Order Code RL31102
CRS Report for Congress
Received through the CRS Web
Student Loan Repayment
for Federal Employees
Updated April 6, 2006
Barbara L. Schwemle and Lorraine H. Tong
Analysts in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Student Loan Repayment
for Federal Employees
Summary
Under a law enacted in 1990 (P.L. 101-510) and amended in 2000 (P.L. 106-
398) and 2003 (P.L. 108-123 and P.L. 108-136), federal agencies may repay portions
of the student loans of highly qualified General Schedule (GS) and non-GS
(including Foreign Service) employees they seek to recruit and retain. Eligible
employees must sign at least a three-year service agreement to remain with their
agencies. In return, these employees may receive loan repayments of up to $10,000
per year and up to $60,000 in total from an agency. Various student loans specified
in law and authorized by the Higher Education Act of 1965 and the Public Health
Service Act may be repaid. Concerns about the attractiveness of government service
to, and the large amount of student loan indebtedness of, new graduates along with
the possibility of a significant number of retirements from the federal government in
the next several years underlie student loan repayment programs. The Office of
Personnel Management (OPM) published final regulations to implement the original
law on January 11, 2001, and final regulations to implement the amendments to the
law on July 31, 2001, and April 20, 2004. Executive branch agencies are considering
and implementing student loan repayment programs. OPM reported to Congress in
April 2005 that 26 executive branch agencies made repayments to 2,680 employees
at a cost of some $15.028 million in FY2004.
In the legislative branch, the Government Accountability Office (GAO, formerly
the General Accounting Office), the Government Printing Office (GPO), and the
Library of Congress also have authority under the laws stated above to establish
student loan repayment programs. Enacted in the 107th Congress, P.L. 107-68
authorized the Senate and the Congressional Budget Office (CBO) to institute
programs, and P.L. 107-117 authorized the U.S. Capitol Police to establish one.
Under the Consolidated Appropriations Resolution, 2003 (P.L. 108-7), enacted in the
108th Congress, the House of Representatives has authority to establish a program for
its employees, and additional authority was granted to the U.S. Capitol Police to
establish a program and to provide tuition reimbursement for employees’ ongoing
career development education. To date, the Senate, the House, the U.S. Capitol
Police, CBO, GAO, GPO, and the Library (not including the Congressional Research
Service) have implemented repayment programs.
In both the executive and legislative branches, questions of how to fund the
programs, what the required period of service should be, the criteria for repayment
eligibility, and the kinds of program data to be collected will likely continue to be
considered as repayment programs are implemented. Several bills pending in the
109th Congress relate to student loan repayment. Under H.R. 1765 and S. 1255,
repayments would not be subject to income tax. S. 2450 includes a provision to
establish a pilot program to authorize repayments for federal employees with specific
skills. The legislative history, statutory authority, status of executive and legislative
branch implementation, issues for consideration, and oversight of student loan
repayment programs are discussed in this report. The report will be updated as
events warrant.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Legislative History of Student Loan Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . 3
101st Congress: Executive Branch Loan Repayment Program . . . . . . . . . . . 3
Senate Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
House Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Final Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
106th Congress: Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
107th Congress: Extension to Cover Senate Employees, the
Congressional Budget Office, and U.S. Capitol Police . . . . . . . . . . . . 10
108th Congress: Further Extension to House Employees and Others . . . . . 11
Implementation in Legislative Branch Agencies . . . . . . . . . . . . . . . . . 13
Executive Branch Law and Implementing Regulations . . . . . . . . . . . . . . . . . . . . 14
Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Reimbursement Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Repayment Plan Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Criteria for Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Student Loans Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Tax Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Reporting Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Proposed Amendment to the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Student Loan Repayments in the Executive Branch . . . . . . . . . . . . . . . . . . . . . . 21
Effectiveness of Student Loan Repayments . . . . . . . . . . . . . . . . . . . . . 24
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
OPM’s Administrative Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Student Loan Repayments in the Legislative Branch . . . . . . . . . . . . . . . . . . . . . 28
Need for Congressional Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Other Legislative Branch Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Student Loan Repayments in the Judicial Branch . . . . . . . . . . . . . . . . . . . . . . . . 37
Issues for Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Required Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Eligibility Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Oversight of Repayment Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

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List of Figures
Figure 1. Student Loan Recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Figure 2. Student Loan Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Tables
Table 1. Student Loan Repayment — Executive and Legislative Branch
Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Table 2. Student Loan Repayments by Agency, with Number of Recipients and
Cost of Repayments, FY2002, FY2003, and FY2004 . . . . . . . . . . . . . . . . . 45

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Student Loan Repayment
for Federal Employees
Background
Congress has authorized student loan repayments for highly qualified General
Schedule (GS) and non-GS (including Foreign Service) employees in the executive
branch.1 Repayments also are authorized for employees in the House of
Representatives,2 the Senate, the Congressional Budget Office (CBO),3 the
Government Accountability Office (GAO), the Government Printing Office (GPO),
the Library of Congress,4 and the U.S. Capitol Police. In the executive branch, and
in GAO, GPO, and the Library of Congress, the repayments may be up to $10,000
annually and up to $60,000 in the aggregate. In the legislative branch, the annual and
aggregate limitations vary. The House and Senate each authorize repayments up to
$500 a month, and $40,000 in the aggregate.5 Repayments to the U.S. Capitol Police
may be up to $10,000 annually, and $40,000 in aggregate. CBO’s repayments may
be up to $6,000 annually, and $40,000 in aggregate. A service agreement of at least
three years is required in the executive branch, while in the legislative branch, the
service agreement varies from one to three years.
Enactment of the executive branch statute followed a recommendation of the
National Commission on the Public Service (commonly referred to as the Volcker
Commission, after its chairman, Paul Volcker) that a federal service loan forgiveness
program be established for federal service.6 In April 1989, after an 18-month study,
1 P.L. 101-510; Nov. 5, 1990; 104 Stat. 1659, 5 U.S.C. §5379, as amended by P.L. 106-398;
Oct. 30, 2000; 114 Stat. 1654A-316 to 1654A-317, and P.L. 108-123; Nov. 11, 2003; 117
Stat. 1345, and P.L. 108-136; Nov. 24, 2003; 117 Stat. 1637. Loan repayment is sometimes
referred to as loan forgiveness; these terms are used interchangeably in this report. For an
analysis of loan forgiveness programs for employees in various public service (including
teachers, child care providers, and law enforcement or corrections officers) and health care
(including nurses, doctors, medical technicians, and health researchers) professions and in
the military, see CRS Report RL32516, Student Loan Forgiveness Programs, by Gail
McCallion.
2 P.L. 108-7; Feb. 20, 2003; 117 Stat. 354 and 117 Stat. 358-359.
3 P.L. 107-68; Nov. 12, 2001; 115 Stat. 563-568 and 115 Stat. 577-578. (For both the Senate
and CBO.)
4 See footnote 1.
5 The monthly computation reflects the unique election cycles of Congress and the possible
impact on congressional offices, committees, and administrative support offices.
6 The National Commission on the Public Service, Leadership for America; Rebuilding the
Public Service, Task Force Reports to the National Commission on the Public Service
(continued...)

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CRS-2
the commission issued its report on rebuilding the federal civil service. Formed in
response to “concern[s] that the federal workforce may be ill-prepared to serve the
nation in the 21st century,” the commission dedicated itself to “placing high on the
national agenda the need to strengthen the effectiveness of the career services in
government.”7 A commission task force on recruitment and retention found that
inadequate compensation and the unattractiveness of government employment to
recent college graduates were among the reasons for the federal government’s serious
problems in recruiting and retaining a quality workforce.8
At the time that student loan repayments were authorized by Congress, the
issues of the attractiveness of government service to9 and the large amount of student
loan indebtedness of10 new graduates were of particular interest. More recently, the
6 (...continued)
(Washington: 1989), pp. 76, 96. (Hereafter referred to as Leadership for America.) The
commission was a private, nonprofit organization assembled to prepare recommendations
to the President and Congress on rebuilding the public service.
7 Leadership for America, Preface.
8 U.S. The National Commission on the Public Service, Committing To Excellence;
Recruiting and Retaining a Quality Public Service, The Report of the Task Force on
Recruitment and Retention (Washington: 1989), pp. 69-111. With regard to private sector
practices, a literature search did not reveal specific information about student loan
repayments offered by private sector companies, but did show various types of
compensation and benefits afforded to employees in the private sector. For example, see
Robert Levering and Milton Moskowitz, “The 100 Best Companies to Work For,” Fortune,
vol. 153, Jan. 23, 2006.
9 The issue continues and is reinforced by recent surveys. For example, a survey
commissioned by the Partnership for Public Service of 805 graduating college seniors
revealed that two-thirds of seniors said getting a private sector job or starting their own
business would make their parents prouder than getting a job in government. (Partnership
For Public Service, “New Survey of the ‘Class of 9/11’ Finds Patriotism is Not Enough to
Inspire New College Graduates to Public Service,” May 19, 2005). For the results of other
surveys on the attractiveness of Public Service, see Partnership for Public Service, Public
Opinion on Public Service, May 2, 2005, available on the Internet at
[http://www.ourpublicservice.org], visited July 15, 2005.
10 For data on the significant amount of student loan debt that college graduates are carrying,
see, for example, The Project on Student Debt, White Paper; Addressing Student Loan
Repayment Burdens; Strengths and Weaknesses of the Current System [Washington: DC],
Feb. 2006; The College Board, Trends in Student Aid 2005 (Washington: Oct. 18, 2005);
Collegiate Funding Services (CFS) News Release, With College Loans Bills Coming Due,
Not All Graduates Are Prepared to Pay, Aug. 27, 2003; American Bar Association
Commission on Loan Repayment and Forgiveness, Lifting the Burden: Law Student Debt
as a Barrier to Public Service [Chicago: Aug. 2003]; Equal Justice Works, National
Association for Law Placement, Partnership for Public Service, From Paper Chase to
Money Chase: Law School Debt Diverts Road to Public Service ([Washington], Nov.
2002); and Tracey King and Ellynne Bannon, The Burden of Borrowing: A Report on the
Rising Rates of Student Loan Debt (Washington: State PIRGs’ Higher Education Project,
March 2002).

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possibility of a significant number of retirements11 from the federal government in
the next several years has joined these issues as a reason underlying student loan
repayment programs in the federal government.12 Authorization of repayments in the
legislative branch resulted from similar concerns about these recruitment and
retention issues.
The legislative history, statutory authority, status of executive and legislative
branch implementation, issues for consideration, and oversight of student loan
repayments are examined in the next sections of the report.
Legislative History of Student Loan Repayment
101st Congress: Executive Branch Loan Repayment Program
Senate Bill. On May 18, 1989, one month after the publication of the Volcker
Commission’s report, Senator Ted Stevens introduced, for himself and Senator David
Pryor, S. 1071, a bill to authorize the repayment of student loans for certain federal
employees. In his statement accompanying the introduction, Senator Stevens noted
the commission’s recommendation and stated that the bill was “designed to improve
the Federal Government’s ability to compete for top college graduates,” many of
whom have heavy debt and “simply cannot afford the option of Federal service.”
Saying that agencies would have discretion to use the authority as they saw fit “to
recruit highly qualified people that are important to its mission,” Senator Stevens
emphasized that agencies “would be required to absorb the expense of loan
repayment out of [their] existing payroll budget,” and went on to say that the
provision envisioned “no new outlays whatsoever.” According to Senator Stevens,
this would ensure “that this authority is used sparingly and only when necessary” and
11 According to OPM, there were 50,643 retirements by full-time, permanent employees in
FY2003, 54,285 retirements in FY2004, and 60,070 retirements in FY2005. OPM data are
available at [http://www.opm.gov/feddata/index.asp], visited Apr. 6, 2006; choose “Go To
FedScope,” then “Data Cubes Separations,” then “Cube Interfaces Dynamic,” then FY2003,
FY2004, and FY2005, and set the separation (separation from federal service) parameter to
retirement, the work schedule parameter to full-time, and the type of appointment parameter
to permanent. (FedScope shows that new hires for full-time permanent employees totaled
88,293 in FY2003, 84,548 in FY2004, and 92,399 in FY2005.) OPM had projected that
there would be 57,687 retirements in FY2005. Retirements projected for FY2006 are
58,889. (U.S. Office of Personnel Management, Retirement Statistics (no date) available
on the OPM website at [http://www.opm.gov/feddata/retire/], visited Apr. 6, 2006; choose
“Projections” to access the document.)
12 Student loan repayments are among the incentives available to federal agencies to foster
recruitment and retention of employees. At a recent interagency management conference,
Kevin Mahoney, deputy associate director at OPM, and other participants were reported to
have said that the federal government must better promote “its job opportunities, potential
for advancement, and competitive benefits packages.” According to Mr. Mahoney, “There’s
no question there is a war for talent[;] the federal government is struggling to regain its
image as an employer of choice.” Tichakorn Hill, “In Battle for Talent, ‘Go to Campuses
and Market, Market, Market,’” Federal Times, May 3, 2005.

