Written by Lynnette Khalfani-Cox
Paying off student loans is a major goal for a lot of college graduates, regardless of whether you left school two years or 20 years ago.
Unfortunately, it’s taking longer than ever to repay college debt. The typical student loan repayment period is now running about 15 years – which means that a lot of people in their 30s and 40s still have student loans. In fact, even many Americans age 50+ are often struggling with college loans.
Little wonder that there is current $1.2 trillion in student loan debt outstanding in the United States.
No matter what your age, if you’re trying to get rid of federal student loans, one little-known way to tackle that debt is to get some help from Uncle Sam.
The Office of Personnel Management administers the Federal Student Loan Repayment Program, and it’s a great way to knock out student loans more quickly than you may have ever imagined.
Federal Student Loan Repayment Program
In short, under this program, the federal government will pay off up to $60,000 worth of your federal student loans.
Sounds great, right? But you’re probably thinking: What’s the catch?
Well, there is a catch … of sorts.
In exchange for Uncle Sam paying off your student loans, you have to agree to work for a federal agency or an independent agency of the government.
Here’s how it works.
An employee receiving federal student loan repayment assistance must sign an agreement to remain in the service of the paying agency for at least 3 years. Basically, you’re signing an employment contract promising not to quit and to remain as a worker in good standing.
So far, so good, right?
It gets better.
The Federal Student Loan program allows government workers to have their employers pay off up to $10,000 a year in student loans, for as many as six years, for a total of $60,000.
There is one caveat however.
If you separate voluntarily or you leave your position involuntarily before fulfilling the 3-year service agreement due to misconduct, unacceptable performance, or a negative suitability determination, then you must reimburse your employer for all student loan repayment benefits received.
As long as you stay in your employer’s good graces, though, you’ll have no problems.
Millions in Student Loan Benefits Paid Annually
According to federal statistics, in calendar year 2013, the latest annual period for which data was available, 31 federal agencies provided 7,314 employees with a total of more than $52.9 million in student loan repayment benefits. The average annual benefit was $7,233.
This is wonderful news for recent college grads in the job market, those who are already working for the government, as well as individuals thinking about going back to school or making a job/career switch. Essentially, these federal and independent agencies use student loan benefits as a recruitment and retention tool.
Best of all, a very broad array of workers can qualify to have their student loans repaid, including accountants, analysts, civil service members, psychologists, pharmacists, engineers, scientists, lawyers, nurses, administrative professionals, human resources specialists and more.
In 2013, there were a total of 85 government or quasi-government agencies that either provided help repaying student loans, or had established programs or were in the process of creating programs to offer student loan repayment assistance.
Here is a list of the federal government agencies and independent agencies that will repay your student loans.
- Agriculture Department
- Commerce Department
- Defense Department
- Education Department
- Energy Department
- Health and Human Services Department
- Homeland Security Department
- Housing and Urban Development
- Interior Department
- Justice Department
- Labor Department
- State Department
- Transportation Department
- Treasury Department
- Veterans Affairs Department
- Access Board
- American Battle Monuments Commission
- Agency for International Development
- Appraisal Subcommittee
- Arctic Research Commission
- Broadcasting Board of Governors
- Chemical Safety and Hazard Investigation Board
- Commission on Civil Rights
- Commission of Fine Arts
- Commodity Futures Trading Commission
- Consumer Financial Protection Bureau
- Consumer Product Safety Commission
- Court Services and Offender Supervision Agency
- Defense Nuclear Facilities Safety Board
- Environmental Protection Agency
- Equal Employment Opportunity Commission
- Farm Credit Administration
- Farm Credit System Insurance Corporation
- Federal Communications Commission
- Federal Deposit Insurance Corporation
- Federal Elections Commission
- Federal Energy Regulatory Commission
- Federal Housing Finance Agency
- Federal Labor Relations Authority
- Federal Maritime Commission
- Federal Mediation and Conciliation Service
- Federal Retirement Thrift Investment Board
- Federal Trade Commission
- General Services Administration
- Government Accountability Office
- Government Printing Office
- Harry S. Truman Scholarship Foundation
- Holocaust Memorial Museum
- Institute of Museum and Library Services
- Inter-American Foundation
- International Trade Commission
- James Madison Fellowship Foundation
- John F. Kennedy Center for the Performing Arts
- Library of Congress
- Merit Systems Protection Board
- Millennium Challenge Corporation
- National Aeronautics and Space Administration
- National Archives and Records Administration
- National Capital Planning Commission
- National Endowment for the Arts
- National Endowment for the Humanities
- National Gallery of Art
- National Labor Relations Board
- National Science Foundation
- National Security Agency
- National Transportation Safety Board
- Nuclear Regulatory Commission
- Occupational Safety and Health Review Commission
- Office of Government Ethics
- Office of Navajo and Hopi Indian Relocation
- Office of Personnel Management
- Office of the Federal Coordinator, Alaska Natural Gas Transportation Projects Overseas Private Investment Corporation
- Pension Benefit Guaranty Corporation
- Postal Regulatory Commission
- Railroad Retirement Board
- Securities and Exchange Commission
- Selective Service System
- Small Business Administration
- Smithsonian Institution
- Social Security Administration
- Surface Transportation Board
- Tennessee Valley Authority
- Trade and Development Agency
- U.S. AbilityOne Commission
The most generous agencies
In case you’re wondering, the most generous agencies with student loan repayment benefits are the Department of Defense, the Department of Justice, the Department of State, and the Securities and Exchange Commission. In 2013, more than 73% of all student loan repayment benefits were provided by these agencies, and more than 70% of all student loan repayment recipients were employed by these four agencies.
But again, I can’t stress enough how widespread these benefits are. They’re now available at 85 federal and independent agencies. So if you’re job hunting or already working at one of these places, do check out the federal and quasi-government organizations listed above to find out about their student loan repayment benefits.
Reader questions about paying off student loans
Q: I have a school loan for me and my daughter from 1994. I have paid interest only and currently the balance is $68,000+. My monthly payment is $375. I have deferred payments at least twice the past 4 years. What options do I have other than walking away from the loan?
A: Unfortunately, student loans aren’t like mortgage debt. You can’t simply “walk away” from student loans — at least not without very, very severe consequences, and not without those loans haunting you, literally, for the rest of your life. You see, student loans have no “statute of limitations.” So your lenders (whether private lenders or the federal government) can come after you and/or your daughter forever to try to collect. Read this article on how to pay student loans fast, and the links on these posts on student loans too, for some ideas about how to eliminate that student loan debt.
Q: I have student loans of $66,000, including $20 in penalties, fees and interest. My salary is $1,500 a month. My required student loan payments are is $415 a month. I want to get them out of default. Any advice?
A: I know those student loans seem overwhelming right now, especially given your modest salary. But there are some steps you can take to improve your situation.
Start by going through the process of rehabilitating your student loans to clear up your student loan default. Read this article which explains everything you need to know about fixing defaulted student loans.
Also read this post about smart ways to pay off student loans.
Both of these items will give you great ideas about how to best tackle that student loan debt.