March 3, 2004

ED-OIG/A07-C0032

Elizabeth Wong, Executive Director

New Jersey Higher Education Student

Assistance Authority

4 Quakerbridge Plaza

Trenton, NJ 08625-0540

Dear Dr. Wong:

This ***Final Audit Report*** (Control Number ED-OIG/A07-C0032) presents
the results of our Audit of the New Jersey Higher Education Student
Assistance Authority's (HESAA) monitoring of law firms (special
counsels) providing collection services to HESAA. Our objectives were
to: (i) determine the adequacy of the procedures HESAA had implemented
to monitor the activities of the special counsels, (ii) determine
whether borrowers were only being assessed collection costs that were
permitted and reasonable, and (iii) assess whether all collections were
being remitted to HESAA on a timely basis.

**[BACKGROUND]{.underline}**

HESAA is a state guaranty agency that provides nearly \$1 billion in
financial aid annually. Each year, HESAA programs assist more than
500,000 students with grants, scholarships, loans and information
resources.

HESAA has written agreements with 10 special counsels[^1] to provide
collection services relating to borrowers who had defaulted on Federal
Family Education Loan Program (FFELP) loans. At the beginning of our
fieldwork, there were over 37,000 borrower accounts, worth \$174
million, assigned to special counsels and active during our audit
period. The special counsels' offices were located in the states of New
Jersey, New York, Florida, and Pennsylvania. In addition, one special
counsel, Hayt, Hayt, and Landau (HHL), New Jersey, had affiliates
located in 48 states, Puerto Rico, the Virgin Islands, and Washington,
D.C. The borrower account portfolios were referred to special counsels
after HESAA's internal collection staff had been unsuccessful in their
efforts. As the defaulted loans were held by HESAA, it was responsible
for monitoring the special counsels to ensure their compliance with
federal laws and regulations, as well as applicable state law (in the
majority of cases, the special counsel obtained judgments from the
applicable state court to enable the attachment of assets).

Prejudgment collection costs and attorney fees were governed and
determined by the appropriate state court, and were normally included in
the final judgment amount. HESAA requested that the court include
special counsel fees in the judgment at the rate provided for in the
agreement between HESAA and the special counsel. Postjudgment collection
costs and interest rates were determined by the court. Postjudgment
attorney fees assessed to the borrower at a flat rate were not
permitted. Postjudgment attorney fees for specific items were allowable
if adequately supported. Postjudgment collection costs (except for the
state of Florida) were to be assessed only after the outstanding
balances of principal and interest were cleared.

**[AUDIT RESULTS]{.underline}**

We found that (1) the guaranty agency did not adequately monitor the
special counsels to ensure compliance with applicable laws and
regulations and the formal, written agreement that the agency had with
each special counsel, (2) reviews of the special counsels' activities
were not being conducted as required, and (3) all collections were not
being remitted to HESAA on a timely basis.

The agreements between the guaranty agency and its special counsels
state,

> Under applicable federal and state law, a guaranty agency is
> responsible for its agent's compliance with all federal and state
> regulatory and statutory requirements. Accordingly, \[HESAA\] will
> conduct a review of your student loan collection and bankruptcy
> practices as they pertain to \[Office of Student Assistance\] accounts
> no less frequently than every three years.

[Improper Application of Payments]{.underline}

The State of New Jersey, Division of Law, one of the special counsels,
did not apply the borrowers' payments to judgment balances in the order
prescribed by HESAA policy. It was applying the payments first to
outstanding judgment principal, then to postjudgment interest. This
practice is harmful to the federal interest. The guaranty agency
informed us that it was aware of the problem and had requested a
reamortization of the accounts in the portfolio.

In 21 of 25 borrower accounts we reviewed, another special counsel,
Waters, McPherson, and McNeill, added collection costs to the
outstanding judgment balance at various times after the final judgment
had been entered, and computed interest on the combined balance. The
special counsel considered these costs as part of the docketing process
prior to final judgment. In most cases, however, special counsels
considered collection costs as postjudgment costs (since the judgment
had been previously entered in the lower court) and applied payments to
them after the outstanding balances of judgment principal and interest
had been cleared. Applying payments to postjudgment collection costs in
this manner is in accordance with HESAA policy and the special counsel
agreement. However, Waters, McPherson, and McNeill did not follow the
established policy. As a result of including collection costs in the
outstanding postjudgment principal balance, we estimated that the total
outstanding balances in the account portfolio of 5,699 accounts were
overstated by \$163,859.

