[Senate Report 108-109]
[From the U.S. Government Publishing Office]

108th Congress 
 1st Session                     SENATE                          Report
                                                       Calendar No. 220



                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                                 of the


                              to accompany

                                 S. 926


                 July 21, 2003.--Ordered to be printed

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
                  Ann C. Fisher, Deputy Staff Director
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
     Andrew Richardson, Staff Director, Subcommittee of Government 
     Management, the Federal Workforce and the District of Columbia
Emily J. Kirk, Minority Counsel, Subcommittee of Government Management, 
           the Federal Workforce and the District of Columbia
                      Amy B. Newhouse, Chief Clerk
                                                       Calendar No. 220
108th Congress
 1st Session                                                    108-109




                 July 21, 2003.--Ordered to be printed


Ms. Collins, from the Committee on Governmental Affairs, submitted the 

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 926]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 926) to amend section 5379 of title 5, 
United States Code, to increase the annual and aggretate limits 
on student loan repayments by Federal agencies, having 
considered the same reports favorably thereon without an 
amendment and recommends that the bill do pass.

                         I. Purpose and Summary

    The purpose of S. 926, the Federal Employee Student Loan 
Assistance Act, is to increase the annual and aggregate amounts 
that federal agencies can offer a qualified employee to assist 
in repaying a student loan. The current repayment amount for an 
employee is limited to $6,000 per year and $40,000 total. This 
legislation would raise the annual amount to $10,000 and the 
aggregate amount to $60,000, reflecting an increase in annual 
college tuition costs since the enactment of the original 
statute in 1991. Repayment of student loans, as a recruitment 
and retention incentive, offsets the higher salaries offered by 
private industry and is a tool for restructuring the federal 
civilian workforce to meet changing mission needs. Without this 
additional authority, the rising cost of tuition would lessen 
the competitive value of this recruitment and retention tool.
    An employee for whom a student loan repayment benefit is 
paid must sign a service agreement to remain in the service of 
the paying agency for a period of at least three years. The 
employee must reimburse the paying agency for all benefits paid 
if he or she separates voluntarily or is separated 
involuntarily for cause or poor performance before fulfilling 
the service agreement.

                             II. Background

    According to a June 2003 Office of Personnel Management 
document entitled, Federal Student Loan Repayment Program--
Fiscal Year 2002: Report to the Congress, ``In FY 2002, 16 
federal agencies provided more than $3.1 million in student 
loan repayments for 690 federal employees. In addition, eight 
other agencies reported that they have established an agency 
loan repayment plan and expect to make use of the program in 
the near future. In total, more than half (29) of the reporting 
agencies (57) reported that they either made student loan 
repayments in FY 2002, have an agency loan repayment plan in 
place, or are in the process of establishing a student loan 
repayment plan.'' The report continues, ``Several agencies 
reported that use of the program has helped them achieve their 
recruitment and retention goals. Agencies are also making a 
concerted effort to make applicants and current employees aware 
of the availability of student loan repayments. The most common 
barrier to using the student loan repayment program reported by 
agencies was a lack of funding caused by limited budgets. The 
agencies also recommended several changes in the student loan 
repayment program, such as eliminating the tax liability and 
reducing the statutory 3-year service requirement in exchange 
for a student loan repayment, as well as increasing the annual 
payment limitation and lifetime payment limitation on student 
loan repayments. These proposed changes would require 
legislation and are under review.'' S. 926 addresses two of 
these agency recommendations by raising the annual and 
aggregate limits on student loan repayments.

                        III. Legislative History

    S. 926 was introduced on April 28, 2003, by Senator George 
V. Voinovich and was referred to the Senate Committee on 
Governmental Affairs.
    S. 926 was polled out by the Subcommittee on Oversight of 
Government Management, the Federal Workforce and the District 
of Columbia on June 11, 2003, by a vote of 10-0.
    S. 926 was considered by the Committee on Governmental 
Affairs on June 17, 2003, approved en bloc with other bills by 
voice vote, and ordered to be reported, with no Members present 
dissenting. Senators present were as follows: Collins, 
Lieberman, Voinovich, Coleman, Fitzgerald, Sununu, Levin, 
Akaka, Durbin, Lautenberg, and Pryor.

                    IV. Section-by-Section Analysis

Section 1. Short title

    This Act may be cited as the ``Federal Employee Student 
Loan Assistance Act''.

Section 2. Student loan repayments

    This section amends section 5379(b)(2) of title 5 USC by 
increasing the annual and aggregate amounts that agencies can 
repay a highly qualified employee for a student loan to $10,000 
and $60,000, respectively.

                    V. Estimated Cost of Legislation

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 20, 2003.
Hon. Susan M. Collins,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Madam Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 926, the Federal 
Employee Student Loan Assistance Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
                                         Robert A. Sunshine
                               (For Douglas Holtz-Eakin, Director).

