Issue Briefs

Following is the summary of a recent OPM report showing a decline in 2011 in the use of student loan repayment incentives for federal employees, which it said reflected tighter budgets and personnel controls, particularly at the Defense Department.

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Overall for CY 2011, 34 Federal agencies provided 10,134 employees with a total of more than $71.8 million in student loan repayment benefits. Compared to our last report for CY 2010, this represents nearly an 11 percent decrease in the number of employees receiving student loan repayment benefits and a 16 percent decrease in agencies’ overall financial investment in this particular incentive. The average student loan repayment benefit was $7,091 and represents a 6 percent decrease compared to CY 2010.

During CY 2011, more than 62 percent of all student loan repayment benefits were provided by the Department of Defense (DOD), the Department of Justice, and the Department of State. Overall, these three agencies provided 6,053 employees with more than $44.6 million in student loan repayment benefits. The other 31 agencies combined to provide 4,081 employees with just over $27 million in student loan repayment benefits.

Notably, the majority of the decrease in the use of student loan repayment benefits during CY 2011 can be attributed to DOD’s student loan repayment program. DOD invested $15 million less in student loan repayment benefits than it did in CY 2010, which represented a nearly 51 percent decrease. Similarly, DOD provided student loan repayment benefits to 1,571 fewer employees than it did in CY 2010, which represented a nearly 41 percent decrease.

DOD reported that the two main reasons for its decrease in the usage of student loan repayments during CY 2011 were budget constraints and hiring controls. Therefore, many DOD components did not have the funding to offer student loan repayments in CY 2011 as they had during CY 2010 and previous years. Additionally, DOD cited the June 10, 2011, Office of Management and Budget and OPM memorandum limiting awards and incentives. DOD believes that student loan repayments are utilized for the same reasons as recruitment and retention incentives, which are covered by the memorandum. As a result of that guidance restricting one group of incentives, DOD proceeded with caution and reined in spending in similar categories of incentive payments, including student loan repayments.

OPM continues to support Federal agencies’ use of student loan repayment benefits to recruit and retain a world-class workforce to serve the American people. In addition, we strongly encourage agencies to establish metrics to demonstrate the value of using student loan repayments and other discretionary incentives. For example, tracking the retention rate of student loan repayment recipients over time and comparing it to the retention rate for employees who do not receive student loan repayment benefits can be useful in determining whether the incentive helps an agency to retain critical personnel. Also, agencies can use survey data to measure the satisfaction of both job candidates and hiring managers with the availability of flexibilities such as student loan repayment benefits. OPM will continue to work with agencies to assist them in using student loan repayments, as well as other flexibilities. We believe the judicious administration of these human resources flexibilities attracts and retains a dynamic Federal workforce to support agency missions and program needs.

In CY 2011, 34 Federal agencies provided 10,134 employees with a total of more than $71.8 million in student loan repayment benefits. (See Attachment 2 for detailed agency reports.) Compared to CY 2010, this represents nearly an 11 percent decrease in the number of employees receiving student loan repayment benefits and a 16 percent decrease in agencies’ overall financial investment in this particular incentive.

In CY 2011, all 15 Federal departments and 19 agencies used student loan repayments as a human resources management tool. In addition to the 34 agencies that provided student loan repayments during CY 2011, 6 additional agencies have established a student loan repayment program. These agencies include the Government Printing Office, National Capital Planning Commission, Office of Government Ethics, Office of Personnel Management, Small Business Administration and the U.S. AbilityOne Commission. Thus, nearly half of the reporting agencies (40 out of 87) either provided student loan repayments during CY 2011 or have established a student loan repayment program.

Agency Data

In CY 2011, the three agencies making the most extensive use of student loan repayments were the Departments of Justice, Defense, and State. More than 62 percent of all student loan repayment benefits were provided by these three agencies. Overall, the three agencies provided 6,053 employees with more than $44.6 million in student loan repayment benefits. The other 31 agencies combined to provide 4,081 employees with just over $27 million in student loan repayment benefits.

