STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

December 14, 1973

James I. Deam, Secretary
Department of Education and Cultural Affairs
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 73-42

Division of Higher Education not authorized to hire a collection agency for collecting bad debts.

Dear Mr. Deam:

You have stated that the primary source of the bad debts are student loan owed to institutions under the control of the Division of Higher Education, are creating considerable concern among institutional executives, some of whom now wish to employ the services of a collection agency have staten that the primary sources of the bad debts are student loan programs administered by the institutions.

In connection with this problem, you have asked whether the division has the authority to hire a collection agency to collect these debts.

Perhaps the primary rule governing the administration of administrative agencies, is that an agency carrying out a legislative function must do so within the limits prescribed in the delegating statute. This includes not only the powers the agency may exert, but also the procedure it must follow to exercise those powers. Custer County Board of Education vs. State Commission on Elementary and Secondary Education, 86 S.D. 215, 193 N.W. 2d 586 (1972). See also Elk Point Independent School District No.3 of Union County v. State Commission on Elementary and secondary Education, 85 S.D. 600, 187 N.W.2d 666 (1971).

SDCL 13-56 does authorize the institutions under the Board of Regents to participate in a student loan program known as the Higher Education Loan Program Guarantee Act. SDCL 13-56A authorizes the Health Professions Loan Fund. It is also my understanding that the institutions participate in other student loan programs.

I have been unable to find any specific authority under any of these student loan programs that would authorize the Division of Higher Education to hire a collection agency. Using the general rule stated above, it is my opinion that the answer to your specific question is, NO.

lit is my opinion, however, that the Division of Higher Education does have authority to require the Commissioner of Higher Education and the business managers of the institutions under the provisions of SDCL 13-49 to initiate procedures for the collection of such bad debits by such persons directly or through a particular person employed for such purpose and, if necessary, the initiation of proper legal action. If a collection agency is desirable, then specific legislative authority should be obtained.

Respectfully submitted,

Kermit A. Sande
Attorney General