In 4 of 20 closed accounts we reviewed from Waters, McPherson, and
McNeill, the special counsel improperly applied payments to the
outstanding judgment principal balance before clearing the outstanding
postjudgment interest. This practice violates HESAA policy and the
special counsel agreements, and is harmful to the federal interest. As a
result of not applying payments to interest before principal, we
estimated that the 1,296 closed accounts in the portfolio were
erroneously reduced by \$9,720.

[Improper Computation of Interest]{.underline}

Gordin and Berger, another special counsel, improperly computed interest
at intervals that did not always coincide with receipt of the borrower's
payments. Because payments must be applied first to computed interest
and then to principal, this methodology is incorrect because the special
counsel failed to compute the amount of interest that had actually
accrued on the outstanding principal balance on the date on which a
payment was received and credited to the debt. Payments were therefore
credited against the outstanding principal balance before all computed
interest had been satisfied in full. For five of the six accounts
reviewed, interest was erroneously reduced by an average of \$98.48. As
a result, the Federal Fund did not receive its share of the additional
interest that would have accrued on principal mistakenly paid by amounts
that should have been credited to computed interest. We estimated that
computed interest was erroneously reduced by \$15,461 for the 157
accounts in the portfolio.

Interest was overstated an average of \$97.10 for six of seven accounts
reviewed that were held by another special counsel, Scott Marcus and
Associates (one of the seven accounts was erroneously reduced). We could
not determine what caused the differences. Interest was overstated
(borrowers were assessed excessive amounts of interest) by an estimated
\$43,112 for the 516 accounts in the portfolio.

[Improper Remittances]{.underline}

HHL, New Jersey, violated its agreement when it withheld its fees from
remittances of borrower payments to the guaranty agency. In June 2001,
HESAA discovered this violation and notified HHL that it must cease and
desist this practice immediately. HHL informed HESAA that it would not
comply until HESAA completed a detailed reconciliation. HESAA did not
feel it was under any obligation to do so, but completed this
reconciliation in November 2001. At that time, HHL began depositing 100
percent of the collections. As a result of HHL withholding its fees from
remittances, the Federal Fund at HESAA, which is the property of the
federal government, did not receive its share of interest
income---\$25,632---that would have been earned on the full remittance
amounts had they been properly deposited into the holding account.

[Untimely Deposits]{.underline}

The guaranty agency violated the 48-Hour Rule when it did not ensure
that the federal government received its share of the interest that
would have accrued on borrowers' payments timely deposited into an
interest-bearing account. The special counsel agreements required that
payments received from borrowers be deposited into a HESAA-controlled
federal collections escrow (holding account) on a daily basis to comply
with the 48-Hour Rule:

> \[In accordance with\] 34 CFR 682.419(b)(6) and Dear Guaranty Agency
> Director letter G-00-328\... the United States Department of Education
> is requiring that we deposit funds received by our agent or us,
> whichever is earlier, within 48 hours of receipt of those funds\...
> into a separate agency-controlled account or an agency-controlled
> escrow account.

On a bimonthly basis, HESAA remitted to the Federal Fund its share of
borrower payments (including interest income from the holding account).
Payments received from defaulted borrowers were not always deposited
into the federal interest-bearing escrow account within 48 hours. Half
of the special counsels had at least one late deposit. As a result of
untimely deposits, we estimated that the Federal Fund lost interest
amounting to \$4,584. HESAA did not ensure that the special counsels
established uniform procedures for receiving and recording payments.

## 

The guaranty agency did not effectively implement management controls
(formal review procedures) that were in place over the processing and
recording of student loan payments received from defaulted borrowers by
the special counsels. HESAA did not conduct reviews of special counsels
as required by its agreements with them. As of the date of our field
exit conference, HESAA had conducted four on-site reviews during the
period the account portfolios were held by the special counsels. Our
analyses of two of the four reviews found that they focused on remitting
and reporting collections to HESAA, rather than review of the special
counsels' individual systems for applying payments to borrowers'
accounts. Informal routine monitoring of special counsels also focused
on attorney fees assessed and collection remittances to HESAA.

