Student loan repayment benefit takes effect

After 11 years and several delays, a student loan repayment benefit for federal employees finally took effect Thursday. In February, Office of Personnel Management officials announced in the Federal Register that the effective date for the student loan regulation would be delayed from Feb. 12 until April 12 to give the Bush administration time to review the rule. In 1990, Congress authorized agencies to repay their employees' student loans at their discretion to recruit and retain a talented workforce. Agencies can pay up to $6,000 a year in student loan payments for each employee, but the total amount per employee cannot exceed $40,000. Employees who participate in the program must remain with the agency for at least three years.

Although the law has been on the books for 10 years, there was no authorizing language that agencies could use to implement it until this year.

Congress originally limited the student loan repayment benefit to "highly qualified professional, technical or administrative personnel," but language in the fiscal 2001 Defense Authorization Act lifted the restriction on eligibility for the benefit. In March, OPM issued draft rules incorporating the new language, which allows employees in blue-collar wage-grade jobs to apply for the benefit. The proposed rule made the benefit available to more than 400,000 non-postal, full-time executive branch employees who aren't paid under the General Schedule. About half of these employees are in wage-grade positions. The State Department has already set aside $7 million in its 2002 budget for student loan repayments. Marc Grossman, undersecretary of State for political affairs, said officials hope the new benefit will lure strong applicants to the department. "We'd like to get going with the student loan repayment program," Grossman, who was head of human resources for the department until March, said last month. "Congress said we could do it in 1990…. I'd like to be able to offer that [benefit] to foreign service and civil service candidates." Although agencies have the authority to repay employees' student loans, they are under no obligation to do so. Some agencies, particularly those whose budgets have shrunk this fiscal year, may not have the funds to pay for the benefit.

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