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require agency managers “to make some tough decisions” in “reallocating funds to
use this recruiting incentive.”
The bill’s provisions requiring at least three years of service, an acceptable level
of performance, and cessation of the loan repayments if the employee separated
(either voluntarily or for reasons of poor performance) from federal service were
viewed by Senator Stevens as “ensur[ing] the Government a return on its human
resource investment.”13 Senator Pryor reiterated the comments of Senator Stevens
in saying that “[a]gencies will have wide latitude to work out how much of a loan
will be repaid by the agency and the length of time the employee will have to commit
to staying with the agency.” He anticipated “that agencies will exercise great
discretion in using this program” as they “will be required to absorb the costs.”14
After referral to the Senate Committee on Governmental Affairs, S. 1071 saw no
further action.
House Bill. In the House of Representatives, Representatives Benjamin
Gilman and William Ford introduced H.R. 2544 on June 6, 1989, which included, as
section 3, provisions on student loan repayment similar to those in S. 1071.15
Representative Gilman, in a statement accompanying the introduction, noted that the
Volcker Commission had recommended repayment of student loans and said the bill
would make “the Federal Government an employer of first choice for many of our
Nation’s finest students.” He stated, “Repayment shall be from funds already
appropriated at the time of appointment.” He also thanked Senators Stevens and
Pryor for “formulating and drafting major provisions of the bill” on the repayments.16
House Subcommittee Hearing. The Public Service Education Assistance
Act of 1990 (H.R. 2544) was referred to the Civil Service Subcommittee of the
House Committee on Post Office and Civil Service. The subcommittee conducted
a hearing on the bill on July 27, 1989, and took testimony from the director of the
Office of Personnel Management, the executive director of the National Commission
on the Public Service, and the special counsel of the Consumer Bankers Association.
In remarks during the hearing, Representative Ford described H.R. 2544 as a “sort
of a GI bill for civil servants.”17 OPM Director Constance Newman stated that the
agency had “not given enough consideration to how much this approach would cost
or to whether the benefits would justify the cost.” She also expressed several
13 Sen. Stevens, “Repayment of Certain Student Loans,” remarks in the Senate,
Congressional Record, vol. 135, May 18, 1989, pp. 9895-9896.
14 Sen. Pryor, remarks in the Senate, Congressional Record, vol. 135, May 18, 1989, p.
9897.
15 Section 2 of H.R. 2544 authorized agencies to pay or reimburse federal employees for the
cost of basic degree training.
16 Rep. Gilman, “The Public Service Education Assistance Act of 1989 (H.R. 2544),”
remarks in the House, Congressional Record, vol. 135, June 6, 1989, pp. 11032-11034.
17 U.S. Congress, House Committee on Post Office and Civil Service, Subcommittee on the
Civil Service, Public Service Education Assistance Act of 1989, hearing on H.R. 2544, 101st
Cong., 1st sess., July 27, 1989 (Washington: GPO, 1989), p. 4.

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concerns about the student loan repayment provisions in H.R. 2544. Those concerns
related to:
! not wanting to induce people to work for the government just long
enough to qualify for loan repayment and then move elsewhere;
! consideration of the equity of a recruitment incentive that would
have no value for those who have already paid their own way
through college;
! the essential need to limit the coverage to occupations where there
is difficulty in recruiting or retaining employees with critical skills
(identified as scientists and engineers);
! the need to examine carefully the administrative feasibility of
agencies making loan repayments;
! the lack of a provision on a central regulatory authority to ensure
uniformity among the agencies;
! the inappropriateness of not having an employee repay any loan
payments made by the agency if he or she fails to complete the
service requirement; and
! the lack of a limit on how large a repayment commitment could be
made.18
The latter three concerns were addressed by provisions that were included in the bill
when it was reported to the House. Asked about the appropriateness of a three-year
service requirement, Mrs. Newman stated that “three is probably a fairly standard
time,” but:
The concern is that we have some assurance that the kinds of people, if you go
with this type of approach, actually have an intent to participate in public service,
and that they aren’t just using this as a vehicle to repay their loans. And whether
or not a three year limitation provides enough assurance that you get at least
some benefit from having participated in this, I don’t know.19
L. Bruce Laingen, executive director of the National Commission on the Public
Service, viewed the legislation as a step in “enriching the talent pool” of government
and as “a practical way to get young people started on their careers.” According to
Laingen, “entry level payment in Government is increasingly noncompetitive with
the private sector” and “combined with slow procedures by Government in hiring on
18 Ibid., pp. 2-3.
19 Ibid., p. 5.

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the one hand and students loans to repay on the other, often makes Government even
for those who actually seek Government service an unattractive career choice.”20
Another witness, Consumer Bankers Association special counsel John Dean,
noted the significant student loan indebtedness of students with advanced degrees:
An individual facing this repayment burden may and frequently does feel obliged
to seek employment with an employer able to provide the highest level of
compensation possible and, in most cases, that is not the Federal Government.
In order to encourage extended government service, Dean suggested that larger
repayments be made for longer years of service. His concerns about the legislation
related to:
! the need for close examination of existing program regulations to
assure that borrower records are appropriately documented,
especially for cases where limitations on the maximum repayment
amount provided under the program result in a residual amount still
owed by the individual student loan borrower;
! making sure that when a federal check comes in for a student loan
it is applied to the correct loan;
! ensuring that, if the check is for an amount that is less than the
amount due on the loan, a note in the computer file will indicate that
a second check will be coming, so that an insufficient notice
payment will not follow receipt of the first check from the federal
government;
! identifying who will be held accountable for delinquency on the
loans if there is a paperwork error and the federal government
payment arrives late; and
! the possibility of precipitating employee delinquency or default on
a loan if he or she no longer qualifies for loan repayment because of
performance reasons or separation from government service.21
House Bill Reported. On February 7, 1990, the House Committee on Post
Office and Civil Service reported the bill to the House, but no further action
occurred. As reported, H.R. 2544 differed from the Senate bill in several respects.
For example, it did not cover student loans made, insured, or guaranteed by state
governments. The bill also provided that “[i]n selecting employees to receive
[student loan repayment] benefits ... an agency shall, consistent with the merit system
principles set forth in paragraphs (1) and (2) of section 2301(b), 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
20 Ibid., p. 10.
21 Ibid., pp. 14-16.

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Government service.” Additionally, H.R. 2544 authorized OPM to “prescribe
regulations containing such standards and requirements as [it] considers necessary
to provide for reasonable uniformity among programs.”22
Discussing the need for the legislation, the committee cited the findings of the
Volcker Commission, as well as reports published by the Merit Systems Protection
Board in May 1988 and the Office of Personnel Management in June 1988, on the
federal government’s difficulties in recruiting and retaining highly qualified
professional, technical, or administrative personnel.23 According to these reports, pay
rates significantly less than those offered by the private sector, a negative image of
public service, and lack of information about careers in government were among the
reasons inhibiting the federal government from attracting and keeping skilled
individuals. The committee report stated that the “new authority is an attempt to
bolster efforts to recruit top-flight candidates for employment with the federal
government” and noted that “the repayment program would be used as a recruiting
tool to attract individuals with critical skills necessary for the agency.” It
acknowledged criticisms that these repayment provisions could “result in disparate
treatment of equally qualified candidates solely on the basis of their form of
indebtedness.” The report expressed the “committee’s opinion that remedies for an
otherwise gravely lacking Federal compensation system must be sought wherever the
Federal Government can exert unique pressure.”24
With regard to limitations on the size of the repayments, the committee stated
its intent to “strike a balance” between the “extremely high loan indebtedness” of
many college graduates and “the limited resources available to Federal agencies for
new initiatives in programs and employee benefits.” Further, the committee noted
that the loan repayment was “to apply to indebtedness outstanding at the time an
employee enter[ed] into an agreement.”25
CBO Cost Estimate. The Congressional Budget Office (CBO) estimated that
the cost of the student loan repayment program in 1991 would be between $2 and $3
million, with the potential to increase to $10 to $15 million by 1995. CBO also
estimated that administrative costs would total less than one million dollars. The cost
estimate assumed that “most agencies would agree to reimburse ... loan payments for
at least five years.”26
22 U.S. Congress, House Committee on Post Office and Civil Service, Public Service
Education Assistance Act of 1990, report to accompany H.R. 2544, 101st Cong., 2nd sess.,
H.Rept. 101-402 (Washington: GPO, 1990), pp. 2-3. (Hereafter referred to as H.Rept. 101-
402.)
23 U.S. Merit Systems Protection Board, Office of Policy and Evaluation, Attracting Quality
Graduates to the Federal Government: A View of College Recruiting, May 1988; and The
Hudson Institute, Civil Service 2000, prepared for the U.S. Office of Personnel
Management, June 1988.
24 H.Rept. 101-402, pp. 5-7.
25 Ibid., p. 12.
26 Ibid., p. 15.

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Views of the Departments of Education and Justice. The Department
of Education (DoE) and the Department of Justice (DoJ) submitted views to the
House Committee on Post Office and Civil Service opposing H.R. 2544’s provisions
to establish a student loan repayment program. DoE believed that the program
“would be extremely costly, with overly generous agency repayment amounts
permitted, and is unlikely to correlate to the recruitment needs of the Federal service
or alter any significant number of students’ decisions to enter the Federal service.”27
Additional concerns expressed by DoE were that the program would:
...set a dangerous precedent by allowing for the first time cancellation of
Guaranteed Student Loans (GSLs) in exchange for performance of a certain
activity. Introducing cancellation for one activity would almost certainly lead to
pressure for cancellation for many other “meritorious” activities.
Very probably be poorly correlated to recruitment needs [and be] unlikely to
affect many decisions on whether to enter the Federal service. Prior efforts to
attract recruits to certain professions such as teaching (through loan forgiveness
and similar programs) have not had a significant impact on students’ decisions
to enter the field.
Provide a potential windfall for some employees, particularly in light of the high
agency repayment amounts permitted.
Aggravate current retention problems if employees need only complete three
years of federal service to take advantage of the repayment program .... Some ...
may well work only long enough to earn the cancellation before moving
elsewhere. Other programs, such as the Perkins Loan Program in the Higher
Education Act of 1965 (20 U.S.C. §1001 et seq.) require five years of service in
certain teaching positions before the entire loan is canceled.
[By authorizing payments up to $6,000 per year, provide] a very generous yearly
“bonus” ... far in excess of the amounts generally available to a small number of
employees in the form of cash awards or merit pay bonuses for outstanding
service. Thus, employees who either have no student loans or who have already
repaid their loans would, in essence, be compensated at a lower rate than other
employees simply because they do not have a particular form of debt. This type
of inequity could have a demoralizing effect on the federal employees not
participating in the repayment program ... and create retention problems.... The
Federal government should not be in a position of “rewarding” students who
finance their education through Federal student loans, and penalizing students
who chose work or savings to finance their postsecondary education.
[Create a situation in which] it could be very difficult to regulate effectively the
very broad, subjective authority of an agency head to waive a right of recovery
against an employee if it would be against equity and good conscience, or against
the public interest.28
27 Ibid., pp. 17-18.
28 Ibid., pp. 16-17.

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DoJ also declined to support student loan repayment. The agency’s concerns
were that the program would not “provide a reliable incentive for recruitment and
retention because its usefulness depends upon the nature of an individual’s
indebtedness and thus varies from candidate to candidate.”29 Additionally, Justice
believed that the program:
...would require the Department to treat otherwise similarly situated candidates
different solely because of their indebtedness or the form of their indebtedness....
Students who worked to pay their tuition would not qualify for benefits nor
would those whose parents saved or borrowed to pay for the student’s education.
This disparate treatment of otherwise equally qualified candidates outweighs the
minimal benefits to be gained by the student loan repayments.30
Final Action. During House consideration of the National Defense
Authorization Act for FY1991 (H.R. 4739) on September 11, 1990, Representative
Gilman offered the text of H.R. 2544 as an amendment to the bill.31 He stated that
the provisions were “intended to be applied systemwide to all Federal agencies.” He
also noted that, as no new funds were being authorized, agencies would have to fund
the program from salary and expense accounts and “use these tools in a cost efficient
manner.” According to Representative Gilman, the Department of Defense “d[id] not
object” to the amendment and “considers it an important tool in enhancing their
ability to recruit and keep essential qualified personnel.” National Commission on
the Public Service executive director L. Bruce Laingen stated in a letter to
Representative Gilman, which was inserted into the Congressional Record, that the
provisions were “an important step forward in the larger challenge of ensuring that
the services of government in the years ahead are performed by personnel of the
highest competence.”32 The House agreed to the amendment by voice vote on
September 11, 1990. The President signed H.R. 4739 on November 5, 1990, and it
became P.L. 101-510. Section 1206(b) of the law provides the repayment authority.33
On June 22, 2000, OPM proposed regulations to implement the initial student
loan repayment program established by P.L. 101-510.34 OPM did not explain the 10-
year delay in issuing the regulations, but a Government Executive article on the
regulations suggested that efforts to reduce the federal workforce in the early and
29 Ibid., p. 19.
30 Ibid.
31 The amendment was an amendment to an amendment that had been offered by Rep.
Mavroules.
32 Congressional Record, vol. 136, Sept. 11, 1990, pp. 23901-23902.
33 H.R. 4739 passed the House of Representatives (amended) on a 256-155 vote (No. 352)
on Sept. 19, 1990. On Sept. 25, 1990, the Senate struck all after the enacting clause and
substituted the language of S. 2884 as amended. The Senate then passed H.R. 4739 with an
amendment in lieu of S. 2884 by unanimous consent. The House agreed to the conference
report (H.Rept. 101-923) on a 271-156 vote (No. 517) on Oct. 24, 1990. The Senate agreed
to the conference report on an 80-17 vote (No. 320) on Oct. 26, 1990.
34 U.S. Office of Personnel Management, “Repayment of Student Loans,” Federal Register,
vol. 65, no. 121, June 22, 2000, pp. 38791-38794.

