debts as of the end of the preceding fiscal year.
(e) If a debtor has agreed under a repayment or settlement agreement with the Secretary to pay costs associated with the collection of a debt at a specified amount or rate, the Secretary collects those costs in accordance with the agreement.
(f) The Secretary does not impose collection costs against State or local governments under paragraphs (a) through (d) of this section.
(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e), 3717(e)(1), 3718))
Notes of Decisions
Cited in
20
cases (
3 in the last 5 years), 1998–2023 · leading case:
In Re Schlehr, 290 B.R. 387 (Bankr. D. Mont. 2003).
In Re Schlehr, 290 B.R. 387 (Bankr. D. Mont. 2003).
· cites it 10× “Fisher testified that after the 60-day notice period, ECMC is obligated to assess collection costs as prescribed in 34 CFR § 30.60 , which sets forth a formula approach.”
In re Kennedy, 568 B.R. 367 (Bankr. D. Kan. 2017).
· cites it 4× “Instead, it relies on 34 C.F.R. § 30.60 to provide the formula for calculating a percentage charge for collection costs.”
Franklin Coll. v. Turner, 844 N.E.2d 99 (Ind. Ct. App. 2006).
· cites it 4× “34 C.F.R. § 30.60 (b), (c). Franklin contends that the collection costs it may recover are to be calculated using the formula set out in 34 C.”
Ascendium Educ. Solutions, Inc. v. Miguel Cardona, 78 F.4th 470 (D.C. Cir. 2023).
· cites it 4× “Borrowers may be required to pay the lesser amount of (1) a percent of the average costs for all defaulting borrowers, see 34 C.F.R. § 30.60 (c)(1); or (2) what the borrower would be charged if the loan were held by the Department, id.”
Educ. Credit Mgmt. Corp. v. Barnes, 318 B.R. 482 (Bankr. S.D. Ind. 2004).
· cites it 2× “405(b)(l)(iv), the amount charged a borrower must equal the lesser of— (I) The amount the same borrower would be charged for the cost of collection under the formula in 34 CFR 30.60; or (ii) The amount the same borrower would be charged for the cost of collection if the loan was…”
In Re Evans, 322 B.R. 429 (Bankr. W.D. Wash. 2005).
· cites it 6× “These regulations include 34 C.F.R. § 30.60 and 34 C.F.R. § 682.410 (b)(2) dealing with collection costs and other charges.”
United States v. Vilus, 419 F. Supp. 2d 293 (E.D.N.Y 2005).
· cites it 8× “3 The regulations therefore interpret “reasonable collection costs” to permit an assessment based on a contingency contract, in this case up to 25% of the borrower’s debt.”
Padilla v. Payco Gen. Am. Credits, Inc., 161 F. Supp. 2d 264 (S.D.N.Y. 2001).
“405(b)(l)(iv), the amount charged a borrower must equal the lesser of— (i) The amount the same borrower would be charged for the cost of collection under the formula in § 34 CFR 30.60; or (ii) The amount the same borrower would be charged for the cost of collection if the loan…”
In Re Sprolito, 359 B.R. 423 (Bankr. D.P.R. 2006).
· cites it 2× “405(b)(1)(iv), the amount charged a borrower must equal the lesser of— (i) The amount the same borrower would be charged for the cost of collection under the formula in 34 CFR 30.60; or (ii) The amount the same borrower would be charged for the cost of collection if the loan was…”
George W. v. United States Dep't of Educ., 149 F. Supp. 2d 1195 (E.D. Cal. 2000).
· cites it 2× “405(b)(l)(iv), the amount charged a borrower must equal the lesser of- (i) The amount the borrower would be charged for the cost of collection under the formula in 34 CFR 30.60; or (ii) The amount the same borrower would be charged for the cost of collection if the loan was held…”
In Re Brown, 310 B.R. 341 (Bankr. N.D. Ohio 2004).
“405(b)(l)(iv), the amount charged a borrower must equal the lesser of— (i) The amount the same borrower would be charged for the cost of collection under the formula in 34 CFR 30.60; or (ii) The amount the same borrower would be charged for the cost of collection if the loan was…”
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