**§1.915 Interest, administrative costs, and penalties.**

\(a\) Except as otherwise provided by statute, contract, or other
regulation to the contrary, and subject to 38 U.S.C. 3485(e) and 5302,
VA shall assess:

\(1\) Interest on all indebtedness to the United States arising out of
participation in a VA benefit, medical care, or home loan program under
authority of Title 38, U.S. Code.

\(2\) Interest and administrative costs of collection on such debts
described in paragraph (a)(1) of this section where repayment has become
delinquent (as defined in 31 CFR 900.2(b)), and

\(3\) Interest, administrative costs, and penalties in accordance with
31 CFR 901.9 on all debts other than those described in paragraph (a)(1)
of this section.

\(b\) Every party entering into an agreement with the Department of
Veterans Affairs for repayment of indebtedness in installments shall be
advised of the interest charges to be added to the debt. All debtors
being provided notice of indebtedness, including those entering into
repayment agreements, shall be advised that upon the debt becoming
delinquent, or in the case of repayment of already delinquent debts,
interest and the administrative costs of collection will be added to the
principal amount of the debt.

\(c\) The rate of interest charged by VA shall be based on the rate
established annually by the Secretary of the Treasury in accordance with
31 U.S.C. 3717 and shall be adjusted annually by VA on the first day of
the calendar year. Once the rate of interest has been determined for a
particular debt, the rate shall remain in effect throughout the duration
of repayment of that debt. When a debtor defaults on a repayment
agreement and seeks to enter into a new agreement, VA may require
payment of interest at a new rate that reflects the current value of
funds to the Treasury at the time the new agreement is executed.
Interest shall not be compounded, that is, interest shall not be charged
on accrued interest and administrative costs required by this section.
If, however, a debtor defaults on a previous repayment agreement,
interest and administrative costs that accrued but were not collected
under the defaulted agreement shall be added to the principal under the
new agreement.

\(d\) Interest on amounts covered by this section shall accrue from the
date the initial notice of the debt is mailed to the debtor.
Notification shall be considered sufficient when effected by ordinary
mail, addressed to the last known address, and such notice is not
returned as undeliverable by postal authorities.

\(e\) Interest under this section shall not be charged if the debt is
paid in full within 30 days of mailing of the initial notice described
in paragraph (b) of this section. Once interest begins to accrue, and
after expiration of the time period for payment of the debt in full to
avoid assessment of interest and administrative costs, any amount
received toward the payment of such debt shall be first applied to
payment of outstanding administrative cost charges and then to accrued
interest or costs, and then to principal, unless a different rule is
prescribed by statute, contract, or other regulation.

\(f\) All or any part of the interest and administrative costs assessed
under this section are subject to consideration for waiver under section
5302 of title 38 U.S.C., and appropriate administrative procedures.

\(1\) In general, interest and administrative costs may be waived only
when the principal of the debt on which they are assessed is waived by a
Committee on Waivers and Compromises. However, VA may forbear collection
of interest and administrative costs, exclusive of collection of the
principal of the debt on which they are assessed, as well as terminate
further assessment of interest and administrative costs when the
collection of such interest and costs are determined to be not in the
government's best interest. Collection of interest and administrative
costs shall not be considered to be in the best interest of the
government when the amount of assessed interest and administrative cost
is so large that there is a reasonable certainty that the original debt
will never be repaid. The determination to forbear collection of
interest and administrative cost, exclusive of collection of the
principal of the debt, shall be made by the Chief of the Fiscal activity
at the station responsible for the collection of the debt. Such a
determination is not within the jurisdiction of a Committee on Waivers
and Compromises.

\(2\) \[Reserved\]

\(g\) Administrative costs assessed under this section shall be the
average costs of collection of similar debts, or actual collection costs
as may be accurately determined in the particular case. No
administrative costs of collection will be assessed under this section
in any cases where the indebtedness is paid in full prior to the 30-day
period specified in paragraph (e) of this section, or in any case where
a repayment plan is proposed by the debtor and accepted by VA within
that 30-day period, unless such repayment agreement becomes delinquent
(as defined in 31 CFR 900.2(b)). (Authority: 31 U.S.C. 3717; 38 U.S.C.
501, 5302, 5315).

\[46 FR 62057, Dec. 22, 1981, as amended at 52 FR 42107, Nov. 3, 1987;
redesignated and amended at 69 FR 62195, Oct. 25, 2004\]