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mid-1990s created little demand in the agencies for the repayment authority.35 Lack
of funding for the program also may have contributed to the delay. OPM’s final
regulations became effective on April 12, 2001.36
106th Congress: Amendments
Ten years after the original student loan repayment authority had been enacted
in P.L. 101-510, Senator Richard Durbin offered an amendment to the Floyd D.
Spence National Defense Authorization Act for FY2001 (S. 2549) to make changes
to the law. The amendment, No. 3480, provided for broader implementation of
student loan repayment programs. It extended eligibility for student loan repayments
to non-GS (including Foreign Service) federal employees and to employees in other
than professional, technical, or administrative positions,37 and expanded the types of
student loans under the Higher Education Act and the Public Health Service Act
eligible for repayment. The Senate agreed to the amendment by voice vote on June
20, 2000. In lieu of S. 2549, the Senate passed H.R. 4205, with an amendment.38 On
October 30, 2000, H.R. 4205 became P.L. 106-398. Section 1122 provides the
expanded repayment authority. Regulations to implement the broadened student loan
repayment program established by the law were proposed by OPM on March 16,
2001, and finalized on July 31, 2001. Those regulations became effective on August
30, 2001.39
107th Congress: Extension to Cover Senate Employees,
the Congressional Budget Office, and U.S. Capitol Police
During its first session, the 107th Congress passed two separate pieces of
legislation to extend the student loan repayment program to specific legislative
branch entities. The FY2002 Legislative Branch Appropriations Act, P.L. 107-68,
35 Brian Friel, “Student Loan Help on Hold,” Government Executive, Feb. 8, 2001, available
at [http://www.govexec.com], visited Apr. 6, 2006.
36 U.S. Office of Personnel Management, “Repayment of Student Loans,” Federal Register,
vol. 65, no. 8, Jan. 11, 2001, pp. 2790-2793. The regulations were to have become effective
on Feb. 12, 2001, but a 60-day moratorium on new regulations was imposed by President
George W. Bush. U.S. Office of Personnel Management, “Repayment of Student Loans:
Delay of Effective Date,” Federal Register, vol. 66, no. 26, Feb. 7, 2001, p. 9187.
37 P.L. 106-398; Oct. 30, 2000; 114 Stat. 1654A-316 to 1654A-317; 5 U.S.C. §5379.
38 On July 13, 2000, the Senate struck all after the enacting clause and substituted the
language of S. 2549, amended, into H.R. 4205. The Senate then passed H.R. 4205, with an
amendment, on a 97-3 vote (No. 179). The House of Representatives agreed to the
conference report (H.Rept. 106-945) on a 382-31 vote (No. 522) on Oct. 11, 2000. The
Senate agreed to the conference report on a 90-3 vote (No. 275) the next day.
39 U.S. Office of Personnel Management, “Repayment of Student Loans,” Federal Register,
vol. 66, no. 52, Mar. 16, 2001, pp. 15202-15203; U.S. Office of Personnel Management,
“Repayment of Student Loans,” Federal Register, vol. 66, no. 147, July 31, 2001, pp.
39405-39406.

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enacted on November 12, 2001,40 authorized Senate employing offices to establish
a program for Senate employees and authorized appropriations to fund the program.
The law also authorized CBO to institute a program for student loan forgiveness.
The FY2002 Department of Defense Appropriations Act, P.L. 107-117, enacted on
January 10, 2002,41 granted authority to the U.S. Capitol Police to offer a student
loan repayment program for recruitment and retention purposes.
The House of Representatives attempted to establish a repayment program for
House employees, but that effort failed. On July 30, 2001, Representative Barbara
Lee submitted an amendment to the FY2002 Legislative Branch Appropriations Bill,
H.R. 2647 to the House Committee on Rules. The amendment was similar to H.R.
2555, a bill Representative Lee had introduced previously to amend P.L. 101-510 by
including legislative branch employees in the federal agency student loan repayment
program. The rule (H.Res. 213) for H.R. 2647 did not make the amendment in order
for consideration on the House floor. On July 31, 2001, however, during floor
consideration of H.R. 2647, Representative James Moran stated that “a uniform
policy should be developed across the board,” and noted that the bill “calls for study
of the issue by the Committee on House Administration.” He further stated that
because the Senate-passed version of the bill would authorize the student loan
repayment benefit to all Senate employees, it was “essential that the Committee on
House Administration develop guidelines rapidly.”42 Nevertheless, the FY2002
Legislative Branch Appropriations bill did not provide for a loan repayment program
for House employees.
108th Congress: Further Extension to
House Employees and Others43
Early in the 108th Congress, the Senate and House passed an omnibus
appropriations bill, the Consolidated Appropriations Resolution, 2003, that provided
40 H.R. 2647, P.L. 107-68, Nov. 12, 2001, 115 Stat. 563-568 and 115 Stat. 577-578.
41 H.R. 3338, P.L. 107-117, Jan. 10, 2002, 115 Stat. 2319-2320. U.S. Congress, Conference
Committees, Making Appropriations for the Department of Defense for the Fiscal Year
Ending September 30, 2002, and for Other Purposes, conference report to accompany H.R.
3338, 107th Cong., 1st sess., H.Rept. 107-350 (Washington: GPO, 2001), pp. 91-92.
42 Rep. Moran, remarks in the House of Representatives, Congressional Record, vol. 147,
July 31, 2001, p. H4888.
43 Legislation to establish a pilot program to repay the student loans of federal employees
in national security positions in eight agencies passed the Senate in the 108th Congress and
was referred to the House Committee on Government Reform, but saw no further action.
Sen. Daniel Akaka, for himself and Sens. Durbin, George Allen, and George Voinovich,
introduced S. 589, the Homeland Security Federal Workforce Act, on March 11, 2003. The
bill was referred to the Senate Committee on Governmental Affairs, where it was marked
up and ordered to be reported by voice vote on June 17, 2003. S. 589 was reported to the
Senate on July 31, 2003 (S.Rept. 108-119). It passed the Senate with an amendment by
unanimous consent on November 5, 2003. Prior to passage, an amendment in the nature of
a substitute proposed by Sen. Bennett for Sen. Susan Collins was agreed to by unanimous
consent. The bill was referred to the House Subcommittee on Civil Service and Agency
Organization, on July 13, 2004, but saw no further action.

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authority and appropriations at Section 105 to the House of Representatives for a
student loan repayment program. The bill was enacted as P.L. 108-7 on February 20,
2003. At Section 1007, P.L. 108-7 also granted authority to the U.S. Capitol Police
to establish a student loan repayment program as part of an educational and tuition
reimbursement assistance program for employee career development.44
Legislation (S. 926) to increase the annual and aggregate limitations on student
loan repayments was enacted as P.L. 108-123 on November 11, 2003.45 The law
amended 5 U.S.C. §5379(b)(2) and increased the amount of a student loan repayment
from $6,000 to $10,000 per year and from $40,000 to $60,000 in total for employees
in the executive branch, GAO, GPO, and the Library of Congress. CBO estimated
that implementing the legislation “would cost less than $500,000 a year, subject to
the availability of appropriated funds.”46 According to the Senate Governmental
Affairs Committee report that accompanied the bill, the amendments reflected “an
increase in annual college tuition costs since the enactment of the original statute in
1991.” It further stated that without them the tuition increases “would lessen the
competitive value of this recruitment and retention tool.”47
On October 28, 2003, the House of Representatives suspended the rules and
passed S. 926 by voice vote. During House consideration of the bill, Representative
Jo Ann Davis stated that the Senate bill, which was identical to the House version,
was taken up because it had already passed the Senate and would speed up approval
of the measure. Explaining the need for the legislation, she stated that “it is the
prospect of these daunting student loans, $50,000, $75,000, or even more than
$100,000, that can prevent public service-minded people from coming to work for
the government.” She added that “[s]tudent loan repayment is at the top of the list for
newly graduated students looking for jobs.”48 Representative Danny Davis noted that
the student loan repayment program “is generally underutilized due to lack of agency
funding caused by limited budgets” and that “without funding and without aggressive
use of this and similar programs to promote Federal civil service, the Federal
44 P.L. 108-7, Feb. 20, 2003, 117 Stat. 354 and 117 Stat. 358-359. The provisions originally
were included in H.R. 5121, Legislative Branch Appropriations Act, 2003.
45 S. 926, P.L. 108-123; Nov. 11, 2003; 117 Stat. 1345.
46 U.S. Congress, Senate Committee on Governmental Affairs, Federal Employee Student
Loan Assistance Act, report to accompany S. 926, 108th Cong., 1st sess., S.Rept. 108-109
(Washington: GPO, 2003), p. 3. (Hereafter referred to as S.Rept. 108-109.)
47 Ibid., p. 1. On April 28, 2003, Sen. Voinovich introduced S. 926, the Federal Employee
Student Loan Assistance Act, and it was referred to the Senate Committee on Governmental
Affairs. The bill was marked up and ordered to be reported by the committee en bloc with
other bills by voice vote on June 17, 2003. It was reported to the Senate (S.Rept. 108-109)
on July 21, 2003, and passed the Senate, without amendment, by unanimous consent on July
30, 2003. Rep. Jo Ann Davis introduced a companion bill, H.R. 3080, the Federal Employee
Student Loan Assistance Act, on September 11, 2003, and it was referred to the House
Committee on Government Reform.
48 Congressional Record, daily edition, vol. 149, Oct. 28, 2003, p. H9835.

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Government will be left behind in the competition for top talents.”49 Under S. 926,
agencies would continue to fund student loan repayments from their own budgets.
Section 1123 of P.L. 108-136, the National Defense Authorization Act for
FY2004 (H.R. 1588), enacted on November 24, 2003, amended 5 U.S.C.
§5379(b)(2)(A) to increase the amount of a student loan repayment from $6,000 to
$10,000 per year.50 The provision became effective on January 1, 2004.
OPM’s regulations to implement the higher annual and aggregate amounts for
repayments authorized in P.L. 108-123 and P.L. 108-136 were published on April 20,
2004.51
Implementation in Legislative Branch Agencies. Student loan
repayment programs at selected legislative branch agencies were established by
different pieces of legislation in the 107th and the 108th Congresses; as a result, the
implementation of these programs is at various stages in these agencies. Legislators
believed that some uniform guidelines would assist the agencies as each agency
began writing regulations and service agreements. Accordingly, the conferees to the
FY2002 Legislative Branch appropriations bill (H.R. 2647, H.Rept. 107-259)
directed the Legislative Branch Financial Managers Council (LBFMC)52 to “develop,
in consultation with all Legislative Branch entities, the controls and criteria that will
govern [student loan repayment] program implementation.” Specifically, the LBFMC
was “directed to perform a comparative analysis between entity implementing
regulations and governing controls and criteria and report the results of that analysis
to the House and Senate” appropriations subcommittees on the legislative branch by
March 1, 2002. The LBFMC consulted with each legislative branch entity beginning
49 Ibid., pp. H9835-H9836.
50 117 Stat. 1637. H.R. 1588 was introduced by Rep. Duncan Hunter, by request, on April
3, 2003, and was referred to the House Committee on Armed Services. The committee
marked up the bill on May 9 and May 14, 2003. The bill was reported to the House,
amended (H.Rept. 108-106) on May 16, 2003. H.R. 1588 passed the House, amended, on
May 22, 2003, on a 361 to 68 (Roll No. 221) vote. On June 4, 2003, the Senate struck all
after the enacting clause and substituted the text of S. 1050 in H.R. 1588. The Senate then
passed H.R. 1588, amended, by voice vote the same day. On November 7, 2003, the House
agreed to the conference report (H.Rept. 108-354) accompanying H.R. 1588 on a 362-40,
2 present (Roll No. 617) vote. The Senate agreed to the conference report on a 95-3 (No.
447) vote on November 12, 2003. U.S. Congress, Conference Committees, 2003, National
Defense Authorization Act for Fiscal Year 2004, conference report to accompany H.R. 1588,
108th Cong., 1st sess., H.Rept. 108-354 (Washington: GPO, 2003), pp. 248, 762. The
provision was Section 1104 of the bill as reported and passed by the House and Section
1123 of the conference agreement.
51 U.S. Office of Personnel Management, “Repayment of Student Loans,” Federal Register,
vol. 69, no. 76, Apr. 20, 2004, p. 21039.
52 Established by charter in March 1996, the Council’s mission is to promote more effective
financial management of the legislative branch, and to ensure that efficient and cost-
effective financial systems are available to support decision making. The Council comprises
the financial managers of legislative branch entities (including the Architect of the Capitol,
the U.S. Capitol Police, CBO, GAO, the House of Representatives, the Library of Congress,
the Office of Compliance, and the Senate).

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in December 2001, completed a comparative analysis of entity implementing
regulations, and developed governing controls and criteria recommendations for the
student loan repayment programs in the legislative branch. On February 27, 2002,
the LBFMC reported the results of the analysis and recommendations to the House
and Senate appropriations subcommittees on the legislative branch. In general, the
legislative branch agencies have followed the LBFMC recommended guidelines.
Executive Branch Law and
Implementing Regulations
Authority for the student loan repayment program is codified at 5 U.S.C. §5379.
The statute covers executive agencies, independent establishments, government
corporations under 31 U.S.C. Chapter 91, as well as GAO, GPO, and the Library of
Congress. Federal employees covered by the law are:
! permanent employees;
! temporary employees who are serving on appointments which can
be converted to term or permanent appointments;
! term employees with at least three years left on their appointments;
and
! employees serving on excepted appointments which can be
converted to term, career, or career conditional appointments
(including, but not limited to, Career Intern or Presidential
Management Intern appointments).
Schedule C appointees — employees in confidential, policy-determining,
policy-making, or policy advocating positions — are not eligible for the repayments.
As amended by P.L. 108-123 and P.L. 108-136, an employee may currently
receive a repayment of up to $10,000 annually and $60,000 in the aggregate from an
agency.53 Regulations to implement the current repayment amount were published
in the Federal Register by OPM on April 20, 2004.54
Agencies may use the student loan repayment benefit in conjunction with other
recruitment and retention incentives available under Title 5 of the United States
Code. Student loan repayments are not subject to the Title 5 provision that limits the
53 P.L. 108-123 and P.L. 108-136. The previous limitations on repayments were $6,000 per
year and $40,000 in total.
54 U.S. Office of Personnel Management, “Repayment of Student Loans,” Federal Register,
vol. 69, no. 76, Apr. 20, 2004, p. 21039.

