[Federal Register Volume 72, Number 5 (Tuesday, January 9, 2007)]
[Proposed Rules]
[Pages 914-918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-101]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / 
Proposed Rules  

[[Page 914]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 537

RIN 3206-AK51


Repayment of Student Loans

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The Office of Personnel Management (OPM) is issuing proposed 
regulations to revise the rules governing the authority to offer 
student loan repayment benefits to current Federal employees or 
candidates for Federal jobs when necessary to recruit or retain highly 
qualified personnel. These revisions include certain policy changes and 
clarifications to assist agencies in taking full advantage of the 
Federal student loan repayment program.

DATES: Comments must be received on or before March 12, 2007.

ADDRESSES: Send or deliver comments to Jerome D. Mikowicz, Deputy 
Associate Director for Pay and Leave Administration, Office of 
Personnel Management, Room 7H31, 1900 E Street, NW., Washington, DC 
20415-8200, FAX: (202) 606-0824, or e-mail at [email protected].

FOR FURTHER INFORMATION CONTACT: Gene Holson by telephone at (202) 606-
2858; by fax at (202) 606-0824; or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) is 
issuing proposed regulations to revise the rules implementing 5 U.S.C. 
5379, which allow agencies to offer student loan repayment benefits to 
current Federal employees or candidates for Federal jobs when necessary 
to recruit or retain highly qualified personnel. The primary purpose of 
this revision is to make part 537 more readable and usable. However, we 
also are proposing substantive changes based on experience to date to 
improve program administration in the agencies and promote alignment 
between this authority and related authorities that support recruitment 
and retention efforts. The following table lists, by specific 
regulatory section, the proposed substantive changes and provides a 
brief description of the purpose and/or effect of each change.

------------------------------------------------------------------------
        Proposed rule                Description of proposed change
------------------------------------------------------------------------
Sec.   537.102...............  Definitions. The current language in the
                                definition of employee regarding the
                                exclusion of certain types of employees
                                would be moved to proposed Sec.
                                537.104, which deals with employee
                                eligibility.
                               New definitions of student loan repayment
                                benefit and loan payment would be added
                                to distinguish more clearly between the
                                benefit credited to the employee and the
                                loan payments made to a loan holder by
                                an agency.
Sec.   537.103(h)............  Documentation. The requirement for
                                documentation would be revised to cover
                                only actions taken to approve a student
                                loan repayment benefit. The current
                                language requires documentation in each
                                case in which an employee is
                                ``considered'' for a student loan
                                repayment benefit.
Sec.   537.104...............  Employee eligibility. Paragraph (a) would
                                revise the current language in Sec.
                                537.104 to clarify when an employee in a
                                time-limited appointment may receive
                                student loan repayment benefits.
                               Paragraph (b) would be modified to
                                incorporate language currently found in
                                the definition of employee.
                               Paragraph (c) would provide a cross
                                reference to the provisions of Sec.
                                537.108, which deal with loss of
                                eligibility for student loan repayment
                                benefits.
Sec.   537.105...............  Criteria for payment. This section would
                                be rewritten to focus more clearly on
                                the criteria that must be met to justify
                                the approval of student loan repayment
                                benefits.
                               The provisions for written documentation
                                and the timing of recruitment-related
                                approvals would be clarified and moved
                                to Sec.   537.106, which deals with
                                payment conditions and procedures. (See
                                Sec.   537.106(a)(3) and (4).)
                               Current Federal employees. Proposed
                                paragraph (c) would provide that an
                                agency may not authorize student loan
                                repayment benefits to recruit an
                                individual from outside the agency who
                                is currently employed in the Federal
                                service. The intent of the student loan
                                repayment authority is to help agencies
                                recruit individuals for Federal service,
                                not to compete with other agencies for
                                current Federal employees. This
                                restriction would be consistent with
                                current OPM guidance and the rules
                                concerning inter-agency competition when
                                providing recruitment and retention
                                incentives under 5 CFR part 575.
Sec.   537.106(a)............  General conditions. These provisions
                                establish standards and requirements
                                necessary to provide for reasonable
                                uniformity across agencies, as required
                                by 5 U.S.C. 5379(g). Proposed paragraph
                                (a)(4) would clarify that a service
                                agreement may be signed before a job
                                candidate begins serving in the position
                                for which he or she was recruited. This
                                paragraph would also incorporate
                                language currently found in Sec.
                                537.105(b).
Sec.   537.106(b)............  Age of student loans. Proposed paragraph
                                (b)(3) would clarify that, although
                                these regulations do not impose a limit
                                on the age of a student loan, an agency
                                may specify in its own plan that only
                                student loans made within a certain
                                timeframe are eligible for repayment.
Sec.   537.106(c)(3).........  Benefit cap. A new paragraph would
                                clarify that the full gross amount of
                                the student loan repayment benefit
                                (before deducting any tax withholdings
                                from that gross amount) counts toward
                                the benefit cap.
Sec.   537.107(a)............  Contingent additional benefits. A new
                                sentence would clarify that a service
                                agreement may address the possibility
                                that the agency may modify the agreement
                                to provide student loan repayment
                                benefits in addition to those fixed in
                                the agreement based on contingencies or
                                conditions specified in the agreement.
                                For example, benefits in a later year
                                could be contingent on budget levels.

