Taxpayers pay off millions in federal employees’ student loans

by Grace

Taxpayers have spent over $70 million annually in recent years to pay off the student loans of federal employees.

This chart shows the annual expenditures under the federal government’s Student Loan Repayment program.

20130628.COCFederalLoanPayback3

The Federal student loan repayment program permits agencies to repay Federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency. The program implements 5 U.S.C. 5379, which authorizes agencies to set up their own student loan repayment programs to attract or retain highly qualified employees.

This perk is raising eyebrows, especially in light of the pending increase in federal student loan interest rates.

Federal officials defend the program as a critical benefit that helps the government recruit and retain top talent. Congressional sources point out that participants are not protected from interest rate increases.

I doubt this perk is needed to recruit employees for all government jobs, especially for prestigious Capitol Hill positions.

The program may make sense for some federal jobs, but it should be limited to those where the benefit really makes a difference, said Tom Schatz, president of the non-profit Citizens Against Government Waste. It is harder to defend for congressional staff, Schatz said.

Senator Tom Coburn’s spokesman call this program a “circular subsidy”.

… “Student loan assistance programs are a circular subsidy that offsets the costs of Congress’ expensive desire to make education affordable. It’s government fixing one failed subsidy with another.”

It would seem these circular subsidies that require teams of bureaucrats to administer are a particularly potent way to fuel government growth.

Related:  Do we have a student loan crisis? (Cost of College)

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