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https://www.opm.gov/policy-data-oversight/pay-leave/student-loan-repayment/?page=1#url=FAQs






Who is eligible to receive student loan repayment benefits? View less
Any employee (as defined in 5 U.S.C. 2105) who is highly qualified is eligible to receive a student loan repayment, except those employees who currently occupy or will occupy a position excepted from the competitive service because of its confidential, policy-determining, policy-making, or policy-advocating character (e.g., employees serving under Schedule C appointments). Under 5 CFR 537.104, agencies may offer student loan repayment benefits to recruit a highly qualified job candidate or retain a highly qualified employee who, during the service period established under a service agreement, will be serving under (1) an appointment other than a time-limited appointment or (2) a time-limited appointment if-

The employee (or job candidate) will have at least 3 years remaining under the appointment after the beginning of the service period; or  
The time-limited appointment authority leads to conversion to another appointment of sufficient duration so that his or her employment with the agency is projected to last for at least 3 additional years after the beginning of the service period.


Who receives the actual loan repayment check? View less
The employing agency makes student loan payments directly to the loan holder.  Student loan payments are not paid to employees.



What types of student loans are eligible for payment under this authority? View less
A student loan is eligible if it is made, insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act of 1965 or is a health education assistance loan made or insured under part A of title VII or part E of title VIII of the Public Health Service Act.



What is the maximum amount of a student loan repayment?
For any one individual, an agency may agree to provide student loan repayment benefits of up to $10,000 per calendar year, subject to a cumulative maximum of $60,000 per employee.



Who may approve a student loan payment? View less
Under 5 CFR 537.103, each agency must establish a plan that designates the officials who are authorized to review and approve offers of student loan repayment benefits.  Agencies may use approval delegations similar to those used for other recruitment, relocation, and retention incentives.



What types of academic degrees and/or levels are covered by the student loan repayment program? View less
The types of academic degrees and/or levels covered by the program are not specified in law.  Agencies are encouraged to tailor their plans to recruit highly qualified candidates and/or retain highly qualified employees in their current positions.  Therefore, an agency may specify the types of degrees and levels necessary to attain this goal.



When does the service requirement begin? View less
Agencies should specify the beginning date of the service requirement in the job candidate’s or employee’s service agreement.  The service requirement begins at the time specified in the service agreement, but may begin no earlier than the date the service agreement is signed or earlier than the date the individual begins serving in the position for which he or she was recruited (when student loan repayment benefits are approved to recruit a job candidate to fill an agency position).



Are employees entitled to a student loan repayment? View less
No.  An agency has discretionary authority to repay certain types of Federally made, insured, or guaranteed student loans as a recruitment or retention incentive for highly qualified candidates or current employees.



Are employees not covered by the General Schedule (GS) pay system eligible for student loan repayment benefits? View less
Yes.  All “highly qualified” personnel, regardless of job series, including Senior Executive Service members, Federal Wage System employees, and employees covered by administratively determined pay systems, are eligible unless specifically excluded by law or regulation.



May a parent who bears a PLUS loan obligation for his son or daughter qualify for loan repayment benefits under the student loan repayment program? View less



The statute authorizing this program states that this incentive is to be used for employees of a given agency who have outstanding student loans.  Thus, if the employee has a PLUS loan for his or her child, the loan would qualify for repayment.  However, if a PLUS loan is held by an employee’s parent, the employee is not eligible for loan repayment benefits for the parent’s PLUS loan.  While a PLUS loan an employee has previously taken out to help pay for his or her child's education is a qualifying student loan under 5 U.S.C. 5379(a)(1)(B) and 5 CFR 537.102, an agency may specify in its agency loan repayment plan that it will not offer to repay PLUS loans under its student loan repayment program.




May an agency offer a student loan repayment benefit to retain an employee likely to leave for a position in another Federal agency? View less
Agencies may not offer to repay a student loan for an employee who is likely to leave for any position in any branch of the Federal Government. (See 5 CFR 537.105(a)(2)(ii).)



May an agency offer student loan repayment benefits in addition to existing bonuses and incentives? View less
Agencies may offer student loan repayment benefits in conjunction with recruitment, relocation and retention incentives.  Agencies may also use student loan repayment benefits in conjunction with a physicians’ comparability allowance (PCA).  However, 5 CFR 595.105(e) requires that the amount of the PCA be reduced by the amount of the student loan repayment.