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aggregate amount of pay an employee can receive to Executive Level I, or $183,500
(as of January 2006),55 but it is unlikely that this would ever be an issue of concern.
Service Agreement. An employee seeking student loan repayment must sign
a written agreement to work for the agency repaying the loan for at least three years.
The implementing regulations specify that the following language should be stated
in the service agreement: “A service agreement made under this part in no way
constitutes a right, promise, or entitlement for continued employment or
noncompetitive conversion to the competitive service.”56 Other employment
conditions the agency considers to be appropriate may be specified in the agreement.
These might include the employee’s position and the duties he or she is expected to
perform, work schedule, or level of performance.
Reimbursement Required. An employee who separates voluntarily from
the agency, does not maintain an acceptable level of performance,57 or violates any
of the conditions of the service agreement becomes ineligible to continue receiving
student loan repayment benefits. An employee who fails to complete the required
period of service must reimburse the agency for the total amount of any repayment
benefits received. This would occur if the employee were separated involuntarily for
misconduct or performance, or left the agency voluntarily. The agency must collect
through appropriate debt collection procedures any amount the employee fails to
reimburse. Reimbursement is not required of an employee who is involuntarily
separated for reasons other than misconduct or performance or who leaves the agency
voluntarily to enter into the service of another agency. The service agreement,
however, may specify reimbursement in this latter instance. An agency head may
waive, in whole or in part, a right of recovery of an employee’s debt if “recovery
would be against equity and good conscience or against the public interest.”58
Repayment Plan Features. OPM regulations require the head of an agency
to establish a student loan repayment plan before repaying any student loans. The
plan must include the following seven elements:
The designation of officials with authority to review and approve offering
student loan repayment benefits;
The situations when the loan repayment authority may be used;
55 66 FR 39405. (Hereafter, citations to the Federal Register are noted as FR, preceded by
the volume and followed by the page.) When it published the final regulations that
implemented the amendments to the student loan repayment law, OPM stated that one
agency had suggested that those regulations address the aggregate limitation on pay. OPM
said that the issue was outside the scope of the regulations, but that it would amend its
questions and answers on student loan repayment to clarify that the aggregate limitation
does not apply to the repayments.
56 66 FR 2792; 5 C.F.R. 537.107. (Hereafter, citations to the Code of Federal Regulations
are designated by C.F.R. preceded by the title number and followed by the part designation.)
57 The most recent performance rating of record must be at least level 3 (“fully successful”)
for an employee whose performance appraisal is covered by 5 C.F.R. 430, subpart B.
58 66 FR 2792; 5 C.F.R. 537.109.

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Criteria that must be met or considered in authorizing loan repayments, including
criteria for determining the size and timing of a payment [or payments];
Procedures for making loan repayments;
A system for selecting employees to receive repayment benefits that ensures fair
and equitable treatment;
Requirements for service agreements (including a basis for determining the
length of service to be required if greater than the statutory minimum), and
provisions for recovering any amount outstanding from an employee who fails
to complete the period of employment established under a service agreement and
for conditions when the agency decides to waive the employee’s obligation to
reimburse the agency for payments; and
Documentation and record keeping requirements sufficient to allow
reconstruction of the action taken in each case.59
Criteria for Repayments. The OPM regulations also establish criteria for
loan repayments. The repayments “must be based on a written determination that,
in the absence of offering loan repayment benefits, the agency would encounter
difficulty either in filling the position with a highly qualified candidate, or retaining
a highly qualified employee in that position.” The written determination for
recruitment purposes must be made before the employee actually enters on duty in
the position for which he or she was recruited. For retention purposes, the written
determination must state “that the high or unique qualifications of the employee or
special need of the agency for the employee’s services makes it essential to retain the
employee, and that, in the absence of offering student loan repayment benefits, the
employee would be likely to leave for employment outside the Federal service.” The
determination “must be based on a written description of the extent to which the
employee’s departure would affect the agency’s ability to carry out an activity or
perform a function that is deemed essential to the agency’s mission.”60
In selecting employees to receive the loan repayment, “agencies 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.”61
Student Loans Covered. Eligible for repayment are student loans made,
insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act
of 1965; and health education assistance loans made or insured under part A of title
VII or part E of title VIII of the Public Health Service Act.62 According to OPM,
loans that qualify for repayment include the following:
59 66 FR 2791; 5 C.F.R. 537.103.
60 Ibid. 5 C.F.R. 537.105.
61 Ibid. Also specified in 5 U.S.C. §5379(e).
62 114 Stat. 1654A-316; 66 FR 39406.

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Federal Family Education Loans (FFEL)
! Subsidized Federal Stafford Loans
! Unsubsidized Federal Stafford Loans
! Federal PLUS Loans
! Federal Consolidation Loans
! William D. Ford Direct Loan Program (Direct Loans)
! Direct Subsidized Stafford Loans
! Direct Unsubsidized Stafford Loans
! Direct PLUS Loans
! Direct Subsidized Consolidation Loans
! Direct Unsubsidized Consolidation Loans
! Federal Perkins Loan Program
! National Defense Student Loans (made before July 1, 1972)
! National Direct Student Loans (made between July 1, 1972 and July
1, 1987)
! Perkins Loans (made after July 1, 1987)
Loans made or insured under the Public Health Service Act
! Loans for Disadvantaged Students (LDS)
! Primary Care Loans (PCL)
! Nursing Student Loans (NSL)
! Health Professions Student Loans (HPSL)
! Health Education Assistance Loans (HEAL)63
Tax Implications. The student loan repayment must be included in an
employee’s income for both income and employment tax purposes. OPM has posted
on its website a document prepared by the Internal Revenue Service that addresses
questions and answers on the tax liability of student loan repayments made by federal
entities. The document includes a discussion on agency reporting and withholding
requirements for tax purposes, and an explanation of how agencies should calculate
and withhold employment taxes.64
The following is an example of an employee’s tax liability if a federal agency
were to provide a student loan repayment in the amount of $10,000. For tax year
2005, a single employee with taxable income between $29,700 and $71,950 is
subject to a federal income tax rate of 25%. In addition to the income tax,
employment taxes (at a 7.65% rate for Social Security and Medicare) would be
collected on the repayment amount. Thus, a total of 32.65% in federal taxes would
have to be paid by an employee receiving repayment benefits under the program. On
63 U.S. Office of Personnel Management, Office of Compensation Administration, Student
Loan Repayment Program Questions and Answers, available at [http://www.opm.gov/oca/
pay/StudentLoan/HTML/QandAs.htm], visited Apr. 6, 2006.
64 U.S. Office of Personnel Management, Office of Compensation Administration, Student
Loan Repayment Program, Questions and Answers on Tax Liability, available at
[http://www.opm.gov/oca/pay/StudentLoan/HTML/QandAsTax.htm], visited Apr. 6, 2006.

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a $10,000 repayment this amounts to $3,265. In addition, the $10,000 would be
subject to any applicable state and local income taxes.65
Legislation Pending in the 109th Congress on Tax Implications. Bills
to exclude student loan repayments from gross income for the purposes of federal
income tax are pending in the House of Representatives and the Senate.
Representative Tom Davis, for himself and 33 other Members, introduced H.R. 1765,
Generating Opportunity by Forgiving Educational Debt for Service Act of 2005, on
April 21, 2005. The bill was referred to the Committee on Ways and Means and the
Committee on Government Reform the same day.66 On May 17, 2005, the House
Subcommittee on Federal Workforce and Agency Organization marked up the
legislation and forwarded it to the Government Reform Committee. The bill was
marked up by the committee and ordered to be reported on June 16, 2005, by voice
vote. In a cost estimate published on September 12, 2005, CBO found that H.R.
1765 “would not affect direct spending,” but “would lower discretionary spending
by $10 million over the 2006-2010 period and $20 million over the 2006-2015
period, assuming that appropriations are reduced accordingly.”67 Senator George
Voinovich, for himself and Senators Akaka, Susan Collins, Durbin, and Stevens,
introduced S. 1255, Generating Opportunity by Forgiving Educational Debt for
Service Act of 2005, on June 16, 2005.68 The bill was referred to the Committee on
Finance. In his statement upon introducing the legislation, Senator Voinovich said:
In recent years, many educational institutions have established programs that
repay a portion of the student loan debt their graduates owe .... Under current
law, the amounts these institutions offer their graduates as student loan
repayment are not taxed as income, provided the recipients choose to work for
the government or non-profit organizations. Unfortunately, the Federal Tax
Code does not treat the Federal Government’s loan repayment programs in the
same way, considering such loan repayment as taxable income to the employee.
65 This example was provided to the authors by Louis Alan Talley, Specialist in Taxation,
at CRS.
66 In the 108th Congress, legislation similar to that introduced in the 109th Congress was
introduced in the Senate (S. 512) by Sen. Voinovich on March 4, 2003, and in the House of
Representatives (H.R. 1056) by Rep. Tom Davis the same day, but saw no further action.
Similar legislation also was introduced in the 107th Congress by Sen. Voinovich (S. 1817)
on December 13, 2001, and Rep. Burton (H.R. 3893) on March 7, 2002, but saw no further
action. Legislation to exclude student loan repayments from gross income for purposes of
federal income tax for members of the uniformed military was introduced in the House
(H.R. 4555) by Rep. Gary Miller on April 23, 2002, but saw no further action.
67 U.S. Congressional Budget Office, Cost Estimate, H.R. 1765, Generating Opportunity by
Forgiving Educational Debt for Service Act of 2005, Sept. 12, 2005.
68 S. 1255, unlike H.R. 1765, also would apply to members of the Armed Forces on active
duty. According to Senator Voinovich, he expanded the legislation to include the military
“because recent reports indicate that all four services missed their recruiting goals last year.”
(Congressional Record, daily edition, vol. 151, June 16, 2005, p. S6742.)

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As a result, the net benefit of any such program is reduced by the amount of tax
that the individual has to pay on the debt repaid.69
H.R. 1765 and S. 1255 would amend 26 U.S.C. §108(f) to exclude student loan
repayments from gross income for the purposes of federal income tax. The bill also
would amend 26 U.S.C. §3121(a) to exclude student loan repayments from the
definition of wages under the Internal Revenue Code and 42 U.S.C. §409(a) to
exclude repayments from the definition of wages under Social Security. The
amendments would apply to payments made in taxable years beginning after
December 31, 2004 (H.R. 1765) or on or after the act’s enactment in taxable years
ending after such date (S. 1255).
Reporting Requirement. OPM is required by law to report to Congress
annually on the implementation of student loan repayment programs in the agencies,
including the number and job classifications of federal employees receiving
repayments, and the cost of the repayments.70 The current statutory requirement is
for the report to include information on those agencies having student loan repayment
programs. Legislation (H.R. 1765, Section 3)71 now pending in the 109th Congress
would amend current law to require that the OPM report also include information on
those agencies that have not implemented repayment programs.72
69 Senator George Voinovich, Statement on S. 1255, Congressional Record, daily edition,
vol. 151, June 16, 2005, p. S6742.
70 114 Stat. 1654A-316-1654A-317.
71 See the discussion of H.R. 1765 in the text under Legislation Pending in the 109th
Congress on Tax Implications.
72 The amendment would apply to reports submitted after the end of the three-month period
beginning on the act’s enactment date. The legislation does not specify what information
would be provided on agencies that have not implemented repayment programs.

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Proposed Amendment to the Law.73 Senator Akaka, for himself and
Senator Durbin, introduced S. 2450, the Homeland Security Education Act, on March
16, 2006. The bill was referred to the Senate Committee on Health, Education,
Labor, and Pensions. Section 11 of the legislation would amend Title 5, United
States Code, by adding a new Section 5379a authorizing the Director of OPM to
establish and administer a pilot program under which the student loans of federal
employees possessing science, technology, engineering, mathematics, and foreign
language skills would be repaid. The legislation provides that not less than three but
not more than five agencies could set aside funds for a student loan repayment
program under 5 U.S.C. §5379 to repay any student loan previously taken out by
employees possessing such skills deemed critical to the agencies under their human
capital strategic plans.74 The repayments would be direct payments made on behalf
of an employee. Agencies participating in the program would be required to set aside
enough funds to repay the student loans of at least one-half of the number of
employees with the identified critical skills who are needed.
Loans Covered. Student loans eligible for repayment would be the same as
those covered by current law — loans made, insured, or guaranteed under parts B,
D, or E of Title IV of the Higher Education Act of 1965; and health education
assistance loans made or insured under Part A of Title VII or Part E of Title VIII of
the Public Health Service Act.
Length of Program. The program would remain in effect for five years,
beginning on the enactment date of the proposed Section 5379a. Employees
73 Two bills pending in the 109th Congress, while outside the purview of this report, are
noteworthy. In the House, a provision to expand Section 428 of the Higher Education Act
was included in H.R. 609, College Access and Opportunity Act of 2006, introduced by Rep.
John Boehner. The provision, to provide up to $5,000 in loan forgiveness to individuals
with Baccalaureate or advanced degrees who serve five consecutive years as full time
employees in public service at the local, State, or federal levels, was offered as Amendment
No. 753 to H.R. 609 by Rep. Jon Porter, for himself and Reps. Rick Renzi and Robert
Andrews, on Mar. 29, 2006, and agreed to by voice vote. The bill passed the House on a
221 to 199 (Roll No. 81) vote on Mar. 30, 2006. (Congressional Record, daily edition, vol.
152, Mar. 29, 2006, pp. H1265-H1266.) In the Senate, legislation has been introduced to
authorize forgiveness of the remaining amount of some student loans of public sector
employees after 120 payments have been made under an income-contingent program. S.
371, College Quality, Affordability, and Diversity Improvement Act of 2005, was
introduced by Sen. Edward Kennedy, for himself and Sens. Christopher Dodd, Jeff
Bingaman, Patty Murray, Jack Reed, Hillary Clinton, and Barbara Mikulski, on Feb. 14,
2005, and referred to the Senate Committee on Finance. It is unclear from the legislative
language of the bill if the proposal was also designed to exclude those amounts from
income. As drafted, it appears that the forgiven amounts would be included in the
individual’s income and taxable. For an analysis of income-contingent repayment, see The
Project on Student Debt, White Paper; Addressing Student Loan Repayment Burdens;
Strengths and Weaknesses of the Current System [Washington: DC], Feb. 2006, pp. 16-18,
and 24.
74 “Agency” would mean any agency that, based on its human capital strategic plan, has a
shortfall in the number of individuals possessing critical science, technology, engineering,
mathematics, and foreign language skills. “Human capital strategic plan” would mean an
agency’s strategic plan under 5 U.S.C. §306.

