GovernmentExecutive.com

Federal agencies increased their spending on student loan repayment programs for employees by 22 percent from 2007 to 2008, according to an Office of Personnel Management report released on Wednesday.

"I am pleased with the reported increases," OPM Director John Berry said in a statement. "We have many critical skills gaps in the federal government and we need to use every tool in our tool box to bring the best service to the American public."

During calendar year 2008, 35 federal agencies provided 6,879 employees with $51.6 million in student loan repayments. For fiscal 2007, 33 agencies participated in the program, distributing $42.2 million in loan repayments to 6,619 employees. OPM switched from collecting fiscal year to calendar year data during the last reporting cycle.

The program has grown substantially since fiscal 2002, when agencies were first able to offer student loan repayments as an incentive for employees to stay in government. That year, only 16 agencies participated, spending $3.2 million repaying loans for 690 employees. Agencies can contribute as much as $10,000 annually, and $60,000 total, per employee; in return, recipients must to commit to three years of federal service.

Despite recent growth in the program, only about half the departments and independent agencies that were tracked -- 39 out of 80 -- either provided student loan repayments or were planning to start in the near future, according to Wednesday's report. Seventeen agencies told OPM the budget process made it difficult for them to spend money on student loan repayments.

Of participating agencies, the Justice Department provided the most assistance, spending $23,420,746 on loan relief for 2,610 employees. Other major participants included the Defense and State departments, Government Accountability Office, and Securities and Exchange Commission.

State Department officials told OPM a survey of employees who received loan repayments showed that the program had a significant effect on retention. Since the program began in 2002, 2,300 State employees received loan payments and of those, only 127 resigned from the department before completing their required three years of service.

Max Stier, president of the nonprofit Partnership for Public Service, praised agency efforts to participate in the repayment program, particularly during challenging economic times.

"That's such an important recruitment incentive," Stier said. "By all of our research, it's one of the most meaningful ways to encourage talent from university campuses to come to government."