S. 926--Federal Employee Student Loan Assistance Act

    S. 926 would amend the federal student loan repayment 
program to increase the limits on the amount of student loans 
that agencies may repay on behalf of eligible employees. Under 
current law, agencies can offer each eligible employee up to 
$6,000 a year for student loan repayments, and the total amount 
of repayment available to any employee is limited to $40,000. 
This legislation would increase the yearly limitation on such 
repayments to $10,000 and raise the individual limitation to 
    CBO estimates that implementing S. 926 would cost less than 
$500,000 a year, subject to the availability of appropriated 
funds. Enacting the bill would not affect direct spending or 
    Based on information from the Office of Personnel 
Management (OPM), CBO does not expect that an increase in the 
limitations on student loan repayment would lead to a 
significant increase in the cost of the program. OPM reports 
that the most common barrier to federal agencies using the 
student loan repayment program is a lack of specific funding. 
During fiscal year 2002, 16 government agencies provided 
student loan repayment benefits to 690 employees at a cost of 
$3.1 million, with an average repayment amount of $4,500. (The 
Department of State made most of those loan payments, providing 
$2 million to 407 employees.) Because current spending for 
student loan repayments does not appear to be significantly 
constrained by the current annual limit of $6,000 per eligible 
employee, CBO estimates that increasing the limit by $4,000 
would result in only a minor increase in spending for this 
    S. 926 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. This estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                  VI. Evaluation of Regulatory Impact

    Paragraph 11(b)(1) of rule XXVI of the Standing Rules of 
the Senate requires that each report accompanying a bill 
evaluate the ``regulatory impact which would be incurred in 
carrying out this bill.'' Carrying out S. 926 would have no 
regulatory impact.

                 VII. Additional Views of Senator Akaka

    I support the Federal Employee Student Loan Assistance Act, 
S. 926, which will increase the annual and aggregate amounts 
that federal agencies can offer a qualified employee to assist 
in repaying a student loan. However, I am concerned with the 
lack of funding available to agencies to effectively use this 
important recruitment and retention tool. Without adequate 
funding, federal agencies are hindered in their ability to hire 
or provide appropriate retention incentives to talented 
employees who are strong candidates for the program.
    Responding to recommendations of the National Commission on 
the Public Service that a loan forgiveness program be 
established for federal service, Congress authorized a student 
loan repayment program for highly qualified federal employees 
in 1990. The April 1989 Commission report found that the 
federal government faced serious problems in recruiting and 
retaining a quality workforce. Student loan repayment was 
viewed as a way to make government service more attractive to 
candidates, many of whom have incurred significant student loan 
debt in acquiring their education.
    However, the program has not lived up to its full 
potential. According to the Office of Personnel Management 
(OPM) report entitled Federal Student Loan Repayment Program--
Fiscal Year 2002: Report to the Congress, of the 16 agencies 
that have used this authority, most have awarded student loan 
repayment to a small number of individuals.\1\ Only the 
Department of State and the General Accounting Office have 
utilized the program as intended.\2\ According to agencies, the 
most common barrier to using the student loan repayment 
incentive was a lack of funding for the program. One agency 
even commented that because agencies have such limited budgets, 
it is difficult, if not impossible, to find the money to fund 
the program. This raises serious concerns about the effective 
use of the program and our recruitment and retention efforts.
    \1\ Beneficiaries of student loan repayments in FY 2002 included 35 
employees at the Federal Energy Regulatory Commission, 17 at the 
Department of Energy, 13 at the Department of the Interior, 9 at the 
Department of the Treasury, 8 at the National Aeronautics and Space 
Administration, 8 at the Department of Health and Human Services, 7 at 
the General Services Administration, 6 at the Department of Defense, 3 
at the Export-Import Bank, 3 at the Committee for Purchase from People 
Who Are Blind or Severely Disabled, 2 at the Department of Agriculture, 
and 1 employee each at the Department of Justice, the Defense Nuclear 
Facilities Safety Board, and the Inter-American Foundation.
    \2\ The Department of State made loan repayments benefitting 407 
employees while the General Accounting Office (GAO) made loan 
repayments for 169 employees.
    If we are to bridge the gap between retiring employees and 
the need for new workers, we must find ways to encourage 
government service. Ensuring that student loan debt is not an 
impediment to the federal government being an employer of 
choice is an important step. This is especially important as 
high educational debt has been found to make a significant 
difference in the federal government's ability to recruit 
talented employees. On June 4, 2003, Paul Light, Director of 
the Brookings Institution Center for Public Service, testified 
before the Committee that while the nature of the job remains 
the most important consideration in making a decision about 
where to work, college debt makes a difference in job choice 
for the class of 2003.
    The Committee notes in its report accompanying S. 926 that 
funding for the student loan repayment program is a problem. 
However, I do not believe that this problem has received the 
attention it deserves. I am pleased to have joined Senator 
Voinovich in urging the Appropriations Committee for the past 
three years to provide funds to address agencies' human capital 
needs. However, more must be done. To address this need, 
federal agencies may require specific funding for recruitment 
and retention initiatives. I look forward to working with my 
colleagues to secure funding for the repayment of student loans 
for federal employees. Only then will the federal government be 
able to effectively compete with the private sector and recruit 
and retain talented individuals.

                                                   Daniel K. Akaka.

                     VIII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic and existing law, in which no 
change is proposed, is shown in roman):


                          PART III--EMPLOYEES

                     Subpart D--Pay and Allowances

                   CHAPTER 53--PAY RATES AND SYSTEMS

                Subchapter VII--Miscellaneous Provisions

Sec. 5379. Student loan repayments

           *       *       *       *       *       *       *

    (b)(1) 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 (by direct payments on 
behalf of the employee) any student loan previously taken out 
by such employee.
    (2) Payments under this section shall be made subject to 
such terms, limitations, or conditions as may be mutually 
agreed to by the agency and employee concerned, except that the 
amount paid by an agency under this section may not exceed--
          (A) [$6,000] $10,000 for any employee in any calendar 
        year; or
          (B) a total of [$40,000] $60,000 in the case of any 

           *       *       *       *       *       *       *