If an employee does not satisfy the terms of the service agreement, how much of the total amount of payment is he or she required to reimburse the paying agency? View less



If an employee voluntarily separates from Federal service before completing the period of service required in the applicable service agreement or violates any other condition that specifically triggers a reimbursement requirement under the agreement, he or she is obligated to reimburse the paying agency for the full amount of the loan repayment benefits provided (gross before any tax deductions from the loan payment).  For example, if an employee’s agreement states that he or she will receive $10,000 per year for 3 years, and the employee leaves with 6 months remaining on the service agreement after receiving $25,000 in loan repayment benefits, the employee must reimburse the paying agency for $25,000.




Is an agency required to make loan payments in one lump sum? View less
Agencies are not required to make loan payments in one lump sum.  In fact, making a loan payment in one lump sum to the loan holder on behalf of the employee accelerates the employee’s tax liability and may increase the resulting tax burden.  (See Questions and Answers on Tax Liability.)




How does an agency calculate the amount of employment tax withholding due on supplemental wages under the flat rate method? View less
The correct amount of income tax withholding is calculated by taking a flat 25 percent of the supplemental wages. Social security tax and Medicare tax withholding are calculated at the usual rates and are in addition to the 25 percent income tax withholding. This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.



What options are available to agencies for easing the tax liability on a recipient of the student loan repayment benefits? View less
Agencies have several options for easing the tax liability on their employees.  (See 5 CFR 537.106(a)(6) and Questions and Answers on Tax Liability.)




What are examples of the loans that qualify under the student loan repayment program? View less
Loans made or insured under the Higher Education Act of 1965 include the following: 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 include the following:

Loans for Disadvantaged Students (LDS)
Primary Care Loans (PCL)
Nursing Student Loans (NSL)
Health Professions Student Loans (HPSL)
Health Education Assistance Loans (HEAL)


How does an agency calculate the amount of employment tax withholding due with respect to a loan repayment? View less
One of two methods may be used – (1) the regular method or (2) the flat rate method. These methods apply because the loan repayments are supplemental wages paid in addition to regular wages. These two methods are described below and, more specifically, in Publication 15, Circular E, Employer's Tax Guide. This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.



What is meant by "against equity and good conscience"? View less
Agencies are responsible for making their own determination regarding what this term means.  In doing so, agencies should take into account consistency, fairness, and the cost to taxpayers of recovering monies owed to the Government.



May the service requirement be prorated according to the dollar amount of the student loan repayment benefit offered? View less
The minimum service requirement is established in statute and may not be prorated.



If an agency deducts the amount of employment tax withholding from the gross loan repayment, is the amount of the employment tax withholding and the net loan repayment includible in the employee's gross income and in wages for Federal employment tax purposes? View less
Yes. However, the amount of income tax withheld is credited against the employee's income tax liability for the year.



How does a candidate or current employee go about applying for a student loan repayment? View less
Current Federal employees or potential candidates may contact their current or potential employing agency for further information.  Each participating agency must develop a plan that describes how the agency will implement the student loan repayment program.



If an employee is a non-pay status, does that time count toward completion of the required service period? View less
No. Periods of leave without pay, or other periods during which an employee is not in a pay status, do not count toward completion of the required service period. However, as provided by 5 CFR 353.107, absence because of uniformed service or compensable injury is considered creditable toward the required service period upon reemployment.  (See 5 CFR 537.107(b).)



Is a degree, diploma, or certificate required for the candidate or employee to qualify for student loan repayment benefits? View less
The law does not require that a candidate or employee earn a degree, diploma, or certificate to be eligible for a student loan repayment benefit.  However, an agency may require a degree, diploma, or certificate as part of its individual agency plan.  Agencies are encouraged to tailor their plans to fit their specific needs.



May an agency that deducts the amount of employment tax withholding from loan repayments repay the $10,000 annually that is permitted? View less
No. The deduction for employment tax withholding reduces the maximum loan repayment.