HESAA officials informed us that their agency had decided to shift
resources to areas other than the monitoring of special counsel
activities, [i.e.]{.underline}, required reviews of lenders and schools.
They stated that subsequent to our audit period HESAA had hired new
personnel and scheduled reviews to satisfy their policy on special
counsel oversight.

**[Recommendations]{.underline}**

We recommend that the Chief Operating Officer (COO) for Federal Student
Aid (FSA) require that HESAA

1.  Conduct reviews of all the special counsels as required by the
    agreements between HESAA and the special counsels.

2.  Ensure that adequate management controls are established and/or
    implemented over the special counsels' systems for accounting for
    borrower collections.

3.  Require that the Division of Law reamortize the applicable accounts
    in its portfolio to properly apply the payments to interest before
    principal and notify borrowers as appropriate.[^2]

4.  Remit to the Federal Fund the federal share of collections for
    Division of Law accounts that were closed prior to the
    reamortization.[^3]

5.  Require that Waters, McPherson, and McNeill reamortize all active
    accounts to properly exclude postjudgment collection costs from the
    outstanding principal balances, and to apply payments to the
    outstanding balances of interest, principal, and collection costs in
    the correct order; and notify borrowers as appropriate.

6.  Require that Gordin and Berger reamortize all active accounts to
    correct the methodology used to compute interest and ensure that
    interest is calculated at the time payment is received, and notify
    borrowers as appropriate.[^4]

7.  Require that Scott Marcus and Associates reamortize all active
    accounts to ensure that interest is computed correctly, and notify
    borrowers as appropriate.

8.  Remit to the Federal Fund \$25,632 in imputed interest lost as a
    result of fees withheld by HHL, New Jersey.[^5]

9.  Require that the special counsels establish uniform procedures for
    recording the date the borrower\'s payment is received.

10. Ensure that all payments are deposited into a federal
    interest-bearing account within 48 hours of receipt from the
    borrower.

**HESAA\'s Comments and OIG Response**

HESAA agreed with a majority of our conclusions and recommendations. Its
comments (full text enclosed) specifically addressed the
recommendations. The following is a summary of HESAA\'s comments and our
response to the comments.

**[Conduct Reviews of All the Special Counsels as Required by the
Agreements Between HESAA and the Special Counsel]{.underline}**

HESAA stated that it concurred with this recommendation and, prior to
our review, had taken significant steps to address this issue. HESAA had
conducted initial reviews of all ten counsel that provided a basis for
identifying compliance issues and prioritizing full compliance reviews.
HESAA noted that, to date, one review had been completed.

**[OIG Response]{.underline}**

We recognize that some steps may have been taken both prior to and after
the start of our review to address the deficiencies noted during our
review. HESAA officials informed us that the Audits and Quality
Assurance Unit had not completed an on-site review in over three years.
HESAA\'s policy required that this unit conduct biennial reviews
focusing on compliance with collection and bankruptcy practices. In
addition, during these reviews, the accounting records were to be
reviewed to verify the correct outstanding balances of accounts.

**[Ensure That Adequate Management Controls Are Established and/or
Implemented Over the Special Counsels\' Systems for Accounting for
Borrower Collections]{.underline}**

HESAA stated that it did not concur with this recommendation because it
implies that adequate controls were not in place during the audit
period. HESAA has in place several effective management controls that
include annual attorney meetings, annual site visits, quarterly
monitoring of attorney collections and core sample review. Core sample
review involved testing sample accounts to ensure the attorney system is
accurately recording credits and applying payments to principal and
interest, as well as verifying the accuracy of interest accruals.
Noncompliance is immediately communicated to the special counsel to
remedy.

**[OIG Response]{.underline}**

We recognize that HESAA had some controls in place prior to and during
our review. As stated above, no major compliance reviews had been
conducted in over three years and noncompliance issues were not
adequately addressed for the period reviewed.

**[Require That the Division of Law Reamortize the Applicable Accounts
in Its Portfolio To Properly Apply the Payments To Interest Before
Principal and Notify Borrowers As Appropriate. Remit To the Federal Fund
the Federal Share of Collections for Division of Law Accounts That Were
Closed Prior To the Reamortization]{.underline}**

HESAA stated that it concurred with these recommendations and had
previously directed the Division of Law to reamortize their portfolio
which is scheduled for completion by June 2004. Borrowers have been and
will continue to be notified accordingly. For those accounts closed
subsequent to January 1, 1998, HESAA will determine the amount of the
Federal share of collections that must be remitted to the Federal Fund.