[[Page 915]]

 
Sec.   537.107(b)............  Agreement modifications. The current
                                sentence on ``increases'' and
                                ``renewals'' would be removed. The
                                replacement sentence would clarify that
                                the agency and the employee may mutually
                                agree to modify a service agreement to
                                provide additional student loan
                                repayment benefits for additional
                                service without the need for a new
                                service agreement. (A new service
                                agreement would require additional
                                service of at least 3 years. In
                                contrast, an agreement modification
                                could, for example, add just 1 year of
                                additional service.) The possibility of
                                payment increases would now be addressed
                                in the new sentence added to paragraph
                                (a).
                               Periods in a non-pay status. A new rule
                                would provide that periods of leave
                                without pay, or other periods during
                                which the employee is not in a pay
                                status, would not count toward
                                completion of the required service
                                period. This means the originally
                                projected service completion date must
                                be extended by the total amount of time
                                spent in non-pay status. However, as
                                provided by 5 CFR 353.107, absence
                                because of uniformed service or
                                compensable injury is considered
                                creditable toward the required service
                                period upon reemployment.
Sec.   537.107(d)............  Service period commencement. A new
                                paragraph would be added to address when
                                a service period begins.
Sec.   537.107(e)............  Reimbursement provision in service
                                agreement. A new provision would require
                                agencies to include in any service
                                agreement a provision addressing whether
                                or not the individual will be required
                                to reimburse the agency for student loan
                                repayment benefits if he or she
                                transfers to a different agency during
                                the service period. (Also see proposed
                                Sec.   537.109(b)(2), which would
                                incorporate language currently found in
                                Sec.   537.109(d)(2).)
Sec.   537.108(a)............  Loss of eligibility. Proposed paragraph
                                (a)(3) would clarify that loss of
                                eligibility based on a condition in the
                                service agreement would occur only when
                                the agreement expressly states that a
                                violation of the condition will result
                                in the loss of eligibility.
Sec.   537.109(c)............  Reimbursement under a modified service
                                agreement. Current language would be
                                modified to clarify what would happen
                                when an agency and an employee mutually
                                agree to modify an existing service
                                agreement to provide additional student
                                loan repayment benefits for additional
                                service (e.g., a 4th year following an
                                initial 3-year service period). The
                                modified service agreement may stipulate
                                that if the employee completes the
                                initial service period but fails to
                                complete the additional service period,
                                he or she would be required to reimburse
                                the paying agency only for the amount of
                                any student loan repayment benefits
                                received during the additional service
                                period. (Also see proposed Sec.
                                537.107(b) regarding modified service
                                agreements.)
Sec.   537.110(a)............  Records retention. Current language would
                                be modified to clarify that a record on
                                a determination to provide student loan
                                repayment benefits must be retained for
                                at least 3 years after the end of the
                                employee's service period as specified
                                in the service agreement. We are
                                deleting the provision regarding an
                                earlier date linked to an OPM program
                                review because as a practical matter a
                                program review may not necessarily mean
                                each case is reviewed individually.
Sec.   537.110(b)............  Reports. A new provision would require
                                agencies to report on the student loan
                                repayment benefits they provided during
                                the previous calendar year rather than
                                during the previous fiscal year.
                                Currently, agencies are required to
                                report to OPM by the end of the calendar
                                year on the student loan repayment
                                benefits they provided during the
                                previous fiscal year. However, the law
                                imposes a calendar year limitation on
                                the amount of student loan repayment
                                benefits an agency may provide to an
                                employee. Also, we note agencies are
                                currently required to report to OPM on
                                their use of other recruitment and
                                retention flexibilities (e.g.,
                                recruitment, relocation, and retention
                                incentives under 5 CFR part 575) on a
                                calendar year basis. Therefore, we are
                                proposing this change to simplify
                                reporting requirements for agencies. The
                                proposed regulation would require
                                agencies to report to OPM by March 31st
                                of each year on their use of the student
                                loan repayment authority during the
                                previous calendar year.
                               In paragraphs (b)(1) and (b)(2), we
                                propose to replace ``employees selected
                                to receive'' with ``employees who
                                received'' because an individual may be
                                selected to receive student loan
                                repayment benefits during one reporting
                                period, but not actually receive
                                benefits until the following reporting
                                period. This change would be consistent
                                with our approach for reporting data on
                                student loan repayments in our annual
                                report to Congress.
------------------------------------------------------------------------

