Loan repayment unfair?

The new federal student loan repayment program permits federal agencies to pay back federally insured student loans as a recruitment or retention incentive for job candidates or agency employees. But it's not without drawbacks.

Any career employee is eligible, and agencies may also offer loan repayment benefits to other employees, such as temporary employees serving appointments that lead to term or permanent jobs and to term employees with at least three years left on their appointment.

Under the program, agencies may make payments directly to the bank holding the loan of up to $6,000 for an employee in a calendar year and a total of not more than $40,000 for any one employee.

An employee receiving this benefit must agree to remain with the paying agency for a period of at least three years or reimburse the agency if he or she leaves voluntarily or involuntarily for cause or poor performance. In addition, an employee must maintain an acceptable level of performance to continue to receive repayment benefits.

I think this can be a pretty good deal for some feds with outstanding student loans, but I have some concerns about this program. For starters, I am bothered by the fact that only employees with outstanding student loans can benefit. What incentive is available to lure attractive candidates that don't have outstanding student loans? An agency may not pay back a student loan that the employee has already paid.

A problem may arise when this program is used as a retention tool because it can only be used to retain employees who have outstanding student loans. Presumably, this tool would be used as a device for retaining employees that are doing a very good job. So if Joe Fed is performing well and his supervisor wants to reward him, he can put in the paperwork to pay up to $6,000 a year in Joe's outstanding student loans. But what about Jim Fed, who works alongside Joe and is doing an equally good job but doesn't have an outstanding student loan? It's not going to be easy to give Jim a $6,000 award. A step increase won't result in a $6,000 pay increase.

Other provisions of this program bother me, including the fact that the student loan repayment authority does not preclude payments for employees who have defaulted on their student loans. I think employees who have defaulted on their student loans should not be eligible. Also, the types of academic degrees and/or levels covered by the program are not specified in law. Therefore, an agency may specify the types of degrees and levels necessary to attain this goal. This flexibility could produce wide variations in eligibility criteria, which Congress may not have intended.

I don't think officials from the Office of Personnel Management have thought this one through. They have taken the easy way out by allowing each agency to configure its own program. All sorts of inequities are bound to arise.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at [email protected]


  • Defense
    Essye Miller, Director at Defense Information Management, speaks during the Breaking the Gender Barrier panel at the Air Space, Cyber Conference in National Harbor, Md., Sept. 19, 2017. (U.S. Air Force photo/Staff Sgt. Chad Trujillo)

    Essye Miller: The exit interview

    Essye Miller, DOD's outgoing principal deputy CIO, talks about COVID, the state of the tech workforce and the hard conversations DOD has to have to prepare personnel for the future.

  • innovation (Sergey Nivens/

    VA embraces procurement challenges at scale

    Steve Kelman applauds the Department of Veterans Affairs' ambitious attempt to move beyond one-off prize-based contests to combat veteran suicides more effectively.

Stay Connected


Sign up for our newsletter.

I agree to this site's Privacy Policy.