**[Require That Waters, McPherson, and McNeill Reamortize All Active
Accounts To Properly Exclude Postjudgment Collection Costs From the
Outstanding Principal Balances, and to Apply Payments To the Outstanding
Balances of Interest, Principal, and Collection Costs in the Correct
Order; and Notify Borrowers as Appropriate]{.underline}**

HESAA stated that it did not concur with the finding or the
recommendation as to the special counsel\'s treatment of \"postjudgment
collection costs\", as referenced by the Inspector General. As described
in the Revised Background Section of HESAA\'s comments, the costs were
part of the judgment amount entered by the Special Civil Part and then
docketed with the Clerk of the Superior Court. The capitalization of the
costs awarded at judgment, and accrual of interest on those costs is
acceptable and routine pursuant to N.J.Ct.R. 4:42-11. The costs were
posted to borrowers\' accounts subsequent to the final judgment date as
a result of an accounting system conversion. Waters, McPherson, and
McNeill did follow established policy when, at HESAA\'s request, they
converted their accounting system September 25, 1996, to include the
costs awarded by the special Civil Part into the judgment balance. This
counsel did not overstate the total outstanding balances in the account
portfolio by including these previously awarded fees and costs in the
judgment amount (principal balance).

With respect to the proper application of payment \[applying payments to
principal before interest\] by Waters, McPherson and McNeill, HESAA
stated that it concurred with the finding but disagreed with the
recommendation. In October 2001, the attorney completed reamortization
of active accounts to correct this problem. The remaining small number
of closed accounts had negligible average balances, which fall within
the small balance write-off guidelines issued by USDE. As a result, the
finding should note that the active accounts have already been
reamortized and borrowers notified.

**[OIG Response]{.underline}**

We agree that the costs were incurred prior to final judgment. In most
cases, however, other special counsels followed the policy provided to
us by HESAA for postjudgment costs, and consistently applied them to
borrowers\' accounts after the outstanding balances of principal and
interest had been cleared. Our review found that the costs were posted
to borrowers accounts held by Waters, McPherson, and McNeill
inconsistently at various times. For example, a judgment was awarded on
December 26, 1996, for one borrower; however, the costs included on the
statement for docketing were not added to the account until August 6,
1999, and the account was paid-in-full on January 25, 2002.

With respect to the application of payments to principal before
interest, according to HESAA, the special counsel has taken corrective
action as of October 2001. We recommend that the Chief Operating Officer
for Federal Student Aid determine if further action is necessary.

**[Require That Gordin and Berger Reamortize All Active Accounts to
Correct the Methodology Used to Compute Interest and Ensure That
Interest Is Calculated at the Time Payment Is Received, and Notify
Borrowers as Appropriate]{.underline}**

HESAA stated that it concurred with the finding, but disagreed with the
number of accounts included in the erroneous reduction of interest
calculation. The special counsel returned the portfolio and HESAA
completed the reamortization of the active accounts. Borrowers were
notified appropriately. As a result, HESAA requested that the erroneous
reduction of interest calculation be limited to 79 closed accounts of
the total 157 accounts in the portfolio. Therefore, HESAA requested that
the recommendation be removed, since all active accounts had already
been reamortized.

**[OIG Response]{.underline}**

The erroneous reduction of interest calculation included in the
recommendation was based on total accounts affected at the time of our
review, including both active and closed accounts. As stated in the
*Objective, Scope, and Methodology* section of this report, the
estimates presented assumed that the average error rates found in the
samples would be representative of the entire population of borrower
accounts related to a particular sample. However, given the sizes of our
samples, we have no assurance that the samples are representative.

**[Require That Scott Marcus and Associates Reamortize All Active
Accounts to Ensure That Interest is Computed Correctly, and Notify
Borrowers as Appropriate]{.underline}**

HESAA stated that it concurred with the recommendation that Scott Marcus
reamortize all active accounts and notify borrowers as appropriate.
HESAA has also taken additional steps to prevent borrowers from being
assessed incorrect amounts in the future.

