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Sample Student Loan Repayment Plan

Sample Agency Plans - Attachment 1
Sample Student Loan Repayment Plan


The following requirements, procedures, and responsibilities implement the final regulations of the Office of Personnel Management (OPM), 5 CFR part 537, 66 Fed. Reg. 39405 (July 31, 2001), as authorized by 5 U.S.C. 5379, et seq, as amended by Pub. L. No. 106-398. OPM's final regulations authorize agencies to establish a program under which an agency may agree to repay all or part of an outstanding Federally insured student loan to facilitate the recruitment or retention of highly qualified employees.



  1. Types of Loans. Repayment is authorized for student loans made, insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act of 1965; or a health education assistance loan made or insured under part A of title VII of the Public Health Service Act, or under part E of title VIII of that Act. Such loans include Subsidized, Unsubsidized, Direct subsidized, and Direct unsubsidized Federal Stafford loans; Federal and Direct Federal Plus loans; Direct subsidized, Direct unsubsidized, and Federal Consolidation loans; Defense loans; National Direct Student Loans; Perkins Loans; Nursing Student Loan Program loans; Health Profession Student Loan Program loans; and Health Education Assistance Loan Program loans. These are Federally insured loans made by educational institutions or banks and other private lenders.

  2. Employees. Employees eligible to benefit from this incentive are those covered under General Schedule (GS) and other-than-GS pay plans (e.g., those in pay bands), except those excepted service employees appointed under the Schedule C authority, in all positions and who are appointed on a permanent appointment, an appointment that will lead to conversion to a term or permanent appointment (including Career Intern and Presidential Interns) with a duration of at least 3 years, or a term appointment with a duration of at least 3 years.

Criteria for selecting candidates for repayment benefits.

When selecting candidates for loan repayment benefits, an approving official must adhere to merit system principles and take into consideration the need to maintain a balanced workforce in which women and members of racial and ethnic minority groups are appropriately represented in Government service. In addition, each approving official should consider:

  1. past problems, or other information, on recruiting highly qualified candidates in similar occupations;

  2. labor market conditions that may be affecting current recruitment efforts;

  3. any special qualifications, skills, or education needed for the subject position;

  4. if a candidate is employed (in the [AGENCY] or elsewhere), demonstrated proficiency in performing the tasks and functions required by the subject position;

  5. the appropriateness of this incentive in lieu of, or in addition to, other incentives, e.g., recruitment bonuses or retention allowances;

  6. the availability of funds; and

  7. for current employees:

    1. the cost of training already given the candidate compared to what would be needed by a new employee if he/she did not possess the skills needed; and
    2. if attending school, the candidate's grade point average (GPA).

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Repayment Amounts.

The maximum amount that may be paid is $10,000 per employee per calendar year, and a total of $60,000 per employee.

Size of Payments --

  1. §537.106(c) states that: "In determining the size of the loan payments, an agency should take into consideration the employee's value to the agency, and how far in advance the agency can commit funds. If budgetary considerations are an issue, agencies have the discretion to determine the repayment benefit amount given to an employee each year." The regulations thus allow for differences in the size of the loan payments among eligible employees based on a consideration of the employee's relative value to the [AGENCY COMPONENT] and how far in advance the [AGENCY COMPONENT] can commit funds.

  2. If an [AGENCY COMPONENT] decides to award a greater student loan repayment benefit to one employee than another, the authorizing official of the [AGENCY COMPONENT] must include in his/her written determination, required by §537.105(a), all facts demonstrating that such difference in treatment is fair and equitable in light of the standards of §537.106(c).

Service Agreements.

Student Loan Repayment Program recipients must sign a written service agreement that requires the employee to complete, at a minimum, a 3-year period of employment with the agency regardless of the amount of loan repayment authorized. Attached, and incorporated in this plan, is the required service agreement which includes all OPM and [AGENCY] substantive provisions. [AGENCY COMPONENTS] may extend or renew payments to lending institutions after the 3-year period has ended without requiring new service agreements.