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CRS-21
recruited under the program who were in compliance with its requirements would
continue to receive benefits until the end of their service commitments.
Regulations. Not later than 60 days after enactment of the proposed Section
5379a and after consultations with the heads of agencies, the OPM Director would
propose regulations for the pilot program. The final regulations would be
promulgated by the OPM Director not later than 180 days after the date on which the
comment period for the proposed regulations ends.
Reports. The OPM Director must report to the appropriate committees of
Congress on the program’s implementation not later than 180 days after enactment
of the proposed Section 5379a. OPM’s annual report on the student loan repayment
program under 5 U.S.C. §5379 must include information on the status of the Section
5379a program, including a determination of its impact in recruiting and retaining
employees possessing the identified critical skills and an assessment of whether it
should be expanded to other agencies or to individuals possessing other critical skills.
Agency heads must provide any necessary information to OPM.
Authorization of Appropriations. Such sums as may be necessary to carry
out the proposed Section 5379a are authorized to be appropriated to enable the
federal government to recruit and retain employees with the identified critical skills.
Student Loan Repayments in the Executive Branch
Executive branch agencies have considerable flexibility to implement student
loan repayment programs. Two sample student loan repayment plans have been
published by OPM as guidance to the agencies.75 OPM also includes a summary of
agency best practices and lessons learned on its Internet website.76 Among the best
practices listed are developing an online application system, using standard
application and justification forms, and confirming that lenders are properly crediting
payments.
In April 2005, OPM submitted its report to Congress on the FY2004 student
loan repayments.77 The OPM document is based on reports from the individual
agencies on their repayment programs. (Given that the individual agency reports are
not publicly available, CRS is unable to independently evaluate agency results.)
According to OPM, 26 agencies made repayments to 2,680 employees at a total cost
of $15,028,432 in FY2004. Specifically, the cabinet agencies made 2,102
75 Available at [http://www.opm.gov/oca/pay/StudentLoan], visited Apr. 6, 2006.
76 Available at [http://www.opm.gov/oca/pay/studentloan/html/bestpractices.asp], visited
Apr. 6, 2006.
77 U.S. Office of Personnel Management, Federal Student Loan Repayment Program Fiscal
Year 2004 Report to the Congress, April 2005, available at [http://www.opm.gov/oca/
pay/StudentLoan], visited Apr. 6, 2006. (Hereafter referred to as FY2004 Repayment
Report.) The OPM report includes GAO and GPO, but the results for these two agencies are
not included in this discussion. See the Legislative Branch section in the text for
information on GAO and GPO.

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CRS-22
repayments and the non-cabinet agencies made 578 repayments. The average
payment was $4,856 (cabinet agencies) and $8,338 (non-cabinet agencies).
As shown in Figures 1 and 2, the number of employees receiving student loan
repayments and the cost of the repayments have grown significantly. For FY2001,
OPM reported that one student loan repayment had been made; the Department of
Health and Human Services made a repayment of $6,000 for one employee.78 In
FY2002, 15 agencies made repayments to 521 employees at a total cost of
$2,561,328 and by FY2003, 22 agencies made repayments to 1,802 employees at a
total cost of $7,984,207.79 Table 1 in the Appendix provides data on repayments in
executive and legislative branch agencies. Table 2 lists the number of recipients and
the cost of repayments for each of the executive branch agencies for FY2002,
FY2003, and FY2004.
Figure 1. Student Loan Recipients
3000
2500
2000
1500
1000
500
0
FY2001
FY2002
FY2003
FY2004
78 Letter to Rep. Hastert, Speaker of the House of Representatives, from Kay Coles James,
Director of the Office of Personnel Management, Mar. 29, 2002.
79 U.S. Office of Personnel Management, Federal Student Loan Repayment Program Fiscal
Year 2002 Report to the Congress, June 2003. U.S. Office of Personnel Management,
Federal Student Loan Repayment Program Fiscal Year 2003 Report to the Congress, May
2004. (Hereafter referred to as FY2003 Repayment Report.) Available on the OPM website
at [http://www.opm.gov/oca/pay/StudentLoan], visited Apr. 6, 2006.

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CRS-23
Figure 2. Student Loan Repayments
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
FY2001 FY2002 FY2003 FY2004
The top four agencies in terms of the number of employees receiving
repayments in FY2004 were the Department of State (734 employees, up from 660
in FY2003); the Department of Defense (702 employees, up from 469 in FY2003);
the Securities and Exchange Commission (384 employees, up from 257 in FY2003);
and the Department of Justice (331 employees, up from 160 in FY2003).80
Other agencies with more than 50 employees receiving payments in FY2004
were the Department of Housing and Urban Development (81), the Federal Energy
Regulatory Commission (78), the Department of Health and Human Services (55),
and the Department of Veterans Affairs (53). Seven agencies were repaying student
loans for under 10 employees each.81
80 For FY2002, OPM’s report to Congress showed that the Department of State had 407
employees receiving student loan repayments, the Department of Defense had 6 employees,
the Securities and Exchange Commission did not have any employees, the Department of
Justice had 1 employee, and GAO had 169 employees receiving student loan repayments.
81 The agencies are the Environmental Protection Agency (seven employees), the
Department of Transportation (six), the Defense Nuclear Facilities Safety Board (five), the
National Archives and Records Administration (four), the National Mediation Board (three),
the Committee for Purchase from People Who Are Blind or Severely Disabled (two), and
the Inter-American Foundation (one). (FY2004 Repayment Report.)

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CRS-24
The OPM report also provides information on the occupations of the recipients
of repayments at the agencies with the largest participation in the student loan
repayment program as follows.
! At the Department of State, 547 recipients were members of the
Foreign Service (up from 472 in FY2003) and 187 recipients were
General Schedule civil service employees (down by one).
Employees in 41 different occupations received repayments, but the
greatest number of recipients were in the Foreign Service positions
of Political Affairs Officer (113, up from 97 in FY2003), Public
Diplomacy Officer (90, up from 73 in FY2003), and Economist (89,
up from 85 in FY2003).
! At the Department of Defense, employees in 81 different
occupations received repayments, but most of them were provided
to mechanical engineers (125, up from 98 in FY2003) and nuclear
engineers (73, up from 47 in FY2003).
! At the Securities and Exchange Commission, repayments were used
primarily to recruit and retain attorneys (239, up from 174 in
FY2003). Of the repayments made by the SEC, 75% were at the
annual maximum amount of $10,000.
! At the Department of Justice, the majority of repayments were
provided to attorneys (118, up from 61 in FY2003) and Special
Agents (92, up from 46 in FY2003).82
Effectiveness of Student Loan Repayments. When asked by OPM in
2004 “if using student loan repayment had improved recruitment and retention
efforts,” 21 of the 27 agencies responding to the question reported “a positive
impact” while four agencies “gave neutral responses, mostly stating it was too early
to determine the effectiveness of the program.”83 DOD provided an example to OPM
of results in these areas. During the previous two years, one DOD component had
recruited 335 college graduates in various career fields, thereby enabling the
component to meet its recruitment goals in the scientist, engineer, and information
technology fields. As for retention, a DOD component reported only five separations
out of 173 program participants.
Five agencies reported to OPM that they were using student loan repayments to
recruit Presidential Management Fellows (PMFs) or federal interns. For example,
At the Department of Education, student loan repayment contributed to the
successful recruitment of eight highly skilled PMFs during FY2004 ... the
Department of Energy reported that it was able to hire four high caliber
Technical Interns that it probably would not have been able to hire in the absence
of student loan repayment. After recruiting these individuals using the program,
82 FY2004 Repayment Report, pp. 6-7.
83 Ibid., p. 8.

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CRS-25
the Department ... has had success in retaining these employees by converting
them to permanent positions.84
OPM’s FY2003 report noted: “The vast majority of the responding agencies
stated that the use of the program had assisted them in recruiting and retaining highly
qualified personnel.”85 Comments from agencies using the program for recruitment
included statements that the repayments “allowed them to remain competitive with
the private sector in recruiting top notch employees,” heightened interest during
recruiting at college campuses, and aided workforce diversity. Agencies using the
program for retention said that the repayments reduced attrition among recent new
hires, permitted the filling of a position requiring a particular competency, and
positively affected the morale of employees, among other results.86
The majority of agencies told OPM in FY2004 that they had not established
specific metrics to measure the effectiveness of student loan repayments as a
recruitment and retention tool. Five agencies, however, reported that they had
established metrics, three agencies were working to do so, and two agencies were
using metrics already available. Another agency, HUD, was identifying baseline
metrics for its repayment program on employee satisfaction, participant versus non-
participant retention rates, and service agreement statistics.
Administration. Some agencies administer funding of the repayment
programs centrally, while other agencies delegate authority to component agencies
or organizations, and still others apply a case-by-case approach. OPM’s report
provides examples of each approach as follows.
HUD centrally allocates funds for repayments and offers them to all qualifying
employees. The State Department’s repayment program is both centrally funded and
administered. Repayment decisions are almost entirely based on the recruitment
needs for specific posts or positions. An individual’s eligibility for a repayment is
determined by using six recruitment and retention difficulty factors for Civil Service
employees and 11 factors for Foreign Service employees. The repayment amounts
provided depend on annual funding and the number of employees eligible.
As for delegated authority, the Federal Energy Regulatory Commission allocates
salary funds to each of its program offices based on their full-time employment
totals; each office then determines, by managing-to-budget, the amount of
repayments. At the Department of the Treasury, several program offices have
reserved special funds for incentives, such as student loan repayments, for critical
positions requiring unique skills. DOD applies established criteria to justify and
budget for repayments that meet specific recruitment and retention needs.
On a case-by-case basis, a committee of three senior managers at the Export-
Import Bank reviews each request for student loan repayment against factors such as
84 Ibid., p. 9.
85 FY2003 Repayment Report, p. 6.
86 Ibid.

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CRS-26
difficulty recruiting or retaining highly or uniquely qualified individuals, availability
of funds, the employee’s performance, and the availability of other tools for
recruitment or retention.87
OPM stated that the “vast majority” of agencies reported in FY2003 that
budgeting decisions for student loan repayments were delegated to their component
organizations. Some agencies said that they “manage-to-budget” according to
available funding. Another agency reported that limited funds dictate that
repayments be justified against other types of incentives. OPM stated that it would
continue to assist agencies in establishing budget plans for loan repayments.88
Several agencies not currently using student loan repayments noted that “lack of
funding for the program or general budgetary constraints” was the reason.89
Barriers. According to OPM, the three primary barriers to using student loan
repayments are difficulty in funding the program, the tax liability of the repayment,
and the requirement of a three-year service agreement in return for a repayment.90
The FY2002 OPM report on the repayment program stated that several agencies
recommended that tax liability on repayments be eliminated and that the three-year
service requirement be reduced.91 Legislation would be required to make these
changes. H.R. 1765 and S. 1255, the Generating Opportunity by Forgiving
Educational Debt for Service Act of 2006, which would address the tax liability
issue, are pending in the 109th Congress. (See the discussion under “Tax
Implications,” above.)
Publicity. The agencies reported using various means to publicize their
repayment programs in FY2003. When the benefit is used for recruitment purposes,
“career fairs, website announcements, college placement office notices, college
recruiting trips, pamphlets and brochures, and job announcements” are used to
announce the availability of the benefit. “New employee orientation, agency intranet,
employee newsletters, employee guides, supervisor guides, briefings to managers,
supervisory training courses, email announcements, and telegrams to offices abroad”
are among the methods used to publicize the availability of repayments for retention
purposes.92
The FY2004 report notes that OPM hosted a focus group on student loan
repayments in September 2004, at which agencies with repayment programs
87 The information in the preceding five paragraphs is taken from the FY2004 Repayment
Report at pp. 8-12.
88 FY2003 Repayment Report, p. 7.
89 Ibid.
90 FY2004 Repayment Report, p. 12.
91 FY2002 Repayment Report, p. 7.
92 FY2003 Repayment Report, p. 6.

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CRS-27
exchanged information about the implementation of their programs. Increased use
of student loan repayments in FY2005 is anticipated by OPM.93
OPM’s Administrative Role. In a July 22, 2005, report on the student loan
repayment program, GAO suggested that OPM and the Chief Human Capital Officers
Council could improve the efficiency, administration, and evaluation of the program
by:
Working with the agencies, [to] determine where program streamlining and
consolidation of agencies’ administrative tasks are most feasible and appropriate,
and design ways to implement these program improvements, especially those that
could be implemented governmentwide and the most cost-effective ways to
implement them. Examples of program improvements ... include creating a
central database of student loan lender information and establishing a shared
service center arrangement for student loan repayments.
Continu[ing] and expand[ing] on its efforts to provide agencies assistance and
to help facilitate coordination and sharing of leading practices ... .
Help[ing] agencies determine ways in which they can monitor long-term program
effects on their recruitment and retention needs, such as determining data to
collect and use as indicators of effects. This ... could provide a consistent set of
governmentwide indicators that would allow OPM to assess, and report to
Congress on, the program’s overall results achieved.94
OPM concurred with GAO’s recommendations and addressed the third
suggestion, related to data requirements and indicators, as part of its comments on
a draft of the report. The Enterprise Human Resources Integration (EHRI) data
warehouse, with more than 400 human resources, training, and payroll data elements,
will provide OPM with “a greatly improved ability to track and measure the success”
of the student loan repayment program by facilitating the establishment of data
requirements and the creation of a baseline, according to the agency. The HR Line
of Business initiative, under which multiple agencies are served by a few providers,
may allow for consolidation and automation of the repayment program in a cost-
effective way.95
Managers responsible for administering student loan repayment programs in the
executive branch discussed the GAO recommendations at two forums hosted by
OPM on August 3, 2005, and December 14, 2005. An issue reportedly examined at
the earlier forum focused on the responsibility of employees to have their student
loan papers in order.96 Following the August meeting, OPM encouraged departments
93 FY2004 Repayment Report, pp. 12-13.
94 U.S. Government Accountability Office, Federal Student Loan Repayment Program;
OPM Could Build on Its Efforts to Help Agencies Administer the Program and Measure
Results, GAO-05-762 (Washington: July 2005).
95 Ibid., pp. 38-39.
96 Karen Rutzick, “Agencies Seek to Iron Out Student Loan Repayment Details,”
(continued...)

