Federal Student Loan Repayment Program Eligibility for Federal Employees

The federal student loan repayment program permits agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency.  The program authorizes agencies to set up their own student loan repayment programs to attract or retain highly qualified employees.

Be aware that employees are not automatically entitled to a student loan repayment. Agencies have discretionary authority to repay certain types of federally insured student loans as a recruitment or retention incentive for highly qualified candidates or current employees.



Current Federal employees or potential candidates may contact their current or potential employing agency for information on how to apply for the student loan repayment program. Each participating agency must develop a plan that describes how it will implement the program.


Maximum Amount

For any one individual, an agency may agree to provide student loan repayment benefits of up to $10,000 per calendar year, subject to a cumulative maximum of $60,000 per employee. The employing agency makes student loan payments directly to the loan holder. Student loan payments are not paid to employees.


Future Student Loans

An agency may not agree to repay any future student loans accrued by an employee. An agency may agree only to make payments on those student loans taken out prior to the student loan repayment agreement.


In Addition to Existing Bonuses and Incentives

Agencies may offer student loan repayment benefits in conjunction with recruitment and relocation bonuses and retention allowances. Agencies may also use student loan repayment benefits in conjunction with a physicians comparability allowance (PCA). However, regulations require that the amount of the PCA be reduced by the amount of the student loan repayment.


Recruiting from Other Federal Agencies

The intent of the federal student loan repayment program is to help agencies recruit individuals for federal service, not for agencies to compete with one another for employees. Thus, agencies should not use this authority to recruit current federal employees from other agencies.


Retaining Employees Leaving for Another Federal Agency

Similarly, agencies may not offer to repay a student loan for an employee who is likely to leave for any other position in any branch of the federal government.


Employee Eligibility

Any employee (as defined in 5 U.S.C. 2105) who is highly qualified is eligible to receive a student loan repayment, except those employees who currently occupy or will occupy a position excepted from the competitive service because of its confidential, policy-determining, policy-making, or policy-advocating character (i.e., employees serving under Schedule C appointments).


Under 5 CFR 537.104, agencies may offer loan repayment benefits to:

  • Temporary employees who are serving on appointments leading to conversion to term or permanent appointments;
  • Term employees with at least 3 years left on their appointment;
  • Permanent employees (including part-time employees); and
  • Employees serving on excepted appointments with conversion to term, career, or career conditional appointments.


Eligibility of Non-GS Employees

Employees not covered by the General Schedule (GS) pay system are also eligible for student loan repayment benefits. The Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398) amended 5 U.S.C. 5379 to remove the limitation that only employees covered by the GS pay system were eligible for student loan repayment benefits. All highly qualified personnel, regardless of job series, including Senior Executive Service members, Federal Wage System employees, and employees covered by administratively determined pay systems, are eligible unless specifically excluded by law or regulation.


PLUS Loan Obligations for a Child

The statute authorizing the student loan repayment program states that this incentive can be used for employees of a given agency who have outstanding student loans. Therefore, if the employee has a PLUS loan for his or her child, the employee would be eligible. However, if a PLUS loan is held by an employee  parent, the employee is not eligible for loan repayment benefits for the parent’s PLUS loan.


Eligibility of Employees in Default

The student loan repayment authority itself does not preclude payments for employees who have defaulted on their student loans. However, agencies may exclude them by so specifying in their agency plans.


Types of Academic Degrees and/or Levels Covered

The types of academic degrees and/or levels covered by the program are not specified in law. Agencies are encouraged to tailor their plans to recruit highly qualified candidates and/or retain highly qualified employees in their current positions. Therefore, an agency may specify the types of degrees and levels necessary to attain this goal.

In addition, the law does not require that a candidate or employee earn a degree, diploma, or certificate to be eligible for a student loan repayment benefit. However, an agency may require a degree, diploma, or certificate as part of its individual agency plan. Agencies are encouraged to tailor their plans to fit their specific needs.


Loan Eligibility

A student loan is eligible for payment under this authority if it is made, insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act of 1965 or is a health education assistance loan made or insured under part A of title VII or part E of title VIII of the Public Health Service Act.  You can find more information on the OPM website here: http://www.opm.gov/oca/pay/studentloan/HTML/QandAs.asp.

Add Comment