E.O. 12866, Regulatory Review

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

Regulatory Flexibility Act

    I certify that these regulations would not have a significant 
economic impact on a substantial number of small entities because they 
would apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 537

    Administrative practice and procedure, Government employees, 
Students, Wages.

U.S. Office of Personnel Management.
Linda M. Springer,
Director.
    Accordingly, OPM is proposing to revise 5 CFR part 537 to read as 
follows:

PART 537--REPAYMENT OF STUDENT LOANS

Sec.
537.101 Purpose.
537.102 Definitions.
537.103 Agency student loan repayment plans.
537.104 Employee eligibility.
537.105 Criteria for payment.
537.106 Conditions and procedures for providing student loan 
repayment benefits.
537.107 Service agreements.
537.108 Loss of eligibility for student loan repayment benefits.
537.109 Employee reimbursements to the Government.
537.110 Records and reports.

    Authority: 5 U.S.C. 5379(g).


Sec.  537.101  Purpose.

    This part implements 5 U.S.C. 5379, which authorizes agencies to 
establish a student loan repayment program for the purpose of 
recruiting or retaining highly qualified personnel. Under such a 
program, an agency may agree to repay (by direct payment to the loan 
holder on behalf of the employee) all or part of any outstanding 
qualifying student loan or loans previously taken out by a job 
candidate to whom an offer of employment has been made, or by a current 
employee of the agency.


Sec.  537.102  Definitions.

    Agency has the meaning given that term in subparagraphs (A) through 
(E) of 5 U.S.C. 4101(1).
    Authorized agency official means the head of an Executive agency or 
an official who is authorized to act for the head of the agency in the 
matter concerned.
    Employee means an employee of an agency who satisfies the 
definition of the term in 5 U.S.C. 2105.
    Loan payment means the net payment made by an agency to the holder 
of a student loan (after deducting any tax withholdings that may be 
made from the

