Source: https://www.federalregister.gov/documents/2008/10/31/E8-26013/repayment-of-student-loans
Timestamp: 2017-09-24 19:48:00
Document Index: 406638913

Matched Legal Cases: ['art 537', '§\u2009537', '§\u2009537', '§\u2009537', 'art 537', 'art 316', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', 'art 575', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', 'art 731', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537', '§\u2009537']

The regulations are effective December 1, 2008.
73 FR 64861
64861-64868 (8 pages)
E8-26013
Comment on Authorizing Student Loan Repayment Benefits To Retain an Employee Likely To Leave for a Different Position in the Federal Service
Comments on Authorizing Student Loan Repayment Benefits To Recruit an Employee From Another Federal Agency
Response to Comments on Authorizing Student Loan Repayment Benefits To Retain an Employee Likely To Leave for a Different Position in the Federal Service or To Recruit an Employee From Another Federal Agency
Request for Clarification Regarding Advertising a Student Loan Repayment Program and the Eligibility of Employees Who Previously Transferred From Another Federal Agency
Movement to a Position in a Different Geographic Location Within the Same Agency
Comment on Reimbursement Requirements
Commissioned Corps Officers of the Public Health Service
https://www.federalregister.gov/d/E8-26013 https://www.federalregister.gov/d/E8-26013
The U.S. Office of Personnel Management is issuing final regulations to revise the rules governing the authority to offer student loan repayment benefits to Federal job candidates or current Federal employees when necessary to recruit or retain highly qualified personnel. These revisions include certain policy changes and clarifications to assist agencies in the administration of the Federal student loan repayment program.
Mark Harrington by telephone at (202) 606-2858; by fax at (202) 606-0824; or by e-mail at pay-performance-policy@opm.gov.
On January 9, 2007, the U.S. Office of Personnel Management (OPM) published proposed regulations (72 FR 914) to revise the rules implementing 5 U.S.C. 5379, which authorizes agencies to offer student loan repayment benefits to candidates for Federal jobs or current Federal employees when necessary to recruit or retain highly qualified personnel. The primary purpose of the revision was to make part 537 more readable and usable. However, we have also made substantive changes that will improve the agencies' program administration and promote alignment between this authority and related authorities that support recruitment and retention efforts.
The 60-day comment period for the proposed regulations ended on March 12, 2007. During the comment period, OPM received comments from four Federal agencies, one union, and two individuals.
An agency recommended we clarify the definition of student loan repayment benefit in § 537.102 by adding a reference to § 537.106(b), which describes student loans that qualify for repayment. We agree and have added the reference.
We also have made two additional minor revisions in the definitions section. Specifically, we have added language clarifying that the definitions in § 537.102 apply only for purposes of part 537. We also have revised the definition of time-limited appointment to refer to a “non-permanent appointment” rather than an “appointment of temporary duration” to ensure there is no confusion with the use of the term “temporary” in other regulations (e.g., 5 CFR part 316, subpart D).
One agency commented on proposed § 537.105(a)(2)(ii), which requires an agency to make a written determination that an employee would otherwise be likely to leave the agency for employment outside the Federal service and that it is essential to retain the employee based on the employee's high or unique qualifications or a special need of the agency before authorizing student loan repayment benefits to retain a current agency employee. The agency recommended we remove the requirement that the employee be likely to leave for employment outside the Federal service to permit agencies to offer student loan repayment benefits to retain an employee likely to leave for a different position in the Federal service. The agency noted the authorizing statute does not prohibit agencies from offering student loan repayment benefits to current employees who are likely to leave for a different position in the Federal service.
Two agencies, one union, and one individual submitted comments in opposition to proposed § 537.105(c), which provides that an agency may not authorize student loan repayment benefits to recruit an individual from outside the agency who is currently employed in the Federal service. One agency and the union commented that it is inequitable for a newly appointed employee to be eligible for student loan repayment benefits while an employee transferring from another Federal agency is not. The agency stated this provision will make it extremely difficult for agencies to recruit for mission-critical positions from other agencies. The agency also commented that all Federal agencies compete with each other for job candidates and each agency offers different benefits and opportunities based on various factors, including budget and certain flexibilities available solely to the particular agency. The union asserted the focus should be on filling the position with the best qualified individual, with all the benefit options open to an agency, regardless of the job candidate's current position.
