I think Fish_wiz meant "not above water level". And as kraze pointed out, you don't want it just barely below the water surface either, or it's going to suck in air from the surface. Depending on how powerful the pump is, you may actually want it draining from a couple holes to reduce the suction at any one. I have a closed loop, but my tank's not drilled (I use an over the back feed), so I'm afraid I don't have any personal experience.