Federal Manager's Daily Report

The Office of Personnel Management promotes the federal student loan repayment program as a powerful incentive to attract and retain employees. Section 5379 of title 5, U.S. Code, authorizes agencies to repay federally insured student loans for employees, which, unsurprisingly, has proved popular among individuals sitting on hefty college loans

Agencies can authorize repayment of up to $6,000 in any calendar year with a lifetime limit of $40,000, according to OPM, in exchange for remaining in the service of the paying agency for at least three years, or otherwise reimburse the agency in the event of separation, either voluntary or the result of poor performance. (In fiscal year 2002, 16 federal agencies provided more than $3.1 million for 690 federal employees and agencies reported that the program has helped achieve personnel goals.)

The Department of State used the program differently for its foreign service and civil service employees, noting that foreign service employees are required to bid for ongoing assignments approximately one year in advance of the date of departure from their current assignments; so State structured the program as an internal recruitment tool to attract the employees to bid on positions that have traditionally been difficult to fill, according to OPM, which also said the most common barrier to using the program was a lack of funding, though some managers reported they do not use the program in order to avoid the appearance of favoritism.

Reference materials for administering the student loan repayment program are available online.