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CRS-28
and agencies to “develop a budget plan for using recruitment and retention
incentives, including student loan repayments.”97 In a November 22, 2005, letter to
the Chief Human Capital Officers, OPM Director Linda Springer requested that
departments and agencies submit FY2005 data to OPM for the annual report on
student loan repayments and identify ways OPM could assist them with their
programs. She also encouraged them to share information on “best practices, lessons
learned, program effectiveness, metrics used to measure program success,
establishing a business case, problem areas, or other relevant details.”98
Student Loan Repayments in the Legislative Branch
There is considerable interest in student loan repayment in the legislative
branch, but no single policy for, or approach to, repayments currently applies evenly
across the entire legislative branch. The 1990 student loan repayment statute
(P.L.101-510) provided authority to GAO, GPO, and the Library of Congress to
establish student loan repayment programs. The FY2002 Legislative Branch
Appropriations Act (P.L. 107-68, H.R. 2647) provided the Senate and CBO with
authority to establish student loan repayment programs. The FY2002 Department of
Defense Appropriations Act (P.L. 107-117, H.R. 3338) extended similar authority to
the U.S. Capitol Police.
As noted earlier, the House tried unsuccessfully in the 107th Congress to
establishment a repayment program for its employees. A House bill (H.R. 2555),
referred to two House committees, proposed that a student loan repayment program
be authorized for the entire legislative branch. No further action was taken on this
bill. Early in the 108th Congress, however, Congress passed legislation authorizing
a program for House employees under P.L. 108-7, the Consolidated Appropriations
Resolution, 2003.
Conferees to the FY2002 Legislative Branch Appropriations bill99 directed the
Legislative Branch Financial Managers Council (LBFMC)100 to “develop, in
consultation with all Legislative Branch entities the controls and criteria that will
96 (...continued)
Government Executive, Aug. 3, 2005.
97 U.S. Office of Personnel Management, OPM Encourages Agencies to Use Federal
Student Loan Repayment Program as Hiring Incentive and Retention Tool, Aug. 8, 2005.
98 U.S. Office of Personnel Management, Memorandum for Chief Human Capital Officers,
From Linda M. Springer, Director, Fiscal Year 2005 Student Loan Repayment Report, Nov.
22, 2005.
99 H.R. 2647, H.Rept. 107-259.
100 Established by charter in March 1996, the Council’s mission is to promote more effective
financial management of the legislative branch, and works to ensure that efficient and cost-
effective financial systems are available to support decision making. The Council comprises
the financial managers of legislative branch entities (including the Architect of the Capitol,
the U.S. Capitol Police, CBO, GAO, the House of Representatives, the Library of Congress,
the Office of Compliance, and the Senate).

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CRS-29
govern [student loan repayment] program implementation.” The LBFMC was
directed to perform a comparative analysis between entity implementing regulations
and governing controls and criteria. The LBFMC consulted with each legislative
branch entity, completed a comparative analysis, and developed governing controls
and criteria recommendations for the repayment programs in the legislative branch.
The LBFMC reported the results of the analysis and recommendations to the House
and Senate appropriations subcommittees on the legislative branch on February 27,
2002. These recommendations included guidelines for the purpose of the repayments;
designation of authorizing officials; service agreement criteria and duration; amount
and size of repayments; eligibility for repayments; eligible loans; repayment
exceptions and waivers; records and reports; and review of the program. The
recommendations would provide for consistent application of the program, yet at the
same time permit some flexibility. For instance, the duration of the service
agreement would necessarily be different for the House and the Senate due to the
congressional election cycles. In general, the legislative branch agencies have
modeled their programs on the recommended guidelines.
Seeking to be competitive with other employers, Congress and several
legislative branch entities have established or continue to consider the loan
repayment programs as a possible tool to recruit highly qualified and talented
individuals, as part of benefits packages.101
Service agreements in the legislative branch agencies vary from one to three
years. For the House and Senate, the requirement for a shorter service agreement
than the executive branch (one-year agreement) is attributed to the impact that
election cycles and possible changes in Congress’ majority/minority composition
may have on the individual Members’ offices, committees, and administrative
support offices.
Table 1 includes data on repayment programs in the legislative branch.
Need for Congressional Program. Some Members in both the Senate and
the House, concerned about high turnover and “brain drain” in their personal and
committee offices, have expressed varying degrees of interest in and support for
student loan repayment programs. Congressional staff, on average, tend to be
younger than other federal employees, and many are recent college graduates carrying
significant student loan debt. According to the 2001 Senate Staff Employment Study,
conducted by the Congressional Management Foundation (CMF),102 in the offices
that responded, about 86% of Senate staff held at least a bachelor’s degree and about
101 Legislative branch support agencies also have offered the flexibility (or are seeking
authority to offer greater flexibility) to establish selected family-friendly policies such as
flexitime, child care, and telework, as well as the promise of professional training and
development, upward mobility, and recruitment bonuses.
102 Established in 1977 by former congressional staff to help improve congressional office
management practices, the Congressional Management Foundation is a nonprofit,
nonpartisan organization. The studies of the Senate and House apply only to congressional
staff in personal offices, not to leadership or committee staff.

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20% had advanced degrees.103 The 2004 House Staff Employment Study found that,
in the offices that responded, 70% of House staff held a minimum of a bachelor’s
degree and 17% held advanced degrees.104
Proponents of the repayment program want the same tools as other federal
employers to attract and retain high caliber individuals. Others do not see the
necessity for a student loan forgiveness program as a recruitment incentive, however,
because they find no lack of highly qualified applicants for congressional jobs.
Working for a congressional office or committee is viewed as highly desirable, and
these staff positions have a certain cachet that, arguably, makes them at least as
desirable as other federal jobs.105
Congress watchers observe that congressional staff tenure is relatively short
because congressional salaries cannot compete with those in the private sector, the
hours are long, and the workload is heavy. Even under such conditions, thousands
of highly qualified individuals flock to Capitol Hill for the opportunity to work for
a Member of Congress or congressional committee, to have input into public policy,
and to play a role in shaping the nation’s laws. Some observers maintain that a high
percentage of staff never intend to stay long, and view the Hill experience as a
launching pad from which to reach other career goals.106
On the other hand, in the view of many, while recruitment of congressional staff
is not a problem, retention is. According to the CMF 2001 Senate study, 50% of
Senate staff had less than one year of experience in their current positions, including
52% of communication directors, 44% of legislative assistants, 73% of legislative
correspondents, 50% of legislative directors, and 34% of chiefs of staff.107 Results
of the CMF 2004 House study indicated that over 60% of House staff have two or
fewer years experience in their current positions, including 39% of chiefs of staff,
64% of legislative directors, and 66% of press secretaries.108 Turnover is higher for
entry-level positions.
103 Sheree L. Beverly, 2001 Senate Staff Employment Study (Washington: Congressional
Management Foundation, 2002). This study was based on 62 Senate offices responding to
the CMF questionnaire. (Hereafter referred to as 2001 Senate Staff Employment Study.)
This is the most recent report available.
104 CMF produced the study, 2004 House Staff Employment Study, for the Chief
Administrative Officer of the House of Representatives. Questionnaires were sent to 440
House personal offices, and the study was based on the responses of 212 House offices.
(Hereafter referred to as 2004 House Staff Employment Study.) See p. 85 for education
statistics.
105 Congressional Quarterly, Inc., Guide to Congress, 5th ed., vol. 1 (Washington: CQ Press),
p. 581.
106 Roger H. Davidson and Walter J. Oleszek, Congress and Its Members, 9th ed.
(Washington: CQ Press), p. 219.
107 2001 Senate Staff Employment Study.
108 2004 House Staff Employment Study, p. 82.

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High staff turnover not only affects an individual Member’s office or a
committee on which the Member serves, but also is a qualitative and quantitative loss
to Congress as an institution. The potential disruption to the smooth operations of
a congressional office or committee, and the time needed to recruit, interview, hire,
and train new staff is a cost that has not been precisely calculated. This concern has
led the Senate and the House to establish student loan repayment programs, which
are detailed below.
Senate. Senate employing offices have the authority to establish a student loan
repayment program under the FY2002 Legislative Branch Appropriations Act (P.L.
107-68) for recruitment and retention purposes. The act authorizes the head of a
Senate employing office, at his or her discretion, to establish a program under which
the office may agree to repay student loan debt by direct payments on behalf of the
Senate employee.
Under P.L. 107-68, the authorized appropriation for the program for the
personal office of a Senator is to equal 2% of the total sum appropriated for
administrative and clerical salaries. The amount for all other employing offices
(committee, leadership, and administrative) is 2% of the total sums appropriated for
the fiscal year for the salaries of those offices. For Senate committees, the funds are
to be apportioned between the majority and minority staff. The Secretary of the
Senate established a central account specifically for the program from which
repayments are made available, and within that account there are sub-accounts for
each employing office from which the student loan repayments are to be made. The
authorization applies to FY2002 and each fiscal year thereafter, and is subject to
annual appropriations.
The Senate began implementation of student loan repayments in mid-March
2002. A minimum one-year service agreement is required, with the possibility of
additional one-year agreements.109 The monthly maximum is $500 ($6,000 per year)
over a 12-month period with a total limit of $40,000. There are no plans at this time
to increase the monthly or aggregate amounts permitted for repayments to the levels
authorized for executive branch employees ($10,000 per year, $60,000 aggregate).
The program has components similar to those provided for the executive branch,
including the requirement that an employee must repay the benefit if the employee
does not fulfill the terms of the service agreement. The benefit is not an entitlement
or a guarantee of continued employment. The repayment may be made on current
and outstanding specified loans only, and the amounts are in addition to basic pay
and subject to taxes. The types of eligible loans are the same as those approved for
the executive branch.
The Secretary of the Senate has provided offices with guidance on the steps to
implement the student loan program, and has prepared a standard service agreement
for the use of employing offices. Written service agreements must be signed and
submitted to the Senate Disbursing Office, which will make the repayments directly
to the lender.
109 The shorter service agreement requirement takes into consideration the unique realities
of the Senate election cycles, and any potential changes in the majority in the Senate.

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CRS-32
At the April 13, 2005, Senate Appropriations Subcommittee on Legislative
Branch hearing on the FY2006 appropriations bill, the Secretary of the Senate
reported that a survey on the student loan program was conducted about a year ago.
Sixty offices out of 140 Senate offices (personal, committee, leadership, and
administrative) responded to the survey, and the responses indicated strong support
for the program. Although there is no statistical evidence that the benefit has been
an effective recruitment and retention tool, the secretary stated that there is anecdotal
evidence that Senate offices view it as an effective tool. Each of the Senate offices
participating in the program varies in the benefit amounts, up to the program
maximum of $500 a month, and each sets its own program within the parameters of
the law. Currently, some 126 offices are providing the student loan repayment to
nearly 900 Senate employees at a cost of about $3 million (an average of
approximately $3,333 a year per employee). The administration of the program is
quite complex; and the secretary indicated that at times as there could be as many as
100 lenders to pay, with many lending institutions being sold and re-managed, and
stated that efforts were underway to streamline the process in paying lenders. At the
hearing, Senator Durbin expressed the hope that information be gathered and
safeguards be put in place to prevent abuses and waste and to enhance the initial
goals of the program (recruitment and retention). The Secretary of the Senate stated
that she looked forward to working on this with the Senator.110
House of Representatives. Under the Consolidated Appropriations
Resolution, 2003 (P.L. 108-7), the House was granted authority to establish a student
loan repayment program for its employees. The Committee on House Administration
directed the Chief Administrative Officer (CAO) to design and administer a program
modeled after the Senate’s and, in general, executive branch repayment programs.
Like the Senate program, the House program requires a one-year service agreement,
with the possibility of additional one-year agreements. The maximum monthly
payment is $500 ($6,000 annual) with a total limit of $40,000 per employee. There
are no plans at this time to increase the annual and aggregate amounts permitted for
repayments to the levels authorized for executive branch employees.
A central account, administered by the CAO, funds the House repayment
program; thus, costs do not come from the Member’s Representational Allowance
(MRA), or committee or office budgets. The personal office of a Member, Delegate,
or Resident Commissioner is to be allocated an amount equal to 2% of the average
MRA for all Member offices for the year. For other House employing offices, an
amount equal to 2% of the salaries and expenses for the year is to be made available.
The House Offices of Finance and Human Resources have established a reporting
mechanism by which Member personal offices, House officers, and other House
offices are informed of monthly student loan repayments made to the participating
offices.
The CAO has prepared a standard written agreement for the offices to use. If
a House employee violates or leaves the office before fulfilling the terms of the
service agreement, the employee must pay back the benefit. The benefit is not an
110 Remarks during Senate Appropriations Subcommittee on Legislative Branch
Appropriations Hearings on FY2006, April 13, 2005.

