[Federal Register Volume 62, Number 62 (Tuesday, April 1, 1997)]
[Rules and Regulations]
[Pages 15400-15402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8140]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 1

RIN 2900-AF29


Reduction of Debt Through the Performance of Work-Study Services

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule amendments to the general 
regulations of the Department of Veterans Affairs (VA). The amendments 
provide that the money payable for performance of work-study services 
may be offset against an individual's outstanding debt to the United 
States arising from participation in educational and vocational 
rehabilitation programs VA administers. The adoption of this change 
helps veterans pay outstanding debts to the United States.

EFFECTIVE DATES: May 1, 1997.

FOR FURTHER INFORMATION CONTACT: June C. Schaeffer, Assistant Director 
for Policy and Program Administration, Education Service, Veterans 
Benefits Administration, Department of Veterans Affairs, 810 Vermont 
Ave., NW, Washington, DC 20420 (202) 273-7187.

SUPPLEMENTARY INFORMATION: On August 5, 1996, VA published in the 
Federal Register (61 FR 40589) a proposed rule to permit individuals 
who have an outstanding debt to the United States arising from 
participation in educational and vocational rehabilitation programs VA 
administers to liquidate that debt through the performance of work-
study services. The public was given 60 days to submit comments. VA 
received no comments.
    Accordingly, based on the rationale set forth in the proposed rule 
document, we are adopting the provisions of the proposed rule as a 
final rule. For the purposes of clarity, the organization of 
Sec. 1.929(b) is slightly modified. This final rule also affirms the 
information in the proposed rule document concerning the Regulatory 
Flexibility Act.
    The Catalog of Federal Domestic Assistance numbers for the programs 
affected by this final rule are 64.116, 64.117, 64.120, and 64.124. 
This final rule also affects the Montgomery GI Bill--Selected Reserve 
for which there is no Catalog of Federal Domestic Assistance number.

List of Subjects in 38 CFR Part 1

    Administrative practice and procedure, Cemeteries, Claims, 
Employment, Flags, Freedom of information, Government contracts, 
Government employees, Government property, Inventions and patents, 
Investigations, Privacy, Seals and insignia.

    Approved: December 23, 1996.
Jesse Brown,
Secretary of Veterans Affairs.

    For the reasons set out in the preamble, 38 CFR part 1 is amended 
as set forth below.

PART 1--GENERAL PROVISIONS

    1. The authority citation for part 1, continues to read as follows:

    Authority: 38 U.S.C. 501(a), unless otherwise noted.


[[Page 15401]]


    2. Section 1.929 and its authority citations are added under the 
undesignated center heading ``STANDARDS FOR COLLECTION OF CLAIMS'' to 
read as follows:


Sec. 1.929  Reduction of debt through performance of work-study 
services.

    (a) Scope. (1) Subject to the provisions of this section VA may 
allow an individual to reduce an indebtedness to the United States 
through offset of benefits to which the individual becomes entitled by 
performance of work-study services under 38 U.S.C. 3485 and 3537 when 
the debt arose by virtue of the individual's participation in a 
benefits program provided under any of the following:
    (i) 38 U.S.C. chapter 30;
    (ii) 38 U.S.C. chapter 31;
    (iii) 38 U.S.C. chapter 32;
    (iv) 38 U.S.C. chapter 34;
    (v) 38 U.S.C. chapter 35;
    (vi) 38 U.S.C. chapter 36 (other than an education loan provided 
under subpart F, part 21 of this title); or
    (vii) 10 U.S.C. chapter 1606 (other than an indebtedness arising 
from a refund penalty imposed under 10 U.S.C. 16135).
    (2) This section shall not apply in any case in which the 
individual has a pending request for waiver of the debt under 
Secs. 1.950 through 1.970.

(Authority: 38 U.S.C. 3485(e)(1); Pub. L. 102-16)

    (b) Selection criteria. (1) If there are more candidates for a 
work-study allowance than there are work-study positions available in 
the area in which the services are to be performed, VA will give 
priority to the candidates who are pursuing a program of education or 
rehabilitation.
    (2) Only after all candidates in the area described in paragraph 
(b)(1) of this section either have been given work-study contracts or 
have withdrawn their request for contracts will VA offer contracts to 
those who are not pursuing a program of education or rehabilitation and 
who wish to reduce their indebtedness through performance of work-study 
services.
    (3) VA shall not offer a contract to an individual who is receiving 
compensation from another source for the work-study services the 
individual wishes to perform.
    (4) VA shall not offer a contract to an individual if VA determines 
that the debt can be collected through other means such as collection 
in a lump sum, collection in installments as provided in Sec. 1.917 or 
compromise as provided in Sec. 1.918.