**[Remit To the Federal Fund \$25,632 in Imputed Interest Lost As a
Result of Fees Withheld by HHL, New Jersey]{.underline}**

\[As stated in our finding, HHL, New Jersey, violated its agreement when
it withheld its fees from remittances of borrower payments to the
guaranty agency. As a result of HHL withholding its fees from
remittances, the Federal Fund at HESAA, which is the property of the
federal government, did not receive its share of interest income.\]
HESAA stated that it had remitted \$14,573 in imputed interest. HESAA
felt that the calculation should be based on the rate of the New Jersey
Cash Management Fund as opposed to the Federal Debt Collection rate and,
therefore, did not feel that it should remit the additional \$11,059 to
the Federal Fund.

**[OIG Response]{.underline}**

Our review of HESAA\'s comments did not change our position. The
Treasury Current Value of Funds rate is specified by the Debt Collection
Act of 1982, 31 U.S.C. 3717, as the minimal rate of interest for debts
owed the Government.

**[Require That the Special Counsels Establish Uniform Procedures for
Recording the Date the Borrower\'s Payment is Received]{.underline}**

HESAA stated that it concurred with this recommendation and has taken
corrective action.

**[Ensure That All Payments Are Deposited Into a Federal
Interest-Bearing Account Within 48 Hours of Receipt From the
Borrower]{.underline}**

HESAA stated that it concurred with this recommendation and has taken
corrective action.

**[Response To Inspector General\'s Statement of Management
Controls]{.underline}**

HESAA disagreed with the statement that the assessment disclosed
significant management control weaknesses. Prior to notification of this
audit by the Inspector General, HESAA had already identified most of the
specific problems with the collections portfolios, and had begun
necessary improvements to more effectively administer the portfolios.

**[OIG Response]{.underline}**

At the time of our review, no major compliance reviews had been
conducted in over three years. Borrowers were not always assessed costs
that were permitted and reasonable. In addition, amounts collected from
borrowers by the special counsels were not always remitted to HESAA in a
timely manner.

**[OBJECTIVES, SCOPE, AND METHODOLOGY]{.underline}**

The objectives of our audit were to (i) determine the adequacy of the
procedures the guaranty agency had implemented to monitor the activities
of the special counsels, (ii) determine whether borrowers were only
being assessed collection costs that are permitted and reasonable, and
(iii) assess whether all collections were being remitted to the guaranty
agency in a timely manner. Our audit of timely deposits covered the
period July 1, 2001, through June 30, 2002. Our audit of collection
costs assessed to borrowers extended from the time of referral to a
special counsel or from the date of judgment (in effect, a new loan is
established at the time of judgment) through July 7, 2003. To accomplish
our objectives, we

-   Reviewed applicable federal laws and regulations.

-   Reviewed state law applicable to judgments against defaulted
    borrowers obtained from state courts.

-   Interviewed guaranty agency staff.

-   Interviewed one special counsel's staff.

-   Reviewed a program review of HESAA conducted from December 5 through
    December 7, 2000.

-   Reviewed Retainer Agreements and modifications for the 10 special
    counsels.

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-   Reviewed two internal review reports prepared by HESAA staff.

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-   Reviewed quarterly variance reports prepared by HESAA staff.

-   Reviewed the Comprehensive Annual Financial Report of the State of
    New Jersey, prepared by the State Auditor, for the fiscal year ended
    June 30, 2001.

-   Reviewed the State of New Jersey Single Audit Report, prepared by
    the State Auditor, for the fiscal year ended June 30, 2001.

In addition, we randomly selected 50 transactions from a universe of
86,493 transactions and traced them to bank deposits and remittance
reports to determine if they were deposited into a federal
interest-bearing account in accordance with the 48-Hour Rule. From the
50 borrower accounts associated with this sample of transactions, we
requested confirmations from borrowers of account information.

From these 50 borrower accounts, we judgmentally selected a preliminary
sample of 40 accounts, and randomly selected an additional 85 borrower
accounts from a universe of 7,209 borrower accounts, to verify the
accuracy and allowability of costs assessed to borrowers. As the special
counsels' records did not provide outstanding balances of principal,
interest, and collection costs at the time of each payment, it was
necessary to recalculate 78 of these accounts.

