The government announced plans yesterday to begin garnisheeing the wages and pensions of nearly 47,000 federal workers and retirees if they do not repay nearly $68 million in delinquent student loans.
Starting next year, defaulters could be docked 15 percent of their salary per pay period and face disciplinary action, including suspension and subsequent dismissal.
Department of Education Secretary Terrel H. Bell said that warning letters, instructing defaulters to start making repayment arrangements immediately, are being sent to 46,860 current and retired federal employes and military personnel who hold 50,393 unpaid loans.
Some government workers have borrowed money under more than one federal loan program, he noted.
Bell and Sen. Charles Percy (R-Ill.), who described the stepped-up loan collection efforts at a news conference, said a computer match of 10 million government employe records against a list of all loan defaulters had enabled the department to come up with the names of specific federal workers who owe the government money.
"The fact that there are 46,000 federal employes in default . . . is the most shocking discovery to unfold in the continuing story of poor debt collection," said Percy, who characterized some of the defaulters as "deadbeats." He called failure to repay the money "really a slap in the face to every taxpayer in this country."
The $68 million owed by federal workers is only part of the $1.1 billion that the Department of Education is trying to collect. Approximately 820,000 people have defaulted on repayment of Federally Insured Student Loans, Guaranteed Student Loans and National Direct and Defense Student Loans programs.
Delinquent debts to the government, including unpaid school and mortgage loans and federal taxes, exceed $40 billion.
Bell said that the Reagan administration wants to collect from "all who are in default," but that it is particularly concerned "that those who hold government jobs pay their bills."
He added, with a touch of embarrassment, that his own agency has 67 student loan defaulters in its ranks and expects to be contacting each of them shortly. Since the department plans to ask other agencies to "play hardball" in seeking repayment, the Department of Education, he said, must "practice what we preach."
Other department officials said that federal workers don't have any higher default rate than the rest of the population, but that they are the easiest targets for collection programs.
"It would be nice" if the government could be just as aggressive about collecting money owed by thousands of others, said Robert Honig, staff director of the Federal Government Service Task Force. "But there's just no question about it, it's money owed."
The Department of Education has turned over to private collection agencies $570 million worth of defaulted loans from 402,000 accounts, Bell said. So far this year, collectors have brought in $9 million and worked out repayment arrangements for another $40 million. He said that most of the recovered money would go back to the federal treasury, but that some would be used to help other student borrowers.
The government this year also has cut off new National Direct Student Loans to schools with high default rates.
Under provisions of the Debt Collection Act, sponsored by Percy and signed into law by Reagan in October, the department will contact all of the defaulters on its list. Those who have not responded to its letters "on or about Feb. 1, 1983" will have their names turned over to the agencies where they work. It then will be up to each agency head to initiate collection action.
"Persons not responding to these actions within 60 days will be subject to having 15 percent of their wages withheld until the defaulted balances are paid in full," Bell said.
Of the outstanding loans held by federal workers, Bell said that current civil service employes owe $24.7 million on 17,221 loan accounts, retired civil service workers owe $745,000 on 589 accounts, active military employes owe $18.9 million on 14,549 accounts, military reservists owe $17.3 million on 12,645 accounts and retired military employes owe $5.1 million on 4,690 accounts.