(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)

    (c) Utilization. The work-study services to be performed under a 
debt-liquidation contract will be limited as follows:
    (1) If the individual is concurrently receiving educational 
assistance in a program administered by VA, work-study services are 
limited to those allowed in the educational program under which the 
individual is receiving benefits.
    (2) If the individual is not concurrently receiving educational 
assistance in a program administered by VA, the individual may perform 
only those work-study services and activities which are or were open to 
those students receiving a work-study allowance while pursuing a 
program of education pursuant to the chapter under which the debt was 
incurred.

(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)

    (d) Contract to perform services. (1) The work-study services 
performed to reduce indebtedness shall be performed pursuant to a 
contract between the individual and VA.
    (2) The individual shall perform the work-study services required 
by the contract at the place or places designated by VA.
    (3) The number of hours of services to be performed under the 
contract must be sufficient to enable the individual to become entitled 
to a sum large enough to liquidate the debt by offset.
    (4) The number of weeks in the contract will not exceed the lesser 
of--
    (i) The number of weeks of services the individual needs to perform 
to liquidate his or her debt; or
    (ii) 52.
    (5) In determining the number of hours per week and the number of 
weeks under paragraphs (d)(3) and (d)(4) of this section necessary to 
liquidate the debt, VA will use the amount of the account receivable, 
including all accrued interest, administrative costs and marshall fees 
outstanding on the date the contract is offered to the individual and 
all accrued interest, administrative costs and marshall fees VA 
estimates will have become outstanding on the debt on the date the debt 
is to be liquidated.
    (6) The contract will automatically terminate after the total 
amount of the individual's indebtedness described in paragraph (d)(5) 
of this section has been recouped, waived, or otherwise liquidated. An 
individual performing work-study services under a contract to liquidate 
a debt is released from the contract if the debt is liquidated by other 
means.
    (7) The contract to perform work-study services for the purpose of 
liquidating indebtedness will be terminated if:
    (i) The individual is liquidating his or her debt under this 
section while receiving either an educational assistance allowance for 
further pursuit of a program of education or a subsistence allowance 
for further pursuit of a program of rehabilitation;
    (ii) The individual terminates or reduces the rate of pursuit of 
his or her program of education or rehabilitation; and
    (iii) The termination or reduction causes an account receivable as 
a debt owed by the individual.
    (8) VA may terminate the contract at any time the individual fails 
to perform the services required by the contract in a satisfactory 
manner.

(Authority: 38 U.S.C. 3485(e), 7104(a); Pub. L. 102-16)

    (e) Reduction of indebtedness. (1) In return for the individual's 
agreement to perform hours of services totaling not more than 40 times 
the number of weeks in the contract, VA will reduce the eligible 
person's outstanding indebtedness by an amount equal to the higher of--
    (i) The hourly minimum wage in effect under section 6(a) of the 
Fair Labor Standards Act of 1938 times the number of hours the 
individual works; or
    (ii) The hourly minimum wage under comparable law of the State in 
which the services are performed times the number of hours the 
individual works.
    (2) VA will reduce the individual's debt by the amount of the money 
earned for the performance of work-study services after the completion 
of each 50 hours of services (or in the case of any remaining hours 
required by the contract, the amount for those hours).

(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)

    (f) Suspension of collections by offset. Notwithstanding the 
provisions of Sec. 1.912a, during the period covered by the work-study 
debt-liquidation contract with the individual, VA will ordinarily 
suspend the collection by offset of a debt described in paragraph 
(a)(1) of this section. However, the individual may voluntarily permit 
VA to collect part of the debt through offset against other benefits 
payable while the individual is performing work-study services. If the 
contract is terminated before its scheduled completion date, and the 
debt has not been liquidated, collection through offset against other 
benefits payable will resume on the date the contract terminates.

(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)


[[Page 15402]]


    (g) Payment for additional hours. (1) If an individual, without 
fault on his or her part, performs work-study services for which 
payment may not be authorized, including services performed after 
termination of the contract, VA will pay the individual at the 
applicable hourly minimum wage for such services as the Director of the 
VA field station of jurisdiction determines were satisfactorily 
performed.
    (2) The Director of the VA field station of jurisdiction shall 
determine whether the individual was without fault. In making this 
decision he or she shall consider all evidence of record and any 
additional evidence which the individual wishes to submit.

(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)

[FR Doc. 97-8140 Filed 3-31-97; 8:45 am]
BILLING CODE 8320-01-P