Many federal jobs are eligible for student loan debt assistance of up to $ 10,000 per year. Under 5 USC 5379, agencies can repay student loans from federal employees in order to attract or retain highly qualified individuals. These reimbursements cannot total more than $ 60,000.
The selection of employees for student loan repayment assistance should be based on merit principles. This authority is not a right. As with any incentive, it is used at the discretion of the agency. If an agency chooses to use it, the agency will need to develop a plan that describes how it will be implemented within that agency.
Those interested in participating in this program should contact the agency in which they work or wish to work for more details.
To note: The Department of Veterans Affairs operates several student debt repayment programs for its own employees with different conditions. See www.vacareers.va.gov/Benefits/EducationSupport.
In order to receive student debt repayment assistance, an employee must:
- sign a service contract to remain in the service of the paying agency for a period of at least three years, except involuntary separation, and to reimburse all benefits received in the event of separation for cause or poor performance; and
- maintain an acceptable level of performance in order to receive continued benefits.
Repayment authority is limited to student loans authorized by the Higher Education Act 1965 and the Public Health Services Act. These are federally insured loans from educational institutions or banks and other private lenders.
Higher Education Law
The Higher Education Act covers guaranteed student loan programs such as: Stafford loans; Additional loans; No more loans; Federal Consolidation Loans; Defense loans (made before July 1, 1972); National direct student loans (granted between July 1, 1972 and July 1, 1987); and Perkins loans. Loans covered by the Public Health Services Act include: Nursing Student Loans Program loans; Health Professions Student Loans Program loans; and loans from the Health Education Assistance Loan Program.
The level of university degree for which a student loan was obtained is not taken into account in determining eligibility for this incentive. However, the loan must be made under the appropriate parts of the Higher Education Act 1965 or the Public Health Services Act to be a loan eligible for this incentive.
In addition, loan repayments are only permitted for tuition fees paid to colleges or universities accredited by a nationally recognized accreditation body or an association recognized by the Ministry of Education.
Agencies cannot use this incentive to retain employees leaving for positions in other federal agencies. Likewise, agencies cannot use this incentive to recruit current federal employees from other agencies.
To note: The authority can be used to help repay a student loan held by a parent for a child’s education, such as a Plus Loan, if the parent is a federal employee. It cannot however be used for such loans if the federal employee is the child.
The repayment is included in the employee’s gross income and in salary for federal employment tax purposes, notwithstanding the repayment of the loan by the agency directly to the lender.