[[Page 916]]

gross student loan repayment benefit credited to the employee).
    Service agreement means a written agreement between an agency and 
an employee (or job candidate) under which the employee (or job 
candidate) agrees to a specified period of service in exchange for 
student loan repayment benefits, subject to the conditions set forth 
under this part.
    Student loan means--
    (1) A loan made, insured, or guaranteed under parts B, D or E of 
title IV of the Higher Education Act of 1965; or
    (2) 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.
    Student loan repayment benefit means the benefit provided to an 
employee under this part in which an agency repays (by a direct payment 
on behalf of the employee) a qualifying student loan previously taken 
out by such employee. The dollar value of this benefit is the gross 
amount credited to the employee at the time of a loan payment to the 
holder of the student loan, before deducting any employee tax 
withholdings from that gross amount as described in Sec.  
537.106(a)(6)(iii). A student loan repayment benefit is not considered 
basic pay for any purpose.
    Time-limited appointment means an appointment of temporary duration 
including--
    (1) A temporary appointment under 5 CFR part 316, subpart D, or 
similar authority;
    (2) A term appointment under 5 CFR part 316, subpart C, or similar 
authority;
    (3) An overseas limited appointment with a time limitation under 5 
CFR part 301, subpart B;
    (4) A limited term or limited emergency appointment in the Senior 
Executive Service, as defined in 5 U.S.C. 3132(a), or an equivalent 
appointment made for similar purposes;
    (5) A Veterans Recruitment Appointment under 5 CFR part 307;
    (6) A Presidential Management Fellow appointment under 5 CFR 
213.3102(ii) and 5 CFR 213.3102(jj);
    (7) A Federal Career Intern appointment under 5 CFR 213.3202(o); 
and
    (8) An appointment under the fellowship and similar programs 
authority at 5 CFR 213.3102(r).


Sec.  537.103  Agency student loan repayment plans.

    Before providing student loan repayment benefits under this part, 
an agency must establish a student loan repayment plan. This plan must 
include the following elements:
    (a) The designation of officials with authority to review and 
approve offering student loan repayment benefits (which may parallel 
the approval delegations used for other recruitment, relocation, and 
retention incentives);
    (b) The situations in which the student loan repayment authority 
may be used;
    (c) The criteria to meet or consider in authorizing student loan 
repayment benefits, including criteria for determining the size and 
timing of the loan payment(s);
    (d) A system for selecting employees (or job candidates) to receive 
student loan repayment benefits that ensures fair and equitable 
treatment;
    (e) The requirements associated with service agreements (including 
a basis for determining the length of service to be required if it is 
greater than the statutory minimum);
    (f) The procedures for making loan payments;
    (g) The provisions for recovering any amount outstanding from an 
employee who fails to satisfy a service agreement and conditions for 
waiving an employee's obligation to reimburse the agency for payments 
made under this part; and
    (h) Documentation and recordkeeping requirements sufficient to 
allow reconstruction of each action to approve a student loan repayment 
benefit.


Sec.  537.104  Employee eligibility.

    (a) Subject to the conditions in 5 U.S.C. 5379 and this part, an 
authorized agency official may approve student loan repayment benefits 
to recruit a highly qualified job candidate or retain a highly 
qualified employee who, during the service period established under a 
service agreement (consistent with Sec.  537.107), will be serving 
under--
    (1) An appointment other than a time-limited appointment; or
    (2) A time-limited appointment if--
    (i) The employee (or job candidate) will have at least 3 years 
remaining under the appointment after the beginning of the service 
period established under a service agreement; or
    (ii) The time-limited appointment authority leads to conversion to 
another appointment of sufficient duration so that his or her 
employment with the agency is projected to last for at least 3 
additional years after the beginning of the service period established 
under a service agreement.
    (b) An employee occupying a position that is excepted from the 
competitive service because of its confidential, policy-determining, 
policy-making, or policy-advocating character is ineligible for student 
loan repayment benefits.
    (c) An employee becomes ineligible for student loan repayment 
benefits under the conditions described in Sec.  537.108.


Sec.  537.105  Criteria for payment.

