Loan bill aimed at recruiting feds

A group of lawmakers introduced legislation March 4 designed to make it easier to recruit workers to federal service by allowing agencies to repay their employees' student loans on a tax-free basis.

Reps. Tom Davis (R-Va.) and John Tierney (D-Mass.), and Sens. George Voinovich (R-Ohio) and Blanche Lincoln (D-Ark.) sponsored the Generating Opportunity by Forgiving Educational Debt for Service (GOFEDS) Act.

Agencies can repay student loans on behalf of their employees now — up to $6,000 a year for a total of $40,000 per employee — but the benefit is subject to tax withholding at the time repayment is made. GOFEDS would eliminate this tax burden for federal workers, similar to loan repayments made by schools or nonprofit organizations to encourage public service.

The bill, Davis said, "levels the playing field" and should help agencies recruit skilled workers to government service. The bill would apply to current and prospective federal workers.

"Government should not tax its own ability to recruit and retain top talent," said Max Stier, president and chief executive officer of the Partnership for Public Service.

Federal agencies have had the authority to offer loan repayments as part of a recruitment package since 1991, but final regulations were not issued until 2001. An employee who receives student loan repayments must stay in his or her job for at least three years.

The Energy Department, the General Services Administration, NASA and Department of Health and Human Services are among the agencies that have offered repayments in past years, according to the Partnership for Public Service.