How does an agency withhold and pay employment taxes from regular wages paid to an employee? View less
To use this method, the agency must–

Determine the correct amount of employment tax withholding on all wages paid to the employee during the payroll period, including both the loan repayment and regular wages. (The agency may use either the regular method or the flat rate method  to calculate the correct amount of employment tax withholding on the loan repayment);  
Deduct the total amount of employment tax withholding from the employee's regular wages; and  
Deposit the amounts withheld and report them on Form 941, Employer's Quarterly Federal Tax Return, and Form W-2 in accordance with normal depositing and reporting procedures.


What is the minimum period of service an agency may require an employee to fulfill in order to receive student loan repayment benefits? View less
A service requirement must be set for a period of time not less than 3 years.  (See 5 U.S.C. 5379(c)(1)(A).)  Agencies may require service agreements of more than 3 years.



If an agency repays the student loan incurred by an agency employee, is the repayment includible in the employee's gross income and in wages for Federal employment tax purposes? View less
Yes. The repayment is includible in the employee's gross income and in wages for Federal employment tax purposes, notwithstanding the agency's repayment of the loan directly to the lender.



May an agency offer a student loan repayment benefit to recruit an individual from another Federal agency? View less
No. An agency may not use this authority to recruit an individual from outside the agency who is currently employed in the Federal service.  (See 5 CFR 537.105(c).)


Are student loan repayment benefits subject to employment taxes? View less
Yes. Because a student loan payment owed by the employee is made by the Federal Government on behalf of the employee, the payment is includible in the employee’s gross income and wages for Federal employment tax purposes even though it is made directly to the loan holder.  Consequently, the agency must withhold and pay employment taxes from either the employee’s regular wages, the loan payment, or a separate payment made by the employee.  The applicable employment taxes include Federal income taxes withheld from wages (and, where appropriate, State and local income taxes) and the employee’s share of Social Security and Medicare taxes.  Tax withholdings must be deducted or applied at the time any loan payment is made.  (See 5 CFR 537.106(a)(6).)  The agency may choose among several different methods for withholding taxes.  (See Questions and Answers on Tax Liability.)  Please note the implications of deducting taxes directly from a gross loan payment.  For example, if the agency has approved a student loan repayment benefit of $10,000 and the employee’s tax deductions are $3,000, then the agency will make a loan payment of $7,000.  The full $10,000 counts toward the maximum limitations described in question #4.



Are agencies responsible for reporting their student loan payments to the Internal Revenue Service? View less
Yes.  Agencies must report to the IRS the amount of student loan repayment benefits they have provided to an employee. 



What are the Federal employment tax obligations of an agency that repays a student loan incurred by an agency employee? View less
The agency must–


Pay the employer's share of social security and Medicare taxes on the loan repayment;  
Withhold and pay Federal income tax withholding (and appropriate State and local income tax withholding) on the loan repayment;  
Withhold and pay the employee's share of social security and Medicare taxes on the loan repayment; and  
Report the loan repayment and taxes withheld and paid as required under Federal law and applicable State and local laws.


When may an agency use the flat rate method of withholding on supplemental wages? View less
The flat rate method of withholding on supplemental wages may be used if income taxes have been withheld from the regular wages of the employee. Consequently, if income taxes have been withheld from an employee's regular wages, an agency may use the flat rate method to determine the correct amount of income tax to be withheld with respect to the loan payment. The resulting employment taxes may be withheld from either the employee's regular wages, the loan repayment, or a separate tax payment made by the employee.



May an agency treat the loan repayment as a noncash fringe benefit and use the withholding rules applicable to noncash fringe benefits? View less
No. The rules for withholding on noncash fringe benefits do not apply to an employer's repayment of an employee's loan obligation.



May an agency make a loan repayment for a student loan that was previously repaid by the employee? View less
No. An agency may not make a loan repayment for a student loan that was previously repaid by the employee.  (See 5 U.S.C. 5379(b)(3).)  Student loan repayments may be paid only for outstanding student loans.



Are employees who have defaulted on their student loans eligible for this program? View less
The student loan repayment authority itself does not preclude payments for employees who have defaulted on their student loans.  However, agencies may exclude them by so specifying in their agency plans.



If an employee leaves the paying agency for another Federal agency before completion of the service requirement, is the gaining agency obligated to offer loan repayment benefits and/or continue making loan payments? View less
No. The gaining agency is not obligated to make any loan payments previously agreed to by another agency.