    (a) General criteria. Before authorizing student loan repayment 
benefits for an employee (or job candidate), an agency must make a 
written determination that--
    (1) The employee (or job candidate) is highly qualified and 
otherwise eligible (as described in Sec.  537.104); and
    (2)(i) In a case where the authorization is granted to recruit a 
job candidate to fill an agency position, the agency otherwise would 
encounter difficulty in filling a position with a highly qualified 
individual; or
    (ii) In a case where the authorization is granted to retain a 
current employee of the agency, the employee otherwise is likely to 
leave the agency for employment outside the Federal service and it is 
essential to retain the employee based on the employee's high or unique 
qualifications or a special need of the agency.
    (b) Retention considerations. In making a determination under 
paragraph (a)(2)(ii) of this section, an agency must consider the 
extent to which the employee's departure would affect the agency's 
ability to carry out an activity or perform a function that is deemed 
essential to its mission.
    (c) Current Federal employees. An agency may not authorize student 
loan repayment benefits to recruit an individual from outside the 
agency who is currently employed in the Federal service.
    (d) Selecting employees. When selecting employees (or job 
candidates) to receive student loan repayment benefits, agencies must 
ensure that benefits are awarded without regard to political 
affiliation, race, color, religion, national origin, sex, marital 
status, age, or handicapping condition.


Sec.  537.106  Conditions and procedures for providing student loan 
repayment benefits.

    (a) General conditions. (1) Student loan repayment benefits may be 
provided at the discretion of the agency and are subject to such terms, 
limitations, or conditions as may be mutually agreed to in writing by 
the agency and the employee (or job candidate) as part of a service 
agreement under Sec.  537.107.
    (2) The student loan to be repaid must be a qualifying student loan 
as set forth in paragraph (b) of this section.
    (3) The agency must document in writing each approval of student 
loan repayment benefits. An authorized

[[Page 917]]

agency official must review and approve each written determination. The 
written determination must show the employee (or job candidate) meets 
the criteria specified in Sec.  537.105.
    (4) An authorized agency official must approve student loan 
repayment benefits in connection with a recruitment action before the 
job candidate actually enters on duty in the position for which he or 
she was recruited. The agency and the job candidate may sign the 
service agreement before the job candidate begins serving in the 
position, but the agency may not begin making loan payments until the 
job candidate begins serving in the position.
    (5) Student loan repayment benefits are in addition to basic pay 
and any other form of compensation otherwise payable to the employee 
involved.
    (6) Appropriate tax withholdings must be deducted or applied at the 
time any payment is made. Since these tax implications could create a 
financial hardship for the recipient of the student loan repayment 
benefit, agencies may lessen the impact of tax withholdings on an 
employee's paycheck in one of the following ways:
    (i) Make smaller payments at periodic intervals throughout the 
year, rather than issue payments under this part in one lump sum;
    (ii) Allow the employee to write a check to the agency to cover his 
or her tax liability, rather than have the tax liability withheld from 
the employee's paycheck;
    (iii) Deduct the amount of taxes to be withheld from the student 
loan repayment benefit before the balance is issued as a loan payment 
to the holder of the loan.


    Note to Sec.  537.106(a)(6): Contact the Internal Revenue 
Service for further details concerning these options, as well as the 
tax withholding implications of payments under this part.


