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Student Loan Repayment

Federal Job Student Loan Payoff

Does the federal government pay off employee’s student loans?

Federal student loan repayment incentive program

The federal government has paid over $452.8 million in student loan repayment incentives to new hires and current employees just since 2008. Student loan repayment is intended to be a tool for agencies to use when necessary to help them achieve their recruitment and retention goals. The federal student loan repayment program authorizes agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency.


The program authorizes agencies to set up their own student loan repayment programs to attract or retain highly qualified employees. Any employee is eligible, except those occupying a position excepted from the competitive civil service because of their confidential, policy-determining, policy-making, or policy-advocating nature (ex: Schedule C appointees).


Although the student loan is not forgiven, agencies may make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee. Employees that accept loan payment are required to sign a service agreement to remain in the service of the paying agency for a period of at least three years. Employees must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for cause or poor performance. In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.

In 2014, the latest reporting period, 33 agencies participated in the program paying our an average of $6,937 to 8,469 federal employees! The Department of Justice paid out the most, $12,897,251 to 1,728 employees with the majority paid to Special Agents and Intelligence Analysts. Each agency decides what occupations to cover based on the agencies needs at the time. The Department of Defense used the program exclusively as an incentive for 578 engineers, 406 employees in the GS-1102 contracting field, and 221 nurses.

One word of caution. When you accept student loan reimbursement the payments sent to your loan holder are included in the employee’s gross income and in wages for federal employment tax purposes. Therefore, your actual payment will be reduced by the taxes incurred. If the recruiter that offers you a position doesn’t offer a student loan payoff incentive ask them if they will consider providing this incentive if you accept the position.