Student Loan Tax Relief Offered

Legislation (HR-1056) offered by House Government Reform Committee chairman Rep. Tom Davis, R-Va., would make tax-free the student loan repayments that agencies may make to employees as a recruiting and retention tool. Under the authority, agencies may pay up to $6,000 a year and up to $40,000 lifetime to employees for loan repayment purposes, with the employee entering into a service agreement, but the amounts are taxable, lowering their value to the employee. While agencies have had loan repayment authority for many years, the program generally laid dormant until 2001, when the Office of Personnel Management issued specific guidance. Use of the authority remains spotty, however, largely because agencies typically have not created budgetary accounts to make the payments.