If an employee fails to complete the service requirement because of disability retirement or leaves Federal service because of a disabling condition, is he or she still subject to the reimbursement requirements? View less
Any employee who does not satisfy the terms of the service agreement is required to reimburse the Government for all loan payments received.  However, agencies may waive recovery if they determine it to be against equity and good conscience or contrary to the public interest.  (See 5 U.S.C. 5379(c)(3) and 5 CFR 537.109(e).)



What are the obligations of an agency that requires employees to pay the agency an amount equal to employment tax withholding before the agency repays a student loan? View less


An agency is obligated to pay amounts required to be withheld from an employee's wages even if those amounts are not actually withheld. Federal tax law requires agencies, like other employers, to withhold employment taxes from employees' wages. The repayment of student loans, however, may be subject to such terms, limitations, or conditions as the agency and the employee may mutually agree. Consequently, an agency's repayment of the student loan may be made contingent on an employee's payment of employment taxes (including income taxes and the employee's portion of social security and Medicare taxes) to the agency. In this case, to fulfill its tax obligations, the agency must–

Determine the correct amount of employment tax withholding on the loan repayment using either the regular method described in Question 6 or the flat rate method described in Question 7;  
Obtain a check or other payment from the employee for the amount determined above;  
Make the loan repayment and deposit and report on Form 941 an amount equal to the payment received from the employee in accordance with normal deposit and reporting procedures; and  
Report the income, social security, and Medicare tax components paid by the employee in the appropriate boxes of Form W-2. These amounts are not included as income or wages in Boxes 1 , 3, and 5 of Form W-2.

This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.
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How does an agency calculate the amount of employment tax withholding due on supplemental wages (such as the loan repayment) under the regular method? View less
To use this method the agency follows these steps:

The Federal agency calculates the correct amount of employment tax withholding on all wages paid during the payroll period by treating the supplemental wages and the regular wages as a single wage payment for the payroll period.  
The Federal agency calculates the correct amount of employment tax withholding on the regular wages paid to the employee during the payroll period.  
The Federal agency subtracts the amount determined in step 2 from the amount determined in step 1 to calculate the amount of any employment tax withholding due with respect to the supplemental wages.

This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.




What records must an agency maintain? View less
Each agency must keep a record of each student loan repayment determination and make such records available for review upon OPM’s request.  Records may be destroyed 3 years after the end of the service period specified in the employee's service agreement if there has been no dispute regarding the agreement. If the service agreement has not been fulfilled, there are other disputes regarding the agreement or the loan payouts, or the agreement has become the subject of litigation, the records should be kept for a minimum of 6 years from the date the facts giving rise to the dispute occurred. If debt collection is pursued against the employee for repayments made by the agency, the agency must keep the records until the debt is fully collected or compromised.
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How does the agency withhold employment taxes directly from a loan repayment? View less
To use this method, the agency must–

Calculate the correct amount of employment tax withholding on the loan repayment using one of two methods–the regular method described in Question 6 or the flat rate method described in Question 7;  
Deduct the amount of employment tax withholding from the loan repayment; and  
Deposit the amounts withheld and report the employment tax withholding and wages on Forms 941 and W-2 in accordance with normal deposit and reporting procedures.

This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.
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May an agency agree to repay any future student loans accrued by an employee? View less
No. An agency may agree only to make payments on those student loans taken out prior to the student loan repayment agreement.  (See 5 U.S.C. 5379(b)(1).)
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Are student loan payments subject to the aggregate limitation on pay under 5 U.S.C. 5307? View less
No.  Student loan payments are not subject to the aggregate limitation under 5 U.S.C. 5307.  The aggregate limitation on pay applies to direct payments made to the employee, whereas student loan payments are paid to the loan holder on behalf of the employee.
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What are the requirements for agency reports on the use of the student loan repayment program? View less
Before March 31st of each year, agencies must submit a written report to the U.S. Office of Personnel Management (OPM) stating when the agency made student loan payments on behalf of an employee during the previous calendar year (see 5 CFR 537.110).  Under 5 U.S.C. 5379(h)(1), each report must include--

The number of employees who received student loan repayment benefits;
The job classifications of the employees who received student loan repayments benefits; and
The cost to the Federal Government of providing student loan repayment benefits.