    (b) Qualifying student loans. (1) The agency may make loan payments 
only for student loan debts that are outstanding at the time the agency 
and the employee (or job candidate) enter into a service agreement. 
Before authorizing loan payments, an agency must verify with the holder 
of the loan that the employee (or job candidate) has an outstanding 
student loan that qualifies for repayment under this part. The agency 
must verify remaining balances to ensure that loans are not overpaid.
    (2) The agency may repay more than one loan if the employee's 
student loan repayment benefit does not exceed the limits set forth in 
paragraph (c) of this section.
    (3) These regulations do not impose a limit on the age of a student 
loan for qualification purposes. The agency may, however, specify in 
its agency plan that only student loans made within a certain timeframe 
are eligible for repayment.
    (c) Benefit amount. (1) In determining the amount of student loan 
repayment benefits to approve, an agency must consider the employee's 
(or job candidate's) value to the agency and how far in advance the 
agency is permitted to commit funds. If an agency decides to make 
additional student loan repayment benefits contingent on budget levels 
or other factors, it must address these contingent benefits in the 
written service agreement as described in Sec.  537.107(a).
    (2) The amount of student loan repayment benefits provided by an 
agency is subject to both of the following limits:
    (i) $10,000 per employee per calendar year; and
    (ii) A total of $60,000 per employee.
    (3) In applying the limits in paragraph (c)(2) of this section, the 
agency must count the full student loan repayment benefit (i.e., before 
deducting any tax withholdings as described in paragraph (a)(6)(iii) of 
this section).
    (d) Employee responsibility. Loan payments made by an agency under 
this part do not exempt an employee from his or her responsibility and/
or liability for any loan(s) the individual has taken out. The employee 
also is responsible for any income tax obligations resulting from the 
student loan repayment benefit.


Sec.  537.107  Service agreements.

    (a) Before an employing agency makes any loan payments for an 
employee, the employee (or job candidate) must sign a written service 
agreement to complete a specified period of service with the agency and 
to reimburse the agency for the student loan repayment benefit when 
required by Sec.  537.109. The service agreement also may specify any 
other employment conditions the agency considers to be appropriate, 
including the employee's (or job candidate's) position and the duties 
he or she is expected to perform, his or her work schedule, and his or 
her level of performance. (See Sec. Sec.  537.108 and 537.109.) The 
service agreement may address the possibility that, during the period 
the agreement is in effect, the agency may modify the agreement to 
provide student loan repayment benefits in addition to those fixed in 
the agreement based on contingencies or conditions specified in the 
agreement.
    (b) The minimum period of service to be established under a service 
agreement is 3 years, regardless of the amount of student loan 
repayment benefits authorized. The agency and the employee may mutually 
agree to modify an existing service agreement, subject to the 
limitations at Sec.  537.106(c)(2), to provide additional student loan 
repayment benefits for additional service without the need for an 
entirely new service agreement (which would require a new 3-year 
minimum service period). Periods of leave without pay, or other periods 
during which the employee is not in a pay status, do not count toward 
completion of the required service period. Thus, the service completion 
date must be extended by the total amount of time spent in non-pay 
status. However, as provided by 5 CFR 353.107, absence because of 
uniformed service or compensable injury is considered creditable toward 
the required service period upon reemployment.
    (c) A service agreement made under this part in no way constitutes 
a promise of, or right or entitlement to, appointment, continued 
employment, or noncompetitive conversion to the competitive service. 
This condition should be stated in the service agreement.
    (d) The service period begins on the date specified in the service 
agreement. That beginning date may not be--
    (1) Earlier than the date the service agreement is signed; or
    (2) Earlier than the date the individual begins serving in the 
position for which he or she was recruited (when student loan repayment 
benefits are approved to recruit a job candidate to fill an agency 
position).
    (e) The service agreement must contain a provision addressing 
whether the individual would be required to reimburse the paying agency 
for student loan repayment benefits if he or she voluntarily separates 
from the paying agency to work for another agency before the end of the 
service period. (See Sec.  537.109(b)(2).)
    (f) The agency may include in a service agreement specific 
conditions (in addition to those required by law) that trigger the loss 
of eligibility for student loan repayment benefits and/or a requirement 
that the employee reimburse the agency for student loan repayment 
benefits already received. (See Sec. Sec.  537.108(a)(3) and 
537.109(a)(2).) However, a service agreement may not require 
reimbursement based on--
    (1) An employee's failure to maintain performance at a particular 
level (unless

[[Page 918]]

the employee is separated based on unacceptable performance); or
    (2) An involuntary separation for reasons other than misconduct or 
unacceptable performance (e.g., an involuntary separation resulting 
from a reduction in force or medical reasons).


