A government perk you didn’t know about

Posted on May 17, 2011


If you weren’t furious with Congress before today, you will be by the time you finish reading this blog entry.

Without any hyperbolic introduction, I’m just going to state the point flat-out and let you decide how high to let your blood pressure spike.

Staff members of United States Congresspersons do not have to repay the full amount of their student loans. Instead, their loans are repaid by — you guessed it — a special taxpayer-funded account.  In short, you’re paying for the college tuition of the staff of the member of Congress you hate the most.

According to Title 2, Chapter 4, Section 60c-6 of the program description by the United States Office of Personnel Management (OPM):

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. Although the student loan is not forgiven, agencies are allowed to make payments to the loan holder of up to a maximum of $10,000 for an employee in any calendar year, up to a maximum of $60,000 for any one employee. An employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years. An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination. In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits. Employees enrolled in the program must count such assistance as income and pay taxes on it.”

So, any federal employee participating in the program pays only the tax percentage of their entire student loan debt, which is capped at a maximum of 22 percent for federal employees making less than $150,000 per year. And that percentage is before they apply whatever deductions, exemptions, shelters and loopholes they’re allowed as federal employees. So, in the long math, Congressional staffers pay an average of $7,194 for a $60,000 college education, and they pay that with income they receive from your tax dollars.

Also, as federal employees, they are allowed to apply for (or transfer their existing) student loans through the Pentagon Federal Credit Union and qualify for a special 1.6-to-3.2 percent (maximum) interest rate on their loan. The current average interest rate for a commercial student loan in 7.1 percent.

And here’s the best part: Congress isn’t the only federal body entitled to the perk. *ALL* federal agencies have the option of implementing it.

So, if they work in a high-salary, perk-laden federal job for three years, more than 94 percent of their student loan debt is paid for by … you.

According to a press release issued by the OPM about the program’s official purpose, the program is part of a directed effort for agencies to compete with the higher salaries offered in the private sector and maintain a highly skilled workforce to ensure that this Government is as efficient as possible and that every taxpayer dollar that is spent is being spent wisely.”

According to the OPM’s August 2010 annual report on the Federal Student Loan Repayment Program, during the previous year 36 different federal agencies provided 8,454 employees with a total of more than $61.8 million in student loan repayment benefits.

Those are the facts, despite the erroneous, distorted and politically calculated misinformation provided about the loan program by Fox News in January (and the subsequent deceptive hoax chain e-mail) which blamed Democrats in Congress for the outrage and claimed that even family members of staffers were eligible for the program.

The “Student Loan Repayment Program for Federal Employees” program was signed into effect in 2001 by then-president George W. Bush for executive branch employees (eligibility has since been expanded to all federal employees), and managed by the Chief Administrative Officer of the OBM, a position appointed by Bush.

And just in case you aren’t hyperventilating yet, you should know that the Public Service Loan Forgiveness program was created by the College Cost Reduction and Access Act of 2007 – also signed into law by Bush – and it allows the Department of Education to begin to forgiving direct federal student loans for employees who have worked for 10 years in “public service” jobs — including federal, state and local governments — as long as those employees made 120 consecutive payments on those loans over a 10-year period.”

So, regardless of what balance remains after 10 years, government employees get to see their debt wiped away entirely, as long as they paid their 120 minimum-interest payments using the income they get from you and I.

I sincerely hope you know where your blood pressure medication is.