OPM will use this information in its annual report to Congress on the agencies’ use of the student loan repayment program.
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What if the agency does not process its own payroll but, instead, contracts with another agency to process its payroll? View less
The agency making the loan repayment is responsible for transmitting the necessary information to the payroll agency and for ensuring that the withholding is properly implemented. If the agency processing the payroll is unable or unwilling to implement withholding, the agency repaying the loan must use one of the alternative withholding methods. This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.
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Is an employee required to reimburse the paying agency for student loan repayment benefits received if he or she leaves the paying agency for another Federal agency before completion of the service requirement? View less
Under these circumstances, the employee is not required by law to reimburse the paying agency unless specified in the service agreement. (See 5 U.S.C. 5379(c)(2) and 5 CFR 537.109(d)(2).)   As provided by 5 CFR 537.107(e), the service agreement must contain a provision addressing whether the individual would be required to reimburse the paying agency for student loan repayment benefits if he or she voluntarily separates from the paying agency to work for another agency before the end of the service period.
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How does a Federal employee report the repayment of a student loan by his or her employer? View less
The repayment is reported as wages on line 7 of Form 1040 or, alternatively, on line 1 of Form 1040EZ.



May an agency tailor its student loan repayment plan to include candidates with specific skills or in a certain job occupation? View less
Agencies may tailor their student loan repayment plan as they see fit in order to facilitate the recruitment and retention of highly qualified personnel.



How must an agency report the repayment of a student loan incurred by an agency employee? View less
The loan repayment must be reported as wages in Box 1 of Form W-2, Wage and Tax Statement, and as Medicare wages in Box 5 of Form W-2. If wages paid to an agency's employee are subject to social security taxes, the repayment is also reported as social security wages in Box 3 of Form W-2. The repayment is includible in social security wages, however, only to the extent that the repayment together with other wages previously paid during the calendar year does not exceed the social security wage base for that year.



Are agencies responsible for any late fees assessed by the loan holder if the agency student loan payment is not received on time? View less
Agencies are not responsible for late fees assessed by the holder of a candidate’s or employee’s student loan.  Agencies should state this in their agency plans and/or in the service agreements with employees.  Agencies should, to the extent possible, ensure that the timing of their payment to the loan holder coincides with the date the loan payment is due.



What methods may an agency use to withhold income taxes and the employee's share of social security and Medicare taxes (employment taxes) when the agency repays a student loan incurred by an employee? View less
An agency may use any of the following methods. Different methods may be used for different groups of employees. The agency may–



Withhold employment taxes from regular wages paid to the employee;  
Withhold employment taxes from the loan repayment; or  
Require a separate tax payment from the employee.


This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.



How does a candidate or current employee go about applying for a student loan repayment? View less
Current Federal employees or potential candidates may contact their current or potential employing agency for further information.  Each participating agency must develop a plan that describes how the agency will implement the student loan repayment program.

What is the student loan repayment program? View less
Under 5 U.S.C. 5379 and 5 CFR part 537, agencies are authorized to establish a program under which they may agree to repay certain types of Federally made, insured, or guaranteed student loans as a recruitment or retention incentive for highly qualified personnel.


What is the student loan repayment program? View less
Under 5 U.S.C. 5379 and 5 CFR part 537, agencies are authorized to establish a program under which they may agree to repay certain types of Federally made, insured, or guaranteed student loans as a recruitment or retention incentive for highly qualified personnel.



What records must an agency maintain? View less
Each agency must keep a record of each student loan repayment determination and make such records available for review upon OPM’s request.  Records may be destroyed 3 years after the end of the service period specified in the employee's service agreement if there has been no dispute regarding the agreement. If the service agreement has not been fulfilled, there are other disputes regarding the agreement or the loan payouts, or the agreement has become the subject of litigation, the records should be kept for a minimum of 6 years from the date the facts giving rise to the dispute occurred. If debt collection is pursued against the employee for repayments made by the agency, the agency must keep the records until the debt is fully collected or compromised.



How does the agency withhold employment taxes directly from a loan repayment? View less
To use this method, the agency must–

Calculate the correct amount of employment tax withholding on the loan repayment using one of two methods–the regular method described in Question 6 or the flat rate method described in Question 7;  
Deduct the amount of employment tax withholding from the loan repayment; and  
Deposit the amounts withheld and report the employment tax withholding and wages on Forms 941 and W-2 in accordance with normal deposit and reporting procedures.


