Dear GovLoop: Can My Agency Help with My Student Loans?

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In today’s column, we’re answering this question: Can my agency help me repay my student loans?

Dear GovLoop: After I graduated last May I started working as a federal public servant and I recently started having to make payments on my student loans. I have heard rumors that the government has programs to help recent grads pay off loans. Do these programs exist and how do they work? –Signed, Ready to Be Debt Free

 Dear Ready to Be Debt Free: You are in luck! There are two main programs that help federal employees get out from under their student loans debt: The Federal Student Loan Repayment Program and the Public Service Loan Forgiveness Program.

The Federal Student Loan Repayment Program:

The Federal Student Loan Repayment Program permits agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency. Additionally, the program includes a statute that authorizes agencies to set up their own student loan repayment programs to attract and keep top talent.

All employees except for Schedule C appointees are eligible for loan repayment. Eligible loans include those made under parts B, D, or E of title IV of the Higher Education Act of 1965 or a health education assistance loan made under part A of title VII or Part E of title VIII of the Public Health Service Act—essentially all federally funded student loans.

However, the repayment program is not a loan forgiveness program. Agencies can make payments to the lender of up to $10,000 a calendar year and not more than $60,000 total for one employee. However, the repayment plans are discretionary by agency and employees are not entitled to repayment.

Have some more specific questions? Get into the weeds of the Federal Student Loan Repayment Program here.

Public Service Loan Forgiveness Program:

Unlike the aforementioned repayment program, the Public Service Loan Forgiveness Program forgives the rest of a lenders balance on Direct Loans after they have made 120 qualifying monthly payments under a qualifying repayment plan while working full time for a qualifying employer.

Qualified employers include state, local, tribal and federal government, not-for-profit 501(c)(3) organizations, or other types of not-for-profit organizations that provide certain types of public services. Additionally, serving in AmeriCorps or Peace Corps full time satisfies the qualified employer requirement. As long as you are employed by one of the aforementioned entities, your job title and function have no bearing on your eligibility for the forgiveness program.

Any loan received under the William D. Ford Federal Direct Loan Program (Direct Loan) are eligible for forgiveness. Federal Family Education Program Loans and Federal Perkins Loans are not eligible on their own however, they may become eligible if you consolidate them into a Direct Consolidation Loan.

Qualifying monthly payments take place in the full amount after October 1, 2007, under a qualify repayment plan while you are employed full-time by your qualifying employer. However, these payments only qualify if they are made during periods where you are required to make payments. So payments made while you were still in school or a grace period do not count.

If you think you qualify, you aren’t automatically enrolled in the forgiveness program. After you make your 120th qualifying monthly payment, you can submit an application to receive loan forgiveness. For more information on how to apply check out this fact sheet. 

Interested in having Dear GovLoop answer your workplace or government question? Drop us a line at [email protected].

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