The preparation and implementation of service agreements require a number of significant procedures:

  1. The period of service will begin on the first day of the pay period for which the initial loan payment is to be disbursed. Disbursements will be made approximately 12 days after the end of a pay period.

  2. The [AGENCY COMPONENT] will verify with each lender/note holder that the employee has one or more outstanding student loans (hereinafter "loan") eligible for repayment under this plan, and the amount of the outstanding balance; the [AGENCY COMPONENT] and lender/note holder must then reach agreement on the terms of the agency payments. [AGENCY COMPONENTS] will verify remaining balances to ensure that loans are not in arrears or default or are overpaid. At least annually thereafter, [AGENCY COMPONENTS] will determine the status of loans to make sure that they are not in arrears or default. [AGENCY COMPONENTS] will also annually review and recertify that funds are available for loan payments.

  3. Loan payments are made directly to the lender/note holder, rather than to the employee, by the servicing payroll office as an allotment. If multiple loans are being repaid on behalf of a single employee, the payroll office will be informed of the amount to be paid for each loan, either as a dollar amount or percentage of the total loan payment.

  4. The lender/note holder will be informed that payment is on behalf of the employee with appropriate identifying information, such as name, social security number, and loan number.

  5. Subject to the lender's/note holder's approval, the employee may choose for loan payments to be made either--

    1. on a biweekly basis, in which case the income taxes will be deducted from the employee's salary; or

    2. as a lump sum amount during the first pay period that the service agreement is effective and annually thereafter, in which case the taxes will be deducted from the gross loan amount and a net payment made.

  6. Recipients of loan repayments must maintain satisfactory performance (i.e., a performance rating of "fully successful" or the equivalent) in accordance with the [AGENCY COMPONENT]'s performance management plan.

  7. Service agreements between individual recipients and approving officials in one [AGENCY COMPONENT] are not binding on another [AGENCY COMPONENT]. Right to placement as a surplus and/or displaced employee under the Career Transition and Assistance Program does not grant an affected employee loan repayment by the gaining [AGENCY COMPONENT]. However, if an employee is reassigned to another [AGENCY COMPONENT] as a management directed action, the gaining element will assume full responsibility for the service agreement.

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Use of loan repayment authority under this plan must be based on a detailed written determination by an approving official in accordance with 5 CFR §537.105. The regulation requires that the determination must confirm that, if the [AGENCY COMPONENT] did not offer loan repayment benefits, it would encounter difficulty either in filling a specific position with a highly qualified candidate, or retaining a highly qualified employee in that position. This authority should be used on a case-by-case basis.

Procedures for handling an indebtedness.

Any indebtedness created under this program will be processed similar to any other employee indebtedness. Waivers of indebtedness under this program will be reviewed consistent with delegations to approve waivers of financial obligations by local and agency finance offices.


Because the agency must report annually to OPM on its use of this incentive, [AGENCY COMPONENTS] will provide information requested for the agency's report; OPM, in turn, must report annually to Congress on agencies' use of this incentive.

Records system and storage

The associated financial records are included in the agency's Privacy Act records system [FORM NUMBER], Payroll and Leave Records, while original service agreements will be stored on the left side of the employee's Official Personnel Folder and included in the OPM/GOVT-1, General Personnel Records system.


Director, Human Resources Management and Administrator, [AGENCY COMPONENT].

These officials are responsible for the development of the agency plan and for ensuring that [AGENCY COMPONENTS] utilize this authority appropriately.


These managers are delegated the authority to approve repayment of student loans. This authority may be redelegated to subordinate officials consistent with existing authority to approve recruitment and relocation bonuses and retention allowances.

Recipient Employees.

The recipient employee will be responsible for making loan payments on the portion of the loan(s) that continues to be the employee's responsibility. Loan repayments by [AGENCY] do not exempt an employee from his/her responsibility and/or liability for any loan(s) the individual has taken out. The employee will also be responsible for any tax obligations resulting from the loan repayment benefit.

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