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CRS-33
entitlement or a guarantee of continued employment. The decision for granting the
benefit is at the sole discretion of each employing office, subject to law and
regulations. Repayments may be granted only to full-time employees. Interns,
volunteers, unpaid staff, and Members are not eligible for the program. The
repayment may be made to current and outstanding specified loans only, it must be
paid directly to the lender, and payments are counted as taxable income.
At the beginning of March 2003, the Committee on House Administration held
briefings on the repayment program for leadership, committee, and personal offices.
Details about the repayment benefit are available on the committee’s website, at
[http://www.house.gov/cha/studentloan.htm].
Student loan repayments began in the House in May 2003. The House
Committees on Appropriations and House Administration receive annual reports on
student loan repayments made on behalf of House employees.
In FY2004, a total of 2,102 House employees in 465 Member offices, leadership
offices, committees, and administrative support offices received the repayment
benefit. The repayments ranged from $300 to $500 a month per employee, and the
House spent a total of $7,075,000 (an average of $3,366 a year per employee) for the
program during the fiscal year. In FY2005, the total monthly limit of repayment
benefits for each individual Member’s office is $2,147. The repayment program is
generally viewed as useful for both recruitment and retention.111
According to the CMF 2004 House Staff Employment Study, a majority (63%)
believed that the repayment program helped the offices with recruitment and
retention.112 About 11% of the offices said they did not believe it assisted with these
goals and nearly 26% were “not sure”of the impact.113
Other Legislative Branch Entities. Congress has indicated concern about
impending retirements within the federal workforce114 and in the legislative branch.
As with executive branch agencies, several legislative branch entities have
implemented programs or are currently considering or formulating possible student
loan repayment programs for their respective employees.
111 Based on telephone conversation with the Office of the Chief Administrative Officer on
May 12, 2005 and June 7, 2005.
112 440 offices were surveyed and 212 offices responded.
113 CMF 2004 House Staff Employment Study, p. 59-61.
114 U.S. Congress, Senate Committee on Governmental Affairs, Report of Senator Fred
Thompson on Management Challenges Facing the New Administration, 106th Cong., 2nd
sess., S.Prt. 106-62 (Washington: GPO, 2000). U.S. Congress, Senate Committee on
Governmental Affairs, Subcommittee on Oversight of Government Management,
Restructuring, and the District of Columbia, Report to the President: The Crisis in Human
Capital, 106th Cong., 2nd sess., subcommittee rept. prepared by Sen. George V. Voinovich,
Chairman (unpublished: 2000).

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CRS-34
Legislative branch entities are planning for substantial retirements in their
respective agencies over the next several years. For example, by the end of FY2006,
30% of all employees at CBO will be eligible for retirement, including 22% of
analysts and 46% of managers.115 The Library of Congress estimates that 32% of its
employees, including 27% of information technology specialists, will be eligible for
retirement by that date.116 Thirty-eight percent of Congressional Research Service
(CRS) employees will be eligible to retire by the end of FY2006, including 40% of
the research and analytical staff and 79% of senior management.117 At GAO, more
than 28% of the analysts and 61% of senior executives will be eligible for retirement
by the end of FY2009.118
These agencies have devised strategic plans to replace seasoned employees who
retire with highly qualified and skilled personnel. Some agencies view student loan
repayment programs as an attractive additional component to the benefits package
available to potential candidates who might have heavy student debt.
The authority of the legislative entities to establish student loan repayment
programs and the status of the programs are discussed below.
U.S. Capitol Police. The FY2002 Department of Defense Appropriations Act
(P.L. 107-117, H.R. 3338) authorized the U.S. Capitol Police to establish a student
loan repayment program similar to those established under P.L. 101-510.
Subsequently, the Consolidated Appropriations Resolution, 2003 (P.L. 108-7, H.R.
5121), authorized an educational assistance program for Capitol Police employees.
Under this law, the Chief of the Capitol Police may recruit and retain qualified
personnel using incentives such as student loan repayment, educational and tuition
assistance, training, and career development programs. Currently, repayments of up
to $10,000 annually and up to $40,000 in the aggregate per employee are permissible.
These amounts include monies granted to an employee for student loan repayment,
and tuition reimbursement and assistance expected to be implemented soon. Service
agreements are for two years.
In December 2003, the Capitol Police issued regulations for the repayment
program and began making loan repayments in May 2004 in support of efforts to
recruit and retain highly qualified employees, mainly law enforcement professionals
and some human resources and information technology specialists. For FY2004, 107
Capitol Police employees were given the repayment benefit at a total cost of
$944,000 (an average of $8,822 per employee). In FY2005, the Capitol Police
estimates that $1.1 million will be spent on repayments, and the FY2006 budget
request for the repayment is $1,383,000.
115 Information provided to CRS by CBO staff by electronic mail on June 8, 2004.
116 Information provided to CRS by Library of Congress staff by electronic mail on June 9,
2004. The data do not include the Congressional Research Service.
117 Information provided by CRS staff by electronic mail on June 3, 2004.
118 Information provided to CRS by GAO staff by electronic mail on June 3, 2004.

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CRS-35
No studies or surveys on the program’s effectiveness in recruitment or retention
are currently available, partly because it is still new. The Capitol Police have stated
however, that there is anecdotal evidence the program is attracting law enforcement
candidates and reducing attrition. In the aftermath of the September 11, 2001,
terrorist attacks and concerns about bio-terrorism, the Capitol Police lost many
officers who took employment in other federal agencies or in the private sector. The
agency has found the program to be useful in the intense competition for law
enforcement professionals. The Capitol Police also noted that many more of their
sworn officers who have been recruited hold degrees.119
Congressional Budget Office (CBO). Authority for CBO to establish a
student loan repayment program was provided for under the FY2002 Legislative
Branch Appropriations Act (P.L. 107-68, H.R. 2647). Currently, approved
employees are eligible for repayments of up to $6,000 (annual) and up to $40,000
(aggregate). In February 2003, CBO established guidelines for the program and
began to offer the benefit as a recruiting tool for analysts specializing in the areas of
health, finance, and tax. For FY2003, CBO received $30,000 to fund the program.
For FY2004, CBO requested $25,000, received a budget of $15,000, and spent
$14,683 for three employees (an average of $4,894 a year per employee). For
FY2005, CBO requested and received $25,000. To date, CBO has spent $6,000 and
provided benefits to one employee. CBO again requested $25,000 for FY2006.120
Government Accountability Office (GAO). Authority for a student loan
repayment program is provided for GAO under P.L. 101-510. GAO issued the final
order to implement the program on June 7, 2002. Each fiscal year, GAO allocates
funds to be used for the program based on GAO’s Human Capital Office estimates
of program participation in a given fiscal year.
For FY2002, GAO requested $410,000, and spent $611,112 to provide 169
employees with the repayment benefit. For FY2003, GAO requested $810,000, and
spent $950,497 to give the benefit to 231 employees. Congress appropriated the
requested amount in both these fiscal years, and GAO supplemented the additional
amounts from its base budget.
For FY2004, GAO requested $1,154,000, and spent $1,146,295 in repayments
to 237 employees (an average of $4,837 per employee). For FY2005, GAO requested
the same amount as for FY2004, and expects to provide repayments to approximately
the same number of employees. GAO estimates up to 255 employees may participate
in the repayment program for this fiscal year. Depending on GAO’s appropriated
budget for FY2006, the agency plans to spend between $1,025,000 and $1,497,500
for the repayment program.121
119 Based on a telephone conversation with staff of the U.S. Capitol Police, Office of
Financial Management, budget office on April 27, 2005 and June 8, 2005.
120 Based on email from staff of the Congressional Budget Office on April 28, 2005.
121 Based on email from GAO on April 28, 2005 and telephone conversation on May 17,
2005. The data presented are the most current and may differ from the OPM statistics
because of differences in the reporting date.

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CRS-36
In the spring of 2004, GAO conducted an evaluation of the FY2003 repayment
program in a web survey. The question concerning the efficacy of the program read
as follows: “The purpose of the student loan repayment program is to repay all or
part of a student loan to facilitate the recruitment or retention of highly qualified
employees. Overall, how much influence does the student loan repayment program
have on your decision to stay at GAO?” A total of 286 respondents answered as
follows:
Great Influence
18.9%
Moderate Influence
25.9%
Some Influence
17.1%
Little or no influence 30.1%122
Government Printing Office (GPO). Authority to establish a student loan
repayment program is granted to GPO under P.L. 101-510. GPO implemented a
repayment program in April 2002, and since that time, 52 employees have received
repayments. The program is funded from GPO’s revolving fund. In FY2004, GPO
provided 28 employees with the benefit at a cost of $253,638 (an average of $9,059
a year per employee). The estimate for FY2005 is to provide 25 employees with the
repayment benefit at a cost of about $175,000.123
Library of Congress (LOC) (including the Congressional Research
Service (CRS)). Authority for the Library of Congress to establish a student loan
repayment program is provided for under P.L. 101-510. The Library issued final
regulations on the student loan repayment program on October 7, 2002, and revised
those regulations on May 5, 2004.124 CRS requested, but did not receive, funding for
a repayment program in FY2003 and FY2004. In FY2005, Congress did not approve
a proposal for CRS to establish a pilot repayment program.
Library offices (not including CRS) are absorbing costs for the repayment
program within their base budgets because the Library did not receive funding for the
program in both FY2004 and FY2005. The Library did not request funds for
FY2006. In FY2003, the Library provided the repayment benefit to two employees
and in FY2004, to eight employees at a total cost of $46,000 (an average of $5,750
a year per employee). In FY2005, the Library anticipates providing benefits to seven
employees at a total cost of approximately $41,000.125
122 Any GAO employee could answer the survey. Based on an electronic mail transmission
from GAO on June 6, 2005.
123 Based on emails from the GPO budget office on May 12 and May 13, 2005. The data
presented are the most current and may differ from the OPM statistics because of differences
in the reporting date.
124 U.S. Library of Congress, Regulations, Repayment of Student Loans. LCR 2017-6. May
5, 2004.
125 Based on information provided by the Budget Office of the Library of Congress on April
26, 2005.

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CRS-37
The Architect of the Capitol126 and the Office of Compliance127 each have
examined the repayment program as a possible recruitment and retention tool.
Although each agency requested authority to establish a student loan repayment
program in the past, Congress did not grant the requests.
Student Loan Repayments in the Judicial Branch
The Administrative Office of the U.S. Courts administers personnel policies for
the judicial branch. According to the Office, consistent with Judicial Conference of
the United States policy, statutory language was included in courts improvement
legislation in the 108th Congress (H.R. 1302 and S. 2396)128 that would have
authorized judicial law clerks working full-time to defer payment of principal and
interest on federally insured student loans for up to three years (typically the term law
clerks serve). A similar legislative proposal was submitted to the 109th Congress in
March 2005, but has not been introduced. The authority is sought to enable federal
judges to be more competitive with law firms in hiring new attorneys as clerks.
Unlike executive branch agencies, the Judiciary has not sought statutory
authorization to use its appropriated funds to repay student loans as a recruitment or
retention incentive for prospective or current employees.129
Issues for Consideration
Agencies may consider several issues as they implement student loan repayment
programs or determine whether the establishment of such programs is desirable or
feasible. Among these issues are how the program will be funded, the length of the
service agreement between the agency and the employee, the criteria for eligibility,
and the kinds of program data to be collected. Each is discussed below.
126 The AOC requested, but was not granted, authority to establish a repayment program in
its FY2003 and FY2004 budget proposals. No request was made in FY2005 or FY2006.
Based on a telephone conversation with Architect of the Capitol staff on April 27, 2005.
127 The Office of Compliance requested, but was not granted, authority for a repayment
program in FY2004 or in FY2005, and did not request authority in FY2006. Based on a
telephone conversation with Office of Compliance staff on April 29, 2005.
128 H.R. 1302, Federal Courts Improvement Act of 2003, was introduced by Representative
Lamar Smith on March 18, 2003, and was referred to the House Committee on the Judiciary
the same day. The Subcommittee on Courts, the Internet, and Intellectual Property marked-
up the bill and forwarded it to the full committee on March 20, 2003. S. 2396, Federal
Courts Improvement Act of 2004, was introduced by Senator Orrin Hatch on May 10, 2004,
and was referred to the Senate Committee on the Judiciary the same day. Neither bill saw
further action.
129 Information provided by electronic mail to CRS by Administrative Office of the U.S.
Courts staff on May 3, 2005.

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CRS-38
Funding
While P.L. 101-510, as amended, provides authority to executive and certain
legislative branch support agencies to establish student loan repayment programs, the
law does not provide funding to implement those programs. The legislative history
of the 1990 law is clear that the authority is to be used “sparingly” and that no
additional appropriations were anticipated. Despite this intention, a specific
appropriation for repayments is sometimes requested and received by agencies. The
Department of State, for example, requested an appropriation of $7 million for
FY2002 and received an appropriation of $2 million for such repayments.130 The
FY2002 Legislative Branch Appropriations Act (P.L. 107-68) authorized
appropriations for a student loan repayment program for Senate employing offices
in FY2002 and each succeeding year. Not all agencies receive specific funds for the
program, however. Absent this, agencies must prioritize among all available
recruitment and retention incentives, including student loan repayments, and then
allocate funds accordingly from existing pay and benefits programs. A consideration
might be how to use the funding available for incentives in a manner that would
benefit the greatest number of employees.131
The U.S. Commission on National Security/21st Century, known as the Hart-
Rudman Commission, recommended that additional funds “to maximize agencies’
options in recruiting and retaining high-quality personnel” be provided. Identifying
student loan repayments as one of many incentive programs designed to recruit and
retain employees, the commission stated that the lack of agency use of the programs
resulted from a “lack of funds.” The commission noted that, “Because all incentive
programs are drawn from the same pool of money as that for salaries, administrators
must trade off incentives for some employees against the ability to hire additional
personnel.” The commission also recommended loan forgiveness for those
individuals in science, mathematics, and engineering entering civilian government
or military service.132
Required Service Agreement
Currently, a service agreement of at least three years is required in the executive
branch. In the legislative branch, the service agreement varies from one to three
130 Telephone conversation with Department of State staff on Feb. 6, 2002. P.L. 107-77,
Nov. 28, 2001, 115 Stat. 783; U.S. Congress, Conference Committees, Making
Appropriations for the Departments of Commerce, Justice, and State, the Judiciary, and
Related Agencies for the Fiscal Year Ending September 30, 2002, and for Other Purposes,
conference report to accompany H.R. 2500, 107th Cong., 1st sess., H.Rept. 107-278
(Washington: GPO, 2001), p. 145.
131 The National Treasury Employees Union (NTEU) “strongly supports” the student loan
repayment program, but is concerned that “no new funding was authorized.” NTEU is
“hopeful Congress will provide additional funding to help agencies pay for this important
benefit, and that Congress will require agencies to utilize this incentive authority.” NTEU
statement received by CRS by facsimile on July 18, 2001.
132 U.S. Commission on National Security/21st Century, Road Map for National Security:
Imperative for Change; The Phase III Report (Washington: Feb. 15, 2001), pp. 99 and 125.

