Government Doled Out Less Money in 2013 to Help Feds Repay Student Loans

The federal government last year significantly cut back on one of its most popular but rare perks – the repayment of federal employees’ student loans.

Thirty-one agencies awarded more than $52.9 million in student loan repayment benefits to 7,314 federal employees in 2013. That’s nearly 31 percent fewer workers who received the benefit in 2012, and an almost 25 percent decrease in the total amount of money agencies doled out for the incentive that year.

The Office of Personnel Management, which recently released its latest report on the benefit, attributed the decline in use to “ongoing budgetary issues” facing agencies. In the current climate of tighter budgets and an ever-watchful Congress, “the use of discretionary tools such as student loan repayments requires close monitoring and evaluation as part of an agency’s overall human capital expenditures,” wrote OPM Director Katherine Archuleta in a message preceding the report.

Still, the select few who received the benefit in 2013 probably got more money individually than federal employees did in 2012. The average amount agencies provided for help repaying student loans in 2013 was $7,233 -- $563 more than the average award in 2012.

The federal student loan repayment program permits agencies to repay federally-insured student loans to recruit or retain highly-skilled employees, and its implementation varies widely across government. Some agencies don’t offer it at all because they don’t need to (they don’t have problems recruiting or retaining highly-skilled employees for hard-to-fill jobs), or they simply lack the funds to do so. Others agencies, like the Food and Drug Administration, actively encourage employees to apply for the benefit and hold an annual “Open Season” for it.  

Agencies have the authority to grant up to $10,000 a year for a total of $60,000 in student loan repayments in return for a promise of three years of service from workers. The money can go to new recruits or current employees. Federal employees also technically are not prohibited from using the benefit (if it’s offered) to help repay their children’s outstanding student loans. Though it’s not clear how often the benefit is used for this purpose, and agencies probably are loath to offer it for that purpose.

House Republicans repeatedly have targeted the student loan repayment benefit for elimination as a way to save the government money. Getting rid of the incentive would not yield significant savings as far as the federal budget is concerned, but according to OPM, many agencies currently aren’t using the benefit anyway because they lack money to offer it, or are encountering resistance to certain requirements. 

Thirty-nine out of 85 agencies that reported to OPM on student loan repayments either provided the benefit during 2013 or are putting a plan in place to offer it. While significant use of the benefit is not widespread across government, agencies that did provide the perk told OPM it was useful in recruiting and retaining workers.

Statistics show that most federal employees receiving the incentive work at the Defense, Justice and State departments and the Securities and Exchange Commission. Those four agencies alone provided more than $38.8 million in student loan repayment benefits last year. In particular, Defense said that the student loan repayment program “has proven to be a significant recruitment tool for bringing interns into entry-level positions, and critical fields like engineering, intelligence-related occupations and nurses,” the OPM report stated.

Since 2008, the government has provided $395 million to federal employees to help them pay back their school loans.

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