VA Sending Debts to Treasury Department for Collection
December 14, 2012
The Department of Veterans Affairs (VA) has started referring debts related to tuition and fee payments made to schools under the new GI Bill to the Treasury Offset Program (TOP). VA's Debt Management Center (DMC) sends a warning letter to the institution 60 days before sending the debt to TOP. If the debt is not resolved by the end of the 60-day period, the debt is sent to TOP for collection.
The Treasury Department, through TOP, acts as the government's collection agency by reducing the next federal payment to an entity (based on its federal employer identification number, or EIN) by the amount owed on an outstanding debt. The offset payment is often not from the agency to which the debt is owed. For example, a grant payment from the National Institutes of Health might be reduced to recover a debt that resulted from Chapter 33 VA benefits. Certain types of payments, including Title IV student aid funds, are exempt from offsets.
There was a great deal of confusion during the first years of the new GI Bill (known as Chapter 33) about when overpayments to the institution should have been returned either to the VA or to the veteran. VA guidance evolved over time and protocols are now more established. However, there are now millions of dollars in debts outstanding from 2009 to 2011. For many of these, institutions maintain that they issued refund payments to student veterans per VA guidance at the time. VA is now claiming that those refund payments should have been made to VA, not the student. In other cases, institutions have already paid the debts to VA but the agency has failed to give them credit for the payments. The agency is now beginning to submit those debts to TOP.
If an institution receives a 60-day notice that a debt is about to be referred to TOP (which will be sent to the School Certifying Official, or SCO), the SCO should work with the bursar or student accounts office to research the debt. If the school disagrees with the debt, it should immediately contact VA's Debt Management office at DMCedu.email@example.com to try to stop collection efforts while the debt is resolved. SCOs should submit details about the disputed debt through the "Ask a Question" feature on VA's Right Now Web. Only SCOs can access Right Now Web. Although VA officials have stated that following these procedures will stop the TOP referrals, institutions have reported several instances where debt offsets proceeded regardless.
If an offset does occur, institutions should receive a letter from TOP approximately one week after the offset has taken place, explaining which payment was offset and for which debt(s). These letters are not always addressed to an appropriate office on campus (and sometimes are just mailed to the main campus address with no individual or office noted), so they can be difficult to locate. SCOs, bursars, or others who receive 60-day warning letters, or anyone on campus who receives an offset letter from TOP should alert the institution's controller as soon as possible.
Tracking what debts are being offset can be challenging. According to the National Association of Veteran's Program Administrators (NAVPA) debts recouped have a $17.00 fee attached for each offset. Subtracting $17.00 from the amount listed provides the original debt amount. Additionally, the account number listed for each offset is coded. Remove the "0075" from the end of the provided account number, and then move the first two digits to the end. This will provide the VA file number for the debt. Ex: account number "8912345670075" translates to "123456789". Institutions can also receive information on their offsets by contacting TOP's call center at 800.304.3107.
NACUBO's VA Payments and Processes Work Group, which includes representatives from NAVPA and the American Council on Education, has been meeting quarterly with representatives from the various VA offices that administer the Chapter 33 GI Bill benefits. The group is working to improve understanding and communication between institutions and the agency and enhance services to veterans. Debt issues will be high on the group's agenda at the next meeting, which is scheduled for early January.
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Members are encouraged to join NACUBO's VA Processes eGroup. This community, similar to a listserv, allows members to share questions, issues, concerns, and success stores related to administering VA programs.
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