Ensuring agencies have an effective civilian workforce to achieve their goals is one of the primary objectives of strategic human capital management in the Government. To meet this objective, agencies must have the necessary human resources tools to recruit and retain essential employees to perform mission-critical work. The student loan repayment authority is one of several tools providing agencies substantial flexibility to help recruit and retain key employees.
We carefully considered the comments recommending the regulations be amended to provide agencies with additional flexibility to authorize student loan repayment benefits to either retain a current employee likely to leave for a different position in the Federal service or to recruit an individual from outside the agency who is currently employed in the Federal service. In determining whether to provide additional flexibility, we must balance the workforce needs of a single agency with the workforce needs of other agencies. An employee providing valuable services to one agency also may possess the competencies that are valuable to another agency. We also need to be cautious when establishing new flexibilities that have the potential to result in costly and inefficient interagency competition.
We have not amended proposed § 537.105(a)(2)(ii) to permit agencies to authorize student loan repayment benefits to retain an employee likely to leave for a different position in the Federal service. We note that this policy was established at § 537.105(c) in OPM's original final regulations on the repayment of student loans, which were published on January 11, 2001 (66 FR 2790).
We also have not amended proposed § 537.105(c) to permit agencies to authorize student loan repayment benefits to recruit an employee from outside the agency who is currently employed in the Federal service. While not previously addressed in OPM's regulations, it has been OPM's longstanding guidance that agencies should not use the student loan repayment authority to recruit current Federal employees from other agencies.
The legislative history of 5 U.S.C. 5379 indicates Congress intended student loan repayment benefits to be a tool used to improve the Federal Government's ability to compete for top college graduates by allowing Federal agencies to repay the student loans of those individuals. (See House Report 101-402, February 7, 1990.) The student loan repayment authority is designed to be used at an agency's discretion as part of a set of flexibilities—including recruitment incentives under 5 CFR part 575, subpart A, and the superior qualifications and special needs pay-setting authority under 5 CFR 531.212—allowing agencies to tailor employment offers to the needs of individual job candidates to compete with non-Federal employers for the best and brightest Start Printed Page 64863personnel. The authority is not intended to assist agencies in competing with other Federal agencies for current Federal employees.
We understand interagency competition already exists, and some agencies are disadvantaged because other agencies have the flexibility to pay higher salaries or provide other unique incentives. However, we must balance single agency needs against the Governmentwide interest of avoiding costly and inefficient interagency competition. If these regulations were to permit agencies to use student loan repayment benefits to retain current employees likely to leave for a different position in the Federal service and to recruit current employees from other agencies, they could result in student loan repayment bidding wars between the current and prospective agencies. We do not intend to discourage interagency movements, which provide certain benefits to both Federal agencies and employees. However, we do not think it is appropriate for Federal agencies to use student loan repayment benefits as a financial incentive to compete with each other for current Federal employees.
One agency asked for clarification concerning what constitutes recruitment for the purpose of § 537.105(c). The agency would like to retain its ability to advertise its student loan repayment program and be assured that simply advertising the program will not be prohibited. In addition, the agency is concerned the new provision would adversely impact the eligibility of an employee with prior Federal work experience if he or she otherwise would be eligible to participate in the agency's student loan repayment program.
Although these final regulations prohibit agencies from authorizing student loan repayment benefits expressly to recruit an individual from outside the agency who is currently employed in the Federal service, there is no restriction prohibiting an agency from advertising its student loan repayment program as part of a general recruitment effort. In addition, the regulations do not prohibit an agency from offering student loan repayment benefits to an employee who previously transferred from another agency. In other words, an agency may not include student loan repayment benefits as part of a job offer in an effort to recruit a current Federal employee from another agency. However, if at some point after entering the new position the individual meets the agency's requirements for participation in its student loan repayment program, the agency may provide student loan repayment benefits to the employee.
