Most of the 6,600 federal worker who have been discovered in default on their student loans have not yet agreed to pay, Department of Health, Education and Welfare Secretary Joseph A. Califano J.r. told a House subcommittee yesterday.
Califano said 5,606 employes - none of them HEW workers - either have not responded to letters or have refused to pay.
HEW, which administers the loan program, will continue to send them letters. Eventually, their cases will be referred to the U.S. attorney's office,which could prosecute them.
The department obtained the names of federal employes who defaulted on loans by using a computer to compare the government's file of 2.65 million civilian workers with a list of 390,000 students nationwide who defaulted on $430 million in loans.
The check was made in January. Last year, the department ran a separate check of its present and former employes, and found that 317 had defaulted on loans. Of them, 222 were current employes, and nearly all of them are paying back their loans. Other cases are in litigation or have been closed because of death, disability or bankruptcy.
The next target of investigation will be more than 2 million military personnel.
Califano said the department will locate nongovernment workers who defaulted on student loans by checking lists of names and addresses supplied by the Internal Revenue Service. State departments of motor vehicles are also cooperating.
Some of those who must be located were students 10 years ago, soon after the student loan program was initiated. Califano said the department may be unable to collect payment on such loans because of a six-year statute of limitations. An estimate of the value of those loans was unavailable.
Rep. John Cunningham (R-Wash), a suggested that in the future students be required to sign a waiver of the statute. Califano called his suggestion excellent, and said it should be adopted.
Califano appeared before the House Government Operations subcommittee on intergovernmental relations and human resources to report on th agency's progress against fraud, inefficiency and abuse in student loan programs.
The department has complained for years about students defaulting on federally insured loans, but until November, it never sent students their bills.
Califano said the problem could be "directly traced to a sorry history of inept management over the last decade."ST"Very few people in this country pay bills they don't receive," he said.
Under the federally insured student loan program, banks that lend students money must send letters to them over a four-month period requesting that they pay back their loans. If the students refuse or do not respond, the government pays the bank and must try to collect from the student. But the government did not send letters to students until recently.
Private collection agencies will help the government locate students in the Atlanta and San Francisco areas, Califano said.
He testified that less than 1 percent of the students who defaulted on their loans filed for bankruptcy. Members of Congress on the subcommittee expressed surprise, saying they had believed the percentage to be much higher.
The department's attempt to make students repay their loans is part of a larger attempt to reduce waste in the agency by $1.1 billion.