[Federal Register Volume 66, Number 147 (Tuesday, July 31, 2001)]
[Rules and Regulations]
[Pages 39405-39406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19008]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 147 / Tuesday, July 31, 2001 / Rules 
and Regulations  

[[Page 39405]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 537

RIN 3206-AJ33


Repayment of Student Loans

AGENCY: Office of Personnel Management.

ACTION: Final rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations to implement provisions of the Floyd D. Spence National 
Defense Authorization Act for Fiscal Year 2001 authorizing Federal 
agencies to repay federally insured student loans when necessary to 
recruit or retain highly qualified personnel.

EFFECTIVE DATES: August 30, 2001.

FOR FURTHER INFORMATION CONTACT: Michael J. Mahoney, (202) 606-0830 
(FAX 202-606-0390).

SUPPLEMENTARY INFORMATION: On March 16, 2001, OPM published proposed 
regulations implementing provisions of Public Law 106-398. OPM is 
making them final with no changes. These provisions: Remove the 
restriction of this incentive to professional, technical, or 
administrative personnel; remove the limitation of this incentive to 
employees covered under General Schedule pay rates; broaden the types 
of loans which qualify under this part under the Higher Education Act 
of 1965 and the Public Health Service Act; require agencies to report 
annually to OPM on their use of this incentive; and require OPM to 
report annually to Congress on agencies' use of this incentive. These 
regulations reflect the amendments to 5 U.S.C. 5379.
    The repayment authority is one of several flexibilities made 
available to agencies when trying to attract individuals to the Federal 
service, or retain highly qualified personnel.
    These final regulations amend the following: Purpose, Definition of 
Employee, Definition of Student Loan, and Records and Reports.

Comments

    OPM received comments from 3 agencies and 6 individuals.
    One agency commented that the $40,000 payment limitation is not 
clear, and that the final regulations should provide greater clarity as 
to what this limitation represents. OPM did not adopt this suggestion 
because we believe the language in the regulation at 5 CFR 
537.106(c)(2), which reads, ``a total of $40,000 per employee'', is 
sufficiently clear. The $40,000 limitation is the maximum an agency may 
pay to any one employee. The same agency also suggested that the final 
regulations state whether this benefit is subject to the aggregate 
limitation on pay. OPM did not adopt this suggestion because that issue 
is outside the scope of these regulations. However, OPM is amending the 
questions and answers on student loan repayments on the OPM Web site to 
clarify that these payments are not subject to that aggregate 
limitation.
    Another agency suggested that OPM serve as a resource for 
information pertaining to tax withholding and payroll related issues 
associated with the use of this benefit. OPM does not agree with this 
suggestion because we have no authority to provide guidance on tax 
related issues. OPM defers to the Internal Revenue Service (IRS) on tax 
related matters. However OPM, with input from the IRS, provides 
information pertaining to the tax related aspects of this benefit in 
our Questions and Answers. This agency also commented that the annual 
reporting requirements do not impose an undue burden on agencies.
    A third agency suggested that the annual reporting requirement be 
conducted on a fiscal year basis to coincide with agency reports for 
other recruitment, retention, and relocation incentives. OPM agrees 
with this suggestion and will adopt a fiscal year reporting 
requirement. We will address reporting timeframes in our Questions and 
Answers.
    One individual commented that more guidelines are needed to ensure 
appropriate implementation of this program and to safeguard against 
abuses of the program. OPM did not address this suggestion in the final 
regulations because we have issued accompanying Questions and Answers 
guidance to assist agencies with their implementation of this program.
    Another individual suggested the final regulations clarify what is 
expected of employees after they receive this benefit. OPM has already 
addressed this in 5 CFR 537.107 (service agreements) and in 5 CFR 
537.108 (loss of eligibility for loan repayment benefits).
    Another individual suggested that OPM define the term, ``highly 
qualified personnel'' in the final regulations. OPM did not adopt this 
suggestion. A standard definition of ``highly qualified personnel'' may 
limit agencies in their use of this authority, as there are many ways 
in which an individual may be deemed highly qualified in relation to 
the duties they perform or the skills they possess. OPM reminds 
agencies that they can define the term in their agency plans for using 
this authority.
    Finally, one individual noted the difficulties in showing that an 
employee would be likely to leave for employment outside the Federal 
service. The individual commented that proof of an offer of employment 
is too unrealistic and difficult to obtain, and that private sector 
employers are not likely to provide such proof. OPM believes the final 
regulations give agencies wide latitude in how they determine whether 
an employee may be likely to leave for employment outside the Federal 
service. The final regulations do not specify that proof from a private 
sector employer is required in order for this benefit to be used as a 
retention incentive.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it affects 
only certain Federal employees.

List of Subjects in 5 CFR Part 537

    Administrative practice and procedure, Government employees, Wages.


[[Page 39406]]


Office of Personnel Management.
Kay Coles James,
Director.

    Accordingly, OPM amends part 537 to Title 5, Code of Federal 
Regulations, as follows:

PART 537--REPAYMENT OF STUDENT LOANS

    1. The authority citation for part 537 continues to read as 
follows:

    Authority: 5 U.S.C. 5379.

    2. Section 537.101 is revised to read as follows:


Sec. 537.101  Purpose.

    This part provides regulations to implement 5 U.S.C. 5379, as 
amended, which authorizes agencies to establish a program under which 
they may agree to repay (by direct payment on behalf of the employee) 
all or part of any outstanding federally insured student loan or loans 
previously taken out by a candidate to whom an offer of employment has 
been made, or a current employee of the agency, in order to recruit or 
retain highly qualified personnel.
    3. In Sec. 537.102 the definitions of Employee and Student loan are 
revised to read as follows:


Sec. 537.102  Definitions.

* * * * *
    Employee has the meaning given that term in 5 U.S.C. 2105, except 
it does not include an employee occupying a position which is excepted 
from the competitive service because of its confidential, policy-
determining, policy-making, or policy advocating character (i.e., 
employees serving under Schedule C appointments).
* * * * *
    Student loan means--
    (a) A loan made, insured, or guaranteed under parts B, D or E of 
title IV of the Higher Education Act of 1965; or
    (b) A health education assistance loan made or insured under part A 
of title VII of the Public Health Service Act, or under part E of title 
VIII of that Act.
    4. In section 537.110 the section heading is revised and the 
existing text is designated as paragraph (a), and paragraph (b) is 
added, to read as follows:


Sec. 537.110  Records and Reports.

* * * * *
    (b) Before January 1st of each year, each agency must submit a 
written report to the Office of Personnel Management stating when the 
agency made student loan repayments on behalf of an employee during the 
previous fiscal year. Each report must include:
    (1) The number of employees selected to receive this benefit;
    (2) The job classifications of the employees selected to receive 
benefits under this part; and
    (3) The cost to the Federal government for providing benefits under 
this part.

[FR Doc. 01-19008 Filed 7-30-01; 8:45 am]
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