An agency recommended we revise the regulations to address a situation in which an employee receiving student loan repayment benefits moves to a position in a different geographic location within the same agency. Specifically, the agency suggested allowing agencies to make a determination regarding whether to terminate or continue providing student loan repayment benefits when an employee moves to a position in a different geographic location within the same agency. The agency stated the agency component in the new geographic location may not have the funds to continue providing student loan repayment benefits to the employee and also may not have the same circumstances to justify providing the incentive. As provided by § 537.107(a), a written service agreement may specify any employment conditions the agency considers to be appropriate, including the individual's position and the duties he or she is expected to perform, his or her work schedule, and his or her level of performance. Also, § 537.107(f) provides that an agency may include in a service agreement specific conditions (in addition to those required by law) that trigger the loss of eligibility for student loan repayment benefits and/or a requirement that the employee reimburse the agency for student loan repayment benefits already received. (Also see §§ 537.108(a)(3) and 537.109(a)(2).) Therefore, the regulations already provide agencies with the authority to make student loan repayment benefits contingent on an employee working in a position at a certain geographic location. However, to address the agency's comment, we have amended § 537.107(a) to clarify that an agency may add language to the service agreement to make the geographic location of an employee's position a condition of receiving student loan repayment benefits.
An agency recommended we expand on § 537.109(b)(1) to add suitability determinations and failure to complete a probationary period to the types of involuntarily separations that trigger a requirement for an employee to reimburse his or her agency for student loan repayment benefits received. We agree in part. As provided by §§ 537.107(f)(2) and 537.109(b)(1), a service agreement may not require reimbursement based on an involuntary separation for reasons other than misconduct or unacceptable performance. We have revised §§ 537.107(f)(2) and 537.109(b)(1) to also require reimbursement when an employee is separated involuntarily prior to the completion of a service agreement as a result of a negative suitability determination under 5 CFR part 731. However, we are not adding language requiring reimbursement based on an involuntary separation due to a failure to complete a probationary period because we believe such an action would be considered an involuntary separation for misconduct or unacceptable performance, which are already covered by the regulations.
One agency questioned whether the provisions allowing agencies to require reimbursement for employees who are removed for poor performance or for non-suitability exceed the statutory authority granted to OPM under 5 U.S.C. 5379. We disagree, and for the reasons explained below, we are not changing our regulations in §§ 537.107(f)(2) and 537.109(b)(1).
Section 5379 provides discretionary authority for agencies to set up programs for student loan reimbursement for eligible employees. (“The head of an agency may, in order to recruit or retain highly qualified personnel, establish a program under which the agency may agree to repay” (emphasis added). See 5 U.S.C. 5379(b)(1).) Agencies are not required to set up such programs, and employees are not entitled to benefits under the authority. Entitlement begins only after a written agreement between the agency and the employee is signed, and the student loan reimbursement is subject to “such terms, limitations, or conditions, as may be mutually agreed to by the agency and employee concerned.” See 5 U.S.C. 5379(b)(2). If agencies decide to offer the program, there are only three statutory limitations. First, an agency may not pay more than $10,000 per calendar year or $60,000 total in student loan repayments for an individual employee (5 U.S.C. 5379(b)(2)). Second, an agency may not reimburse an employee for repayments made by the employee before entering into an agreement with the agency (5 U.S.C. 5379(b)(3)). Third, an agency must require reimbursement if the employee Start Printed Page 64864is involuntarily separated for misconduct or is voluntarily separated before the completion of the term of the agreement, (5 U.S.C. 5379(c)). In addition, agencies must follow regulations implemented by OPM under the authority of 5 U.S.C. 5379(g).
