How are interest, penalty, and administrative costs determined?

22 C.F.R. § 1506.13
in effectEffective: 2024-07-01
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(a) Interest. USADF will assess interest on all delinquent debts, unless prohibited by statute, regulation, or contract. (1) Interest begins to accrue on all debts from the payment due date established in the initial notice to the debtor, or as otherwise provided by law. USADF shall charge an annual rate of interest that is equal to the rate established annually by the Secretary of the Treasury in accordance with 31 U.S.C. 3717 unless a different rate is necessary to protect the rights of the United States. USADF will notify the debtor of the basis for its finding that a different rate is necessary to protect the interest of the Government. (2) The rate of interest, as initially assessed, shall remain fixed for the duration of the indebtedness. If a debtor defaults on a repayment agreement, interest may be set at the Treasury rate in effect on the date a new agreement is executed. (3) Interest will not be assessed on interest charges, administrative costs or late payment penalties. However, where a debtor defaults on a previous repayment agreement and interest, administrative costs and penalty charges that had been waived under the defaulted agreement may be reinstated and added to the debt principal under any new agreement and interest may be charged on the entire amount of the debt. (b) Administrative costs of collecting overdue debts. The costs of USADF's administrative processing of overdue debts, including charges assessed by the Department of Treasury in cross-servicing the debts based on either actual or average cost incurred, will be charged on all debts. These costs include both direct and indirect costs. (c) Penalties. Penalty charges will be assessed at 6 percent a year on any portion of a claim that is delinquent for more than 90 days. (d) Allocation of payments. A partial payment by a debtor will be applied first towards outstanding administrative costs, penalty assessments, accrued interest and then towards the outstanding debt principal. (e) Waivers. (1) USADF will waive the collection of interest and administrative charges on any portion of the debt that is paid within 30 days after the date on which late payment charges begin to accrue. This 30 day period may be extended on a case-by-case basis where the Agency determines that such action is in the best interest of the Government. (2) USADF may (without regard to the amount of the debt) waive collection of all or part of accrued interest, penalty or administrative costs, where it determines that: (i) Waiver is justified under the criteria of subpart D; or (ii) Collection of these charges would be against equity and good conscience or not in the best interest of the United States. (3) A decision to waive interest, penalty charges or administrative costs may be made at any time.

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