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Payroll Services Letter 05-23.2: Student Loan Repayment Requests

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Payroll Services Letter 05-23.2: Student Loan Repayment Requests

Number: PS05-23.2

Date: May 26, 2015

Subject: Student Loan Repayment Requests

Category: Debt Management


Reference: PS05-23.1, Subject: Student Loan Repayment Requests dated April 17, 2005. PS05-23.2 supersedes PS05-23.1. Please replace that letter with this one.

Purpose

This letter provides instructions for requesting payment for employees in the Student Loan Repayment Program and forwarding related payroll information to the Defense Finance and Accounting Service (DFAS) Payroll Office. This letter also contains information about the program and its intended use.

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The Student Loan Repayment Program is intended to facilitate the recruitment and retention of highly-qualified employees by allowing agencies to repay part or all of their federally insured student loans. For the complete list of eligible loans, refer to the Student Loan Repayment Fact Sheet:http://opm.gov/oca/pay/studentloan/index.asp

 

Authorization

HHS Operating Divisions (OPDIV) and Staff Divisions Heads or their designee have the authority to approve the repayment of student loans in accordance with the criteria established by 5 CFR 575. The official HHS request and agreement form must be used for documentation and approval.

 

Payment

The OPDIV will send the documents to Customer Care Services (CCS) via a service center ticket.  CCS reviews the documents to ensure all requested information is provided.  Where there are obvious errors or information is missing, CCS will reach back out to the customer. CCS then faxes the completed package to DFAS.

A lump sum payment will be made to the lender identified on the student loan fax coversheet. The amount paid by the agency is subject to all the following maximum limits: $10,000 per employee per calendar year, and a total of $60,000 per employee.

 

Tax Liability

Although a student loan payment is paid directly to the loan holder on behalf of the employee, the employee is nonetheless responsible for the taxes. The student loan repayment is included as taxable income in the employee’s pay record, and tax withholdings are deducted from the payment. For more information on the taxes related to this program, refer to the
Student Loan Repayment Program Questions and Answers on Tax Liability:  http://www.opm.gov/policy-data-oversight/pay-leave/student-loan-repayment/#url=(References)

 

Resources

Guidelines for student loan repayment can be found on the OPM website:

Student Loan Repayment Fact Sheet: http://www.opm.gov/oca/pay/studentloan/index.asp

OPM’s Student Loan Repayment Program Service Agreement: http://opm.gov/oca/pay/studentloan/HTML/sample1-attch2.asp

 

Related Regulations

Section 5379 of Title 5, United States Code:

http://www.opm.gov/oca/pay/studentloan/HTML/5USC5379.asp

 

Part 537 of Title 5, Code of Federal Regulations:

http://www.opm.gov/oca/pay/studentloan/HTML/5CFR537.asp

http://assembler.law.cornell.edu/uscode/html/uscode05/usc_sec_05_00002105----000-.html

For further assistance or for questions regarding the information in this letter, please contact your Payroll Customer Service Team