May an agency agree to repay any future student loans accrued by an employee? View less
No. An agency may agree only to make payments on those student loans taken out prior to the student loan repayment agreement.  (See 5 U.S.C. 5379(b)(1).)


Are student loan payments subject to the aggregate limitation on pay under 5 U.S.C. 5307? View less
No.  Student loan payments are not subject to the aggregate limitation under 5 U.S.C. 5307.  The aggregate limitation on pay applies to direct payments made to the employee, whereas student loan payments are paid to the loan holder on behalf of the employee.


What are the requirements for agency reports on the use of the student loan repayment program? View less
Before March 31st of each year, agencies must submit a written report to the U.S. Office of Personnel Management (OPM) stating when the agency made student loan payments on behalf of an employee during the previous calendar year (see 5 CFR 537.110).  Under 5 U.S.C. 5379(h)(1), each report must include--

The number of employees who received student loan repayment benefits;
The job classifications of the employees who received student loan repayments benefits; and
The cost to the Federal Government of providing student loan repayment benefits.

OPM will use this information in its annual report to Congress on the agencies’ use of the student loan repayment program.



What if the agency does not process its own payroll but, instead, contracts with another agency to process its payroll? View less
The agency making the loan repayment is responsible for transmitting the necessary information to the payroll agency and for ensuring that the withholding is properly implemented. If the agency processing the payroll is unable or unwilling to implement withholding, the agency repaying the loan must use one of the alternative withholding methods. This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.


Is an employee required to reimburse the paying agency for student loan repayment benefits received if he or she leaves the paying agency for another Federal agency before completion of the service requirement? View less
Under these circumstances, the employee is not required by law to reimburse the paying agency unless specified in the service agreement. (See 5 U.S.C. 5379(c)(2) and 5 CFR 537.109(d)(2).)   As provided by 5 CFR 537.107(e), the service agreement must contain a provision addressing whether the individual would be required to reimburse the paying agency for student loan repayment benefits if he or she voluntarily separates from the paying agency to work for another agency before the end of the service period.


How does a Federal employee report the repayment of a student loan by his or her employer? View less
The repayment is reported as wages on line 7 of Form 1040 or, alternatively, on line 1 of Form 1040EZ. This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.

May an agency tailor its student loan repayment plan to include candidates with specific skills or in a certain job occupation? View less
Agencies may tailor their student loan repayment plan as they see fit in order to facilitate the recruitment and retention of highly qualified personnel.


How must an agency report the repayment of a student loan incurred by an agency employee? View less
The loan repayment must be reported as wages in Box 1 of Form W-2, Wage and Tax Statement, and as Medicare wages in Box 5 of Form W-2. If wages paid to an agency's employee are subject to social security taxes, the repayment is also reported as social security wages in Box 3 of Form W-2. The repayment is includible in social security wages, however, only to the extent that the repayment together with other wages previously paid during the calendar year does not exceed the social security wage base for that year.


Are agencies responsible for any late fees assessed by the loan holder if the agency student loan payment is not received on time? View less
Agencies are not responsible for late fees assessed by the holder of a candidate’s or employee’s student loan.  Agencies should state this in their agency plans and/or in the service agreements with employees.  Agencies should, to the extent possible, ensure that the timing of their payment to the loan holder coincides with the date the loan payment is due.

What methods may an agency use to withhold income taxes and the employee's share of social security and Medicare taxes (employment taxes) when the agency repays a student loan incurred by an employee? View less
An agency may use any of the following methods. Different methods may be used for different groups of employees. The agency may–

Withhold employment taxes from regular wages paid to the employee;  
Withhold employment taxes from the loan repayment; or  
Require a separate tax payment from the employee.

This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.

How does a candidate or current employee go about applying for a student loan repayment? View less
Current Federal employees or potential candidates may contact their current or potential employing agency for further information.  Each participating agency must develop a plan that describes how the agency will implement the student loan repayment program.

What is the student loan repayment program? View less
Under 5 U.S.C. 5379 and 5 CFR part 537, agencies are authorized to establish a program under which they may agree to repay certain types of Federally made, insured, or guaranteed student loans as a recruitment or retention incentive for highly qualified personnel.