For the 78 accounts, we reviewed court, HESAA, and special counsel
records to verify the correct outstanding balance at the time of
judgment. We prepared a spreadsheet that automatically calculated the
outstanding balances at the time of each payment. We compared the ending
balances from the special counsels' systems to the ending balance from
our spreadsheet. We traced amounts contained in the special counsels'
systems to amounts reported in HESAA's system. Throughout the course of
our fieldwork, we provided HESAA officials with spreadsheet data on 19
of 78 accounts to obtain additional information and/or their comments.
The estimates presented in the *Audit Results* section of this report
assumed that the average error rates found in the samples would be
representative of the entire population of borrower accounts related to
a particular sample. However, given the sizes of our samples, we have no
assurance that the samples are representative.

To achieve our objectives, we relied on data from HESAA's and the
special counsels' electronic collections systems. To assess the
reliability of this data, we relied, to the extent possible, on work
performed by HESAA's staff, and conducted additional tests of the data.
We tested the accuracy, authenticity, and completeness of the data by
comparing the data to source records. We concluded that the data
contained in these systems were sufficiently reliable to be used in
meeting the audit's objectives.

We performed on-site fieldwork at HESAA's offices from October 17
through October 25, 2002 and March 31 through April 4, 2003, and at the
New Jersey Division of Law's offices on April 1, 2003. A field exit
conference was held on April 4, 2003. We conducted additional analyses
on borrower accounts in our Kansas City office from April 4 through
August 5, 2003, and a final exit conference was held on August 28, 2003.
We conducted the audit in accordance with generally accepted government
auditing standards appropriate to the scope of the audit described
above.

**[STATEMENT ON MANAGEMENT CONTROLS]{.underline}**

As part of our review, we assessed the system of management controls,
policies, procedures, and practices applicable to HESAA\'s monitoring of
the special counsels' collections of defaulted loans. Our assessment was
performed to determine the level of control risk for determining the
nature, extent, and timing of our substantive tests to accomplish the
audit objectives.

For the purpose of this report, we assessed and classified the
significant controls into the following categories:

-   Receipt and recording of borrower payments.

-   Remitting and reporting collections.

-   HESAA's on-site monitoring of special counsels.

Because of inherent limitations, a study and evaluation made for the
limited purpose described above would not necessarily disclose all
material weaknesses in the management controls. However, our assessment
disclosed significant management control weaknesses that allowed for
improper application of payments, improper accrual of interest, improper
remittances, and untimely deposits of collections. These weaknesses and
their effects are fully discussed in the *Audit Results* section of this
report.

**[ADMINISTRATIVE MATTERS]{.underline}**

If you have any additional comments or information that you believe may
have a bearing on the resolution of this audit, you should send them
directly to the following Department of Education official, who will
consider them before taking final Departmental action on the audit.

Theresa S. Shaw

Chief Operating Officer

Federal Student Aid

U.S. Department of Education

Union Center Plaza, Room 112G1

830 First Street, NE

Washington, DC 20202

It is the policy of the U.S. Department of Education to expedite the
resolution of audits by initiating timely action on the findings and
recommendations contained therein. Therefore, receipt of your comments
within 30 days would be greatly appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. § 552),
reports issued by the Office of Inspector General are available, if
requested, to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

If you have any questions, or if you wish to discuss the contents of
this report, please contact William Allen at (816) 268-0509. Please
refer to the control number in all correspondence related to the report.

Sincerely,

/s/

William Allen

Regional Inspector General

for Audit

Enclosure

[^1]: Gordin and Berger; Hayt, Hayt, and Landau, New Jersey; Hayt, Hayt,
    and Landau, New York; Levin, Clancy, Foster & Arena; Scott Marcus
    and Associates; Marvel & Maloney; State of New Jersey, Division of
    Law; Rolfe & Lobello; Schachter Portnoy; and Waters, McPherson and
    McNeill

[^2]: HESAA indicated that reamortization of accounts and borrower
    notification was in process.

[^3]: HESAA indicated that the Division of Law planned to ask the court
    to reopen closed accounts.

[^4]: On August 28, 2003, HESAA informed us that corrective action had
    been taken---all active accounts had been reamortized.

[^5]: HESAA remitted \$14,573 to the Federal Fund on March 17, 2003.
    HESAA used the New Jersey Cash Management Fund rate to calculate the
    amount of imputed interest. We used the U.S. Treasury Current Value
    of Funds rate, which is specified by the Debt Collection Act of 1982
    (31 U.S.C. 3717) as the minimal rate of interest for debts owed the
    federal government.