House budget targets student-loan repayment perk for federal workers

April 1, 2013

The budget plan passed by the House before Congress started its current recess calls for ending a student loan reimbursement program that federal agencies can use as a recruiting and retention tool.

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“The budget assumes discretionary savings by eliminating the repayment by the government of student loans for federal employees,” says a House report on the chamber’s blueprint for spending and tax policy for the fiscal year that starts in October. The report fleshes out the details of the plan, sponsored by Budget Committee Chairman Paul Ryan (R-Wis.).

Under the program, agencies may pay employees up to an additional $10,000 per year, $60,000 lifetime, to pay off student loan debt, in exchange for service agreements.

According to the most recent Office of Personnel Management report on the program, issued in January, more than 10,000 federal employees received such payments averaging about $7,100 in calendar year 2011.

Both figures were down from 2010 when about 11,400 employees received payments averaging above $7,500, the report said. It attributed the decreases to restrictions on budgets and hiring, particularly at the largest user, the Defense Department.

Nearly two-thirds of the payments went to employees of the Defense, Justice and State Departments. Payments also were concentrated in certain occupations, including engineering, contracting, intelligence and nursing.

“We support Federal agencies’ use of student loan repayment benefits to recruit and retain a world-class workforce to serve the American people,” OPM Director John Berry said in the report. However, he added that “In our current budgetary climate, agencies should be mindful that the use of discretionary tools such as student loan repayments deserves close monitoring and must be evaluated as part of an agency’s overall human capital expenditures.”

The House budget plan also calls for reducing the workforce by 10 percent through attrition by allowing agencies to fill only one of every three vacancies that occur, with exceptions for national security-related positions. It also seeks to have employees and the government contribute equal amounts toward civil service retirement benefits; that would mean an increase in the employee share of about 5.5 percentage points with an offsetting decrease in the government share.

The plan further would generally repeal a supplementary benefit paid to some employees who retire before age 62.

The Senate-passed counterpart does not contain similar provisions.

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Eric Yoder · April 1, 2013