Agencies may not expand a program to provide for more benefits to employees than are authorized by statute. However, where a benefit is discretionary, agencies may set conditions, limitations, or terms on the employee's eligibility for payment of the benefit. This is explicitly stated in the statute. The phrase “terms, limitations, or conditions as may be mutually agreed to by the agency and employee concerned” refers to aspects of the administration of the program relating to individual payments. OPM may properly use its regulatory authority to mandate that agencies uniformly include certain terms, limitations, and conditions in service agreements. (See 5 U.S.C. 5379(g), which allows OPM to establish “standards and requirements” by regulation to ensure uniformity in appropriate areas.) We believe that requiring agencies to condition payment of the student loan repayment benefit on the employee's acceptance of reimbursement when involuntarily separated for performance or for non-suitability is within the letter and the spirit of the authority given under 5 U.S.C. 5379(b)(2). It is good policy to require that agencies seek reimbursement when an employee has been found unsuitable, engaged in misconduct, or failed to perform adequately. In summary, the statute does not provide entitlement, and employees are required to sign agreements with conditions only if they wish to participate in their agencies' discretionary programs.
One agency requested that OPM delegate it the authority to offer student loan repayment benefits to Commissioned Corps Officers of the Public Health Service. However, officers of the Commissioned Corps are not covered by the authorizing statute, and OPM cannot extend eligibility to Commissioned Corps officers by regulation. The statute authorizing student loan repayment benefits, 5 U.S.C. 5379, does not define “employee.” Therefore, the general title 5 definition of employee at 5 U.S.C. 2105 applies to the student loan repayment authority. As such, proposed § 537.102 defines employee as “an employee of an agency who satisfies the definition of the term in 5 U.S.C. 2105.” Under 5 U.S.C. 2105(a), the term “employee” includes officers and individuals appointed in the “civil service.” Section 2101(1) of title 5, United States Code, states that “the ‘civil service’ consists of all appointive positions in the executive, judicial, and legislative branches of the Government of the United States, except positions in the uniformed services.” Under 5 U.S.C. 2101(3), the term “uniformed services” includes the Commissioned Corps of the Public Health Service. Officers of the Commissioned Corps are not employees under 5 U.S.C. 2105 and thus are not covered by the student loan repayment authority in 5 U.S.C. 5379. OPM may not extend an authority by regulation to employees who are not covered by the authorizing statute.
An individual provided a comment generally opposing the authority for Federal agencies to repay student loans. We disagree. One of the biggest challenges for Federal agencies is attracting and retaining well-qualified, high-performing employees. We believe the student loan repayment authority is a valuable human capital management tool that enables agencies to recruit highly qualified candidates into Federal service and keep talented employees in the Federal workforce.
A union recommended the sections pertaining to benefit caps and employee eligibility be looked at with an eye towards increasing the maximum total student loan repayment benefit. The union noted student loan debt burdens are continuously increasing and requested that wherever possible, efforts be made to give agencies the option of offering greater benefits to recruit and retain excellent employees. Under 5 U.S.C. 5379(b)(2), an agency may provide student loan repayment benefits of up to $10,000 for an employee in any calendar year up to an aggregate total of $60,000 for any one employee. An increase in the annual or aggregate limits on student loan repayment benefits would require a statutory amendment. We note that the Federal Employee Student Loan Assistance Act (Pub. L. 108-123, November 11, 2003) increased the maximum amounts Federal agencies are authorized to repay under the Federal student loan repayment program from $6,000 to $10,000 per employee in any calendar year and from $40,000 to a total of $60,000 for any one employee. On April 20, 2004, OPM published a final rule (69 FR 21039) to revise § 537.106(c) in accordance with the statutory amendment.
An agency recommended expanding on § 537.106(a)(4) to emphasize that an agency should not begin making loan payments prior to the time the employee starts work under any circumstances. We have not made this recommended change because we believe the paragraph is sufficiently clear that although an agency and a job candidate may sign a service agreement before the job candidate begins serving in the position, the agency may not begin making loan payments until the job candidate actually begins serving in the position. However, we are adding a reference to § 537.107, which contains the regulations regarding service agreements.