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CRS-39
years. Among the considerations that might enter into an agency’s discussion of the
appropriate length of a service agreement are these: Whether the repayments are
used to recruit or retain employees, the time and resources that would be expended
to hire and train employees to replace those who are leaving, the time that it takes for
newly hired employees to develop expertise in their positions, and whether a service
agreement longer than the minimum would diminish the interest of employees in
working in agencies with extended requirements. Additionally, a Member of
Congress’s tenure in office may affect the decision on the length of the service period
required in House and Senate offices.
Eligibility Criteria
When publishing the proposed regulations, OPM identified five factors to be
considered in determining whether the loan repayments should be authorized and the
amount of such payments. The factors were:
! the success of recent efforts to recruit high quality candidates;
! labor market factors affecting recruitment;
! special qualifications or education needed;
! the cost of training current versus new employees; and
! the practicality of using other recruitment and retention incentives.
OPM’s final regulations noted that because “Several agencies complained that
the ‘factors to be considered’ portion of the [Criteria for Payment] section were
overly restrictive and burdensome,” these were deleted from the final rules.133
Requirements for written determinations of the need for the repayments based on
recruitment and retention (see the “Criteria for Repayments” section above) were
retained in the final regulations.
In final regulations implementing the amendments to the law, OPM noted a
suggestion that the term “highly qualified personnel” be defined in the regulations.
OPM stated that it did not adopt this suggestion because “A standard definition of
‘highly qualified personnel’ may limit agencies in their use of this authority, as there
are many ways in which [individuals] may be deemed highly qualified in relation to
the duties they perform or the skills they possess.”134 As for making the
determination that an employee would likely leave government service without the
repayment benefit, OPM stated that the regulations give agencies “wide latitude” and
do not require “proof from a private sector employer” to use repayment as a retention
incentive.135
The flexibility inherent in the OPM criteria for student loan repayments may be
considered by agencies in deciding whether repayments or other recruitment and
retention incentives would best meet their needs. The desire to fairly administer a
repayment program and not adversely affect employee morale may prompt
133 66 FR 2790.
134 66 FR 39405.
135 Ibid.

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CRS-40
consideration of these issues: whether just new recruits or both new recruits and
current employees would be eligible for student loan repayments, the capability of
new recruits to repay their student loans depending on the pay grade at which they
are hired, and the fact that some current employees may have already recently paid
off their student loans.136
Records and Reports
The student loan repayment law requires agencies to report annually to OPM on
the number and job classifications of employees receiving student loan repayments
and the cost of providing the repayments. The regulations state that cost is defined
as the total amount of student loan repayments and not the costs of administering the
program. Under the regulations implementing the law, records on student loan
repayments must be maintained by the agencies for three years, or until after OPM
formally evaluates the program, whichever comes first. OPM must report annually
to Congress on agencies’ use of student loan repayments.137
In Congress, the Senate Disbursing Office, under the Office of the Secretary of
the Senate, reports annually to the Committee on Appropriations and to the
Committee on Rules and Administration on the loan repayments made to Senate
employees. The Office of the Chief Administrative Officer reports annually to the
Committee on Appropriations and the Committee on House Administration on
repayments made to House employees.
Agencies might examine whether student loan repayment records should be
maintained beyond the period prescribed by regulation. A longer period of record
keeping might be useful if an employee leaves to work at another federal agency and,
in turn, also receives loan repayment from that agency. The collected data could be
useful in evaluating the cost, desirability, feasibility, and effectiveness of the
programs. Pilot programs, instituted to test the effectiveness of repayments in
meeting workforce management goals, could serve as models for other agencies as
yet undecided about establishing repayment programs.
136 The American Federation of Government Employees (AFGE) “very much favors” the
benefit for both recruits and incumbent employees and believes that it might help current
employees to advance themselves and remain in government service. The National
Federation of Federal Employees (NFFE) views the program as a good recruitment and
retention tool. NTEU “believe[s] that agencies should give priority consideration to using
this incentive to retain those individuals already in the government workforce before using
it as a recruitment incentive.” Telephone responses from AFGE (July 18, 2001) and NFFE
(July 16, 2001) and NTEU statement received by CRS by facsimile on July 18, 2001.
137 Although the law does not specify the committees, the Senate Committee on
Governmental Affairs and the House Committee on Government Reform, in general, have
exercised jurisdiction over federal employee issues. Other committees, such as
Appropriations, also may have an interest in seeing the reports.

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CRS-41
Oversight of Repayment Programs
In order to enhance the oversight of student loan repayment programs, OPM
may want to expand the information provided in its annual report to Congress.
Additional data that could be reported might include the costs of administering such
programs, the number of individuals who leave government service after receiving
repayments and completing the minimum required service period; the number of
individuals who have been granted waivers from repaying the benefit if they do not
fulfill the service agreement (an agency head may waive the repayment for reasons
of equity or public interest); and the attrition rates of employees both receiving and
not receiving repayments. Other information that could be included in the OPM
report might be the composition as to sex and race of recipients, to determine
whether the program is being administered in an equitable manner, and details on the
written determination document that recipients sign to attest that they would leave
federal service in the absence of the student loan repayment.
Congress, OPM, and the agencies themselves also may wish to examine whether
the intent of Congress that repayments be used sparingly and with great discretion is
being fulfilled. Individual executive agency reports on student loan repayments are
not available publicly. Perhaps agencies would consider posting these reports on their
Internet websites. Oversight of the repayment programs may be strengthened by
evaluations conducted by agency Inspectors General or the National Academy of
Public Administration.
Currently, several agencies have anecdotal evidence on the effectiveness of their
student loan repayment programs. Some agencies are into their fourth year of using
the incentive while others have one to three years of experience with the program.
In order to further assess the impact of repayments, agencies may institute systematic
entrance and exit interviews that query their employees on the importance of
receiving student loan repayments compared to other available recruitment and
retention incentives. In addition, the recruitment and retention results for new hires
who received and did not receive the repayments could be compared to determine the
effectiveness of the repayments.

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CRS-42
Appendix
Table 1. Student Loan Repayment — Executive and Legislative Branch Agencies
In FY2004
Agencies
Authority
Payment
Service
Number of
Average
Total Cost of
Types of Positions
Amount
Agreement
Recipients
Repayment
Repayments
(Limit)
Amount
Executive branch —
P.L.
$10,000 per
at least 3 years
2,102
$4,856
$10,208,826
Accountant, Analyst,
Cabinet Agencies
101-510
year;
Attorney, Economist,
(1990); P.L.
$60,000 total
Engineer, Scientist
106-398
(2000); P.L.
108-123
(2003); P.L.
108-136
(2003)
Executive branch —
Same as
$10,000 per
at least 3 years
578
$8,338
$4,819,606
(in addition to
Non-Cabinet
above
year;
positions listed
Agencies
$60,000 total
above) Archivist,
Contracting,
Information
Technology, Loan
Specialist, Public
Affairs, Social
Science
House of
P.L. 108-7
$500 per
1 year
2,102
$3,366
$7,075,000
Legislative,
Representatives
(2003)
month,
Administrative, and
$40,000
Technical Positions

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CRS-43
In FY2004
Agencies
Authority
Payment
Service
Number of
Average
Total Cost of
Types of Positions
Amount
Agreement
Recipients
Repayment
Repayments
(Limit)
Amount
Senate
P.L. 107-68
$500 per
1 year
900 (approx.)
$3,333 (approx.)
$3,000,000
Legislative,
(2001)
month,
(approx.)
Administrative, and
$40,000
Technical Positions
Congressional Budget
P.L. 107-68
$6,000 per
3 years
3
$4,894
$14,683
Financial Analyst,
Office
(2001)
year,
Health Analyst
$40,000 total
Government
Same as
$10,000 per
at least 3 years
237
$4,837
$1,146,295
Analyst, Attorney,
Accountability Office
executive
year;
Auditor, Economist,
branch
$60,000 total
Social Scientist
Government Printing
Same as
$10,000 per
at least 3 years
28
$9,059
$253,638
Specialists in
Office
executive
year;
Printing, Information
branch
$60,000 total
Technology, Program
Planning, Human
Capital, and
Contracting;
Inspector General

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CRS-44
In FY2004
Agencies
Authority
Payment
Service
Number of
Average
Total Cost of
Types of Positions
Amount
Agreement
Recipients
Repayment
Repayments
(Limit)
Amount
Library of Congress
Same as
$10,000 per
at least 3 years
8
$5,750
$46,000
Information
executive
year;
Technology
branch
$60,000 total
Specialist,
Supervisory
Librarian,
Supervisory Printing
Specialist, Special
Assistant,
Confidential
Assistant, Labor
Relations Specialist
U.S. Capitol Police
P.L. 107-117
$10,000 per
2 years
107
$8,822
$944,000
Predominantly
(2002); P.L.
year;
Officers, Information
108-7 (2003)
$40,000 total
Technology and
Human Resource
Professionals
Total
6,065 (approx.)
$27,508,048
(approx.)
Sources: The executive branch information on the number of recipients, total cost of repayments, and positions is derived from U.S. Office of Personnel Management, Federal Student
Loan Repayment Program Fiscal Year 2004 Report to the Congress, April 2005. Average repayment amounts were calculated by CRS. Examples of positions held by recipients of
student loan repayments are included. For a complete list of positions, see the OPM report. The legislative branch information was provided to CRS by the budget and human resources
offices of the individual entities in June 2005. Senate data are from the April 13, 2005, Senate Appropriations Subcommittee on Legislative branch hearings on the FY2006 (remarks
of the Secretary of the Senate). Average repayment amounts were calculated by computer.

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CRS-45
Table 2. Student Loan Repayments by Agency, with Number of Recipients and Cost of Repayments,
FY2002, FY2003, and FY2004
Fiscal Year 2002
Fiscal Year 2003
Fiscal Year 2004
Agency
Number of
Cost of Repayments
Number of
Cost of Repayments
Number of
Cost of Repayments
Recipients
Recipients
Recipients
Department of Agriculture
2
$8,524
4
$28,000
10
$54,000
Department of Defense
6
$11,839
469
$1,309,247
702
$3,079,228
Department of Education
—
—
2
$12,000
11
$44,000
Department of Energy
17
$50,592
27
$149,855
36
$86,653
Department of Health and
8
$35,000
38
$130,323
55
$195,746
Human Services
Department of Housing and
—
—
—
—
81
$323,353
Urban Development
Department of the Interior
13
$74,625
20
$113,015
41
$246,216
Department of Justice
1
$4,000
160
$688,149
331
$1,919,412
Department of Labor
—
—
11
$59,000
24
$118,084
Department of State
407
$2,000,000
660
$3,234,602
734
$3,610,773
Department of Transportation
—
—
—
—
6
$52,928
Department of the Treasury
9
$14,829
10
$64,150
18
$155,364
Department of Veterans Affairs
—
—
46
$211,329
53
$323,069
Chemical Safety and Hazard
—
—
1
$2,000
—
—
Investigation Board

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CRS-46
Fiscal Year 2002
Fiscal Year 2003
Fiscal Year 2004
Agency
Number of
Cost of Repayments
Number of
Cost of Repayments
Number of
Cost of Repayments
Recipients
Recipients
Recipients
Committee for Purchase from
3
$18,000
2
$12,000
2
$20,000
People Who Are Blind or
Severely Disabled
Defense Nuclear Facilities
1
$6,000
4
$21,450
5
$41,689
Safety Board
Environmental Protection
—
—
—
—
7
$41,000
Agency
Export-Import Bank
3
$18,000
10
$60,000
12
$76,164
Farm Credit Administration
—
—
—
—
15
$71,462
Federal Energy Regulatory
35
$226,435
47
$269,787
78
$703,831
Commission
General Services
7
$39,484
14
$75,711
17
$93,197
Administration
Inter-American Foundation
1
$6,000
1
$6,000
1
$6,000
National Aeronautics and Space
8
$48,000
10
$34,000
40
$341,786
Administration
National Archives and Records
—
—
—
—
4
$24,000
Administration
National Mediation Board
—
—
4
$11,139
3
$10,750
Nuclear Regulatory
—
—
5
$30,000
10
$96,000
Commission
Securities and Exchange
—
—
257
$1,462,450
384
$3,293,727
Commission

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CRS-47
Fiscal Year 2002
Fiscal Year 2003
Fiscal Year 2004
Agency
Number of
Cost of Repayments
Number of
Cost of Repayments
Number of
Cost of Repayments
Recipients
Recipients
Recipients
Total of 15 (FY2002), 22
521
$2,561,328
1,802
$7,984,207
2,680
$15,028,432
(FY2003), and 26 (FY2004)
Agencies
Source: U.S. Office of Personnel Management, Federal Student Loan Repayment Program Fiscal Year 2002 Report to the Congress, June 2003. U.S. Office of Personnel Management,
Federal Student Loan Repayment Program Fiscal Year 2003 Report to the Congress, May 2004. U.S. Office of Personnel Management, Federal Student Loan Repayment Program
Fiscal Year 2004 Report to the Congress, April 2005, available at [http://www.opm.gov/oca/pay/StudentLoan]. The agencies are listed as they appear in the report. Reported costs
are rounded to the nearest whole dollar. The OPM report includes the Government Accountability Office (GAO) and the Government Printing Office (GPO), but data for these two
agencies are not included in this table. See the legislative branch section in the text for information on GAO and GPO.
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