Sec.  537.108  Loss of eligibility for student loan repayment benefits.

    (a) An employee receiving student loan repayment benefits from an 
agency is ineligible for continued benefits from that agency if the 
employee--
    (1) Separates from the agency;
    (2) Does not maintain an acceptable level of performance, as 
determined under standards and procedures prescribed by the agency; or
    (3) Violates a condition in the service agreement, if the agreement 
specifically provides that eligibility is lost when the condition is 
violated.
    (b) For the purpose of applying paragraph (a)(2) of this section, 
an acceptable level of performance is one that is equivalent to level 3 
(``Fully Successful'' or equivalent) or higher, as described in 5 CFR 
430.208(d). An employee loses eligibility for student loan repayment 
benefits if his or her most recent official performance evaluation does 
not meet this requirement.


Sec.  537.109  Employee reimbursements to the Government.

    (a) An employee is indebted to the Federal Government and must 
reimburse the paying agency for the amount of any student loan 
repayment benefits received under a service agreement if he or she--
    (1) Fails to complete the period of service required in the 
applicable service agreement (except as provided by paragraph (b) of 
this section); or
    (2) Violates any other condition that specifically triggers a 
reimbursement requirement under the agreement.
    (b) An agency may not apply paragraph (a) of this section based on 
an employee's failure to complete the required period of service 
established under a service agreement if--
    (1) The employee is involuntarily separated for reasons other than 
misconduct or unacceptable performance; or
    (2) The employee leaves the paying agency voluntarily to enter into 
the service of any other agency, unless reimbursement to the agency is 
otherwise required in the service agreement, as provided by Sec.  
537.107(e).
    (c) If an agency and an employee mutually agree to modify an 
existing service agreement to provide additional student loan repayment 
benefits for additional service (as provided by Sec.  537.107(b)), the 
modified service agreement may stipulate that, if the employee 
completes the initial service period but fails to complete the 
additional service period, he or she is required to reimburse the 
paying agency only for the amount of any student loan repayment 
benefits received during the additional service period.
    (d) If an employee fails to reimburse the paying agency for the 
amount owed under paragraph (a) of this section, a sum equal to the 
amount outstanding is recoverable from the employee under the agency's 
regulations for collection by offset from an indebted Government 
employee under 5 U.S.C. 5514 and 5 CFR part 550, subpart K, or through 
the appropriate provisions governing Federal debt collection if the 
individual is no longer a Federal employee.
    (e) An authorized agency official may waive, in whole or in part, a 
right of recovery of an employee's debt if he or she determines that 
recovery would be against equity and good conscience or against the 
public interest. (See 5 U.S.C. 5379(c)(3).)
    (f) Any amount reimbursed by, or recovered from, an employee under 
this section must be credited to the appropriation account from which 
the amount involved was originally paid. Any amount so credited must be 
merged with other sums in such account and must be available for the 
same purposes and time period, and subject to the same limitations (if 
any), as the sums with which merged. (See 5 U.S.C. 5379(c)(4).)


Sec.  537.110  Records and reports.

    (a) Each agency must keep a record of each determination to provide 
student loan repayment benefits under this part and make such records 
available for review upon request by OPM. Such a record may be 
destroyed when 3 years have elapsed since the end of the service period 
specified in the employee's service agreement.
    (b) By March 31st of each year, each agency must submit a written 
report to OPM containing information about student loan repayment 
benefits it provided to employees during the previous calendar year. 
Each report must include the following information:
    (1) The number of employees who received student loan repayment 
benefits;
    (2) The job classifications of the employees who received student 
loan repayment benefits; and
    (3) The cost to the Federal Government of providing student loan 
repayment benefits.

[FR Doc. E7-101 Filed 1-8-07; 8:45 am]
BILLING CODE 6325-39-P