The Department of Justice (DOJ) continued its use of student loan repayment repayments. In CY 2011, DOJ provided benefits totaling more than $20 million to 2,556 employees. The Federal Bureau of Investigation (FBI) provided the vast majority of student loan repayments within DOJ. The FBI accounted for nearly 90 percent (2,298 employees) of all DOJ employees receiving student loan repayments and more than 91 percent ($18.3 million) of the total benefits provided during CY 2011.

The CY 2011 recipients at the FBI included 902 Special Agents and 407 Intelligence Analysts. These two occupations accounted for more than 51 percent of DOJ’s total student loan repayment recipients during CY 2011.

The Department of Defense (DOD) decreased its use of student loan repayments in CY 2011, providing $14.5 million in student loan repayment benefits to 2,294 employees. In CY 2010, DOD provided $29.5 million in student loan repayment benefits to 3,865 employees. Therefore, DOD had a 41 percent decrease in the number of employees receiving student loan repayment benefits and a 51 percent decrease in the total amount of student loan repayment benefits provided during CY 2011.

DOD used student loan repayment benefits extensively as an incentive for engineers and provided benefits to a total of 707 employees in engineering positions. Engineers who received the most student loan repayment benefits included 172 Mechanical Engineers, 149 General Engineers, 129 Nuclear Engineers, and 76 Electronics Engineers. DOD also provided student loan repayment benefits to 345 employees in contracting positions. Additionally, DOD provided student loan repayments to 337 employees in nursing positions. Employees in engineering, contracting, and nursing positions accounted for over 60 percent of the DOD employees who received student loan repayment benefits during CY 2011.

The Department of State (DOS) continued its use of student loan repayments in CY 2011, providing more than $10 million in student loan repayment benefits to 1,203 employees. Of the CY 2010 recipients, 532 were in Civil Service positions and 671 were members of the Foreign Service. DOS offered a lump-sum payment of $8,500 or the outstanding loan amount if it was less than $8,500 and greater than $5,000. DOS provided the most student loan repayments to employees in the positions of Foreign Affairs (185), Passport and Visa Examiner (91), and members of the Foreign Service serving in Political Affairs (122), Economics (102), and Public Diplomacy (101) positions.

The Department of Veterans Affairs (VA) provided 606 employees with over $4.4 million in student loan repayment benefits during CY 2011. VA provided student loan repayment benefits to employees in a variety of occupations, including 78 Human Resources Specialists, 77 Psychologists, and 76 Pharmacists. In its report, VA also noted its separate student loan repayment authority under section 7681 of title 38, United States Code. The VA Education Debt Reduction Program (EDRP) allows VA facilities to recruit and retain highly qualified healthcare personnel.

The Securities and Exchange Commission (SEC) provided 575 employees with more than $3.9 million in student loan repayment benefits during CY 2011. As in the past, SEC made the vast majority (74 percent) of its student loan repayments on behalf of employees in its major occupations of Attorney-Advisor (310) and Accountant (107). These two positions accounted for more than 72 percent of all student loan repayments made by the SEC during CY 2011.

The Department of Health and Human Services (HHS) provided more than $3 million in student loan repayment benefits to 360 employees in CY 2010. This represents a 7 percent decrease in the number of employees receiving student loan repayments compared to CY 2010. HHS also saw a decrease of nearly 10 percent in the amount of student loan repayments provided versus CY 2010.

The Government Accountability Office (GAO) provided student loan repayment benefits totaling more than $3.7 million to 536 employees during CY 2010. The vast majority (75 percent) of recipients were GAO Analysts (405).

The Agency for International Development (AID) provided more than $2.8 million in student loan repayment benefits to 307 employees during CY 2011. The majority of student loan repayment recipients at AID were employees in Crisis Stabilization and Governance (40), Program Analysts/Project Development Officer (38), Health and Population Officer (37), Contract Management (27), and Agriculture Officer (22) positions.

Additional Agencies.The Departments of Agriculture and Energy, as well as the Federal Energy Regulatory Commission, also invested more than $1 million in their student loan repayment programs.