University of New Haven v. Agosto, CV156057921S

• Decision Date: 18 May 2016
• Docket Number: CV156057921S
• Court: Connecticut Superior Court
• Parties: University of New Haven v. Samary Agosto

University of New Haven
v.
Samary Agosto

No. CV156057921S

Superior Court of Connecticut, Judicial District of New Haven, New Haven

May 18, 2016

UNPUBLISHED OPINION

MEMORANDUM OF DECISION RE MOTION FOR DEFAULT JUDGMENT #113

Brian T. Fischer, J.

INTRODUCTION

This case concerns the attempts of an the plaintiff, University of New Haven, to collect from the defendant, Samary Agosto, a debt arising from an outstanding Federal Perkins loan. To date, the defendant has not filed an appearance in this action. On December 15, 2015, the plaintiff filed a motion for default pursuant to Practice Book § 17-23 (#106), which was granted by the court, Fischer, J., in an order dated December 23, 2015 (#106.10). The court's order did not include an award of collection fees, as had been requested by the plaintiff. On January 12, 2016, the plaintiff filed a motion to reargue/reconsider the court's order (#108), which was granted.

The plaintiff also filed a second motion for default (#113). In the attached affidavit of debt, the plaintiff seeks to collect a total of $9, 062.18, which includes the loan principal of $5, 500.00; collection fees of $2, 231.09; attorney fees of $825; interest of $376.69; and late charges of $29.40. At the April 11, 2016 short calendar, the plaintiff argued that when an institution seeks to collect an outstanding Perkins loan through litigation, federal law mandates the addition of collection fees and attorney fees as part of the award.

DISCUSSION

The issue before the court is what discretion it has, if any, in awarding collection costs and attorney fees arising from debt collection efforts on an outstanding Perkins loan. In general, the collection of an outstanding Perkins loan is subject to Title 20 of the United States Code, section 1091a, which provides in relevant part: " Notwithstanding any provision of State law to the contrary . . . a borrower who has defaulted on a loan made under this subchapter and part C of subchapter I of chapter 34 of title 42 shall be required to pay, in addition to other charges specified in this subchapter and part C of subchapter I of chapter 34 of title 42 reasonable collection costs . . ." (Emphasis added.) 20 U.S.C. § 1091a(b)(1).

The determination and assessment of reasonable collection costs, in turn, is set by 34 C.F.R. § 674.45(e), which provides that " (1) Subject to § 674.47(d), the institution shall assess against the borrower all reasonable costs incurred by the institution with regard to a loan obligation. (2) The institution shall determine the amount of collection costs that shall be charged to the borrower for actions required under this section . . . based on either i) Actual costs incurred for these actions with regard to the individual borrower's loan; or (ii) Average costs incurred for similar actions taken to collect loans in similar stages of delinquency. (3) For loans placed with a collection firm on or after July 1, 2008, reasonable collection costs charged to the borrower may not exceed . . . (iii) For collection efforts resulting from litigation, 40 percent of the amount of principal, interest, and late charges collected plus court costs."

The plain language of the controlling statute and regulations indicates that the institution is obligated to assess " reasonable collection costs" on the debtor, and that the debtor is obligated to pay them. The question, however, remains: how to define and calculate " reasonable collection costs." " Because the statute leaves the terms 'reasonable collection costs' undefined, the Court must defer to the Department of Education's interpretation of the term, if reasonable." United States v. Vilus, 419 F.Supp.2d...