An agency suggested that in order to differentiate between paragraphs (1) and (2) of 5 CFR 537.107(d), paragraph (1) should be revised to read as follows: “Earlier than the date the service agreement is signed, for individuals who are current employees” (emphasis added). We do not believe this change is necessary. Because we have written the phrase in the negative and use the conjunction “or” between paragraphs (1) and (2), both conditions must be met.
An agency suggested that even though 5 U.S.C. 5379(c)(2) allows agencies to waive the reimbursement of student loan repayments already made by an agency if the employee enters into the service of another agency, OPM should consider making such reimbursement a requirement. We disagree and are not changing 5 CFR 537.107(e). We believe that agencies should be allowed to make their own decisions regarding the granting of a waiver of recovery of already paid benefits.
Finally, an agency points out that under 5 CFR 537.110(a), records kept under the Program may be destroyed when 3 years have elapsed since the end of the service period, but that a longer record retention period may be necessary where potential litigation is involved (i.e., if there has been a default of the service agreement and the agency engages in debt collection). We agree and are making the necessary changes to that section.
Start List of Subjects Start Printed Page 64865
Student loan repayment benefit means the benefit provided to an employee under this part in which an agency repays (by a direct payment on behalf of the employee) a qualifying student loan as described in § 537.106(b) previously taken out by such employee. The dollar value of this benefit is the gross amount credited to the employee at the time of a loan payment to the holder of the student loan, before deducting any employee tax withholdings from that gross amount as described in § 537.106(a)(6)(iii). A student loan repayment benefit is not considered basic pay for any purpose.
(3) The agency must document in writing each approval of student loan repayment benefits. An authorized agency official must review and approve each written determination. The written determination must show the employee (or job candidate) meets the criteria specified in § 537.105.
(4) An authorized agency official must approve student loan repayment benefits in connection with a recruitment action before the job candidate actually enters on duty in the position for which he or she was recruited. The agency and the job candidate may sign the service agreement consistent with § 537.107 before the job candidate begins serving in the position, but the agency may not begin making loan payments until the job candidate begins serving in the position.
(a) Before an employing agency makes any loan payments for an employee, the employee (or job candidate) must sign a written service agreement to complete a specified period of service with the agency and to reimburse the agency for the student loan repayment benefit when required by § 537.109. The service agreement also may specify any other employment conditions the agency considers to be appropriate, including the employee's (or job candidate's) position and the duties he or she is expected to perform, his or her work schedule, his or her level of performance, and the geographic location of his or her position. (See §§ 537.108 and 537.109.) The service agreement may address the possibility that, during the period the agreement is in effect, the agency may modify the agreement to provide student loan repayment benefits in addition to those fixed in the agreement based on contingencies or conditions specified in the agreement.
(b) The minimum period of service to be established under a service Start Printed Page 64867agreement is 3 years, regardless of the amount of student loan repayment benefits authorized. The agency and the employee may mutually agree to modify an existing service agreement, subject to the limitations at § 537.106(c)(2), to provide additional student loan repayment benefits for additional service without the need for an entirely new service agreement (which would require a new 3-year minimum service period). Periods of leave without pay, or other periods during which the employee is not in a pay status, do not count toward completion of the required service period. Thus, the service completion date must be extended by the total amount of time spent in non-pay status. 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.
(a) Each agency must keep a record of each determination to provide student loan repayment benefits under this part and make such records available for review upon request by OPM. Such a record may be destroyed when 3 years have elapsed since the end of the service period specified in the employee's service agreement unless any dispute has arisen 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 until the agency is notified by agency counsel that all pending claims have been resolved, all litigation concluded, and any applicable periods for seeking further review has elapsed and, in any event, 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 agency is notified by agency counsel that the debt is fully Start Printed Page 64868collected, compromised, or settled finally and that any applicable period for seeking further review has elapsed.
[FR Doc. E8-26013 Filed 10-30-08; 8:45 am]