- The Washington Times - Monday, February 9, 2004

Uncle Sam is bolstering job offers for new hires — and keeping older employees from fleeing to the more lucrative private sector — by helping pay off their federal student loans.

The job perk has become an important tool for federal personnel directors in their struggle to compete with private employers for new workers.

Agencies are authorized to help repay as much as $10,000 of a loan per year, capped at $60,000 per employee, but only a handful of agencies have chosen to offer the benefit. Those that do say more employees are taking advantage of it.

For example, the State Department, the program’s biggest user, paid $3.2 million toward loans for 663 employees in the fiscal year that ended June 30, up from $2 million toward loans for 407 employees in the previous fiscal year.

“People who are interested in careers in the public sector may not be able to afford it. This helps make it a little easier to recruit and retain talented people,” said Max Stier, president of the Partnership for Public Service, a nonprofit group that encourages people to consider careers in the federal government. The organization has encouraged more agencies to offer the perk.

Federal agencies have had the authority to pay off their employees’ student loans since 1991, but final regulations were not issued until 2001.

Initially, federal workers received as much as $6,000 annually to repay federal student loans, up to a lifetime maximum of $40,000. Congress raised the ceiling in 2003, so beginning this year employees may receive as much as $10,000 per year, with a lifetime maximum of $60,000.

In exchange for the money, employees must agree to work for the government for at least three years. Also, the loan repayments are subject to federal withholding taxes, although some lawmakers on Capitol Hill hope to change that this year.

Student debt in the United States has risen sharply. The average undergraduate debt is $18,900, up 66 percent from $11,400 in 1997, according to Nellie Mae Corp., the nation’s leading education-loan granter.

The median debt level for graduate school borrowing is $23,700, a 72 percent increase from 1997, Nellie Mae reported.

“Coming out of graduate school, every little bit helps,” said Brodi Fontenot, a financial analyst for the General Accounting Office who received $3,000 to help pay down debt he incurred while attending graduate school at the University of North Carolina at Chapel Hill. The money helped reduce his student debt by about one third, Mr. Fontenot said.

Co-worker John Buehler, a GAO defense analyst, received two payments — $4,000 the first year and $3,500 the next — to help pay down his debt from Vanderbilt University. Mr. Buehler said the money alone wasn’t key to his decision to join GAO, but coupled with other agency benefits — including a monthly stipend of as much as $100 for commuting costs — helped sway him.

“When people think of the government, they don’t think of bonuses,” Mr. Buehler said. He routinely visits local colleges and universities to help GAO recruit new employees, and said students are always impressed when they learn the agency has helped pay off his student debt.

The government paid $3.2 million toward student loans for 690 employees during the fiscal year that ended June 30, 2002, according to the most recent data available from the federal Office of Personnel Management (OPM), which oversees the program.

Of the 16 agencies that offered the benefit, the State Department and GAO were the biggest users, OPM reported.

The State Department has primarily used the money to hire candidates for its less- desirable overseas posts, such as Kabul, Afghanistan, and some African and Latin American nations, according to Jo Ellen Powell, director of the office of employee relations.

“For them, it’s a very meaningful incentive,” she said.

The GAO paid $602,662 toward loans for 169 employees, according to the OPM data.

Employees at the other 14 agencies that participated in the program in fiscal 2002 used it far less frequently than the State Department and GAO, according to OPM. Three agencies — the Defense Nuclear Facilities Safety Board, the Department of Justice and the Inter-American Foundation — each had one employee take advantage of the program, OPM reported.

Mr. Stier hopes more agencies will offer the program in the future, stressing its potential to help the government recruit and retain better employees. That will go a long way toward the Partnership for Public Service’s goal of elevating the image of civil servants, he said.

“Ultimately, we live in a world where people don’t think too much about how much federal employees contribute to their lives,” he said.

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