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HRDG 4537 - Repayment of Student Loans - Section B

Subchapter 4537 - Repayment of Student Loans
Section B - How to Repay Student Loans



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Procedures Chart
Updated 11/15

Updated 10/20
Step Who: Does What:
1 Recommending Official

Decides to repay a student loan and checks the web site below to see if a loan qualifies for repayment.

This program is limited to student loans authorized under the Higher Education Act of 1965 or the Public Health Service Act. These are Federally-insured loans made by educational institutions or banks and other private lenders. A list of qualifying loans is located on the internet at:


Since this list will be occasionally updated, remember to check the website before making any decision to offer the incentive. Examples of qualifying loans: Stafford Loans and/or Nursing Student Loan Program loans.

AMS only:

  • Approval to repay a student loan must be obtained prior to making an offer.
  • All Service Agreements must note that “Repayment of the loan is subject to the availability of funds each fiscal year.”
2 Recommending Official Develops a written justification and attaches it to MRP Form 252-R, Recommendation and Approval of the Repayment of Student Loan(s).
3 Recommending Official

Confirms employee debt with candidate's/employee's loan institution. This means:

  • Having your candidate/employee sign MRP Form 250-R, Release to Obtain Student Loan Information.
  • Contacting the loan holder and verifying that your employee has an outstanding loan that qualifies for repayment.
  • Verifying the remaining balances to ensure loans are not overpaid.
4 Recommending Official Submits the above documents through appropriate channels to the approving official.
5 Approving Official Reviews request. Approves request by signing MRP Form 252-R noting the decision and any additional comments / changes.
6 Recommending Official

When request is approved:

  • Completes written service agreement (MRP Form 251-R) with the candidate / employee.
  • Discusses the conditions of the service agreement with the candidate / employee.
8 Recommending Official

Activates initial payment by sending the Servicing Personnel Office a copy of:

AMS only: All Service Agreements must note that “Repayment of the loan is subject to the availability of funds each fiscal year.”

Note: Make sure the SPO has a copy of all needed information.

9 Approving and Recommending Officials

To initiate subsequent years’ payments, officials must:

  • Review the written justification to ensure the conditions continue.
  • Review and update, as necessary, MRP 251-R. Any changes must be initialed and dated by both parties.
  • Review and sign an updated form MRP 252-R as indicated on the form.
  • Submit the following forms to the SPO:
    • Copy of the written justification,
    • Copy of forms MRP 250-R and 251-R,
    • Copy of the employee’s most recent monthly loan statement, (remember to protect PII),
    • Loan account number and mailing address of the loan institution where payment is to be mailed,
    • FMMI code that is to be charged, and
    • Copy of the re-approved MRP 252-R
10 SPO
Updated 10/20

Keeps Maintains records as outlined in the Records section. of loan repayments documentation (above) for a minimum of 3 years after the loan is repaid or after OPM formally evaluates the program, whichever is later:

  • Copy of written justification
  • Copy of MRP 250-R
  • Copy of MRP 251-R
  • Copy of MRP 252-R
  • Complete name and address of institution that received the repayment
  • Any other relevant data

Note: OHRM will request Race, Sex, National Origin, and Disability information from the NFC data base (Appendix C, DR 4050-537, dated April 2, 2002).

Note: Throughout the duration of the service agreement, any changes to its terms must be documented and agreed to, in writing by both the Agency and the employee with a copy provided to the SPO for any necessary action.

Developing Written

While developing written justification for a loan repayment, supervisors may want to address the following to further support the justification:

For new employees, consider:

For current employees, consider:

Payments to retain an employee must be based on a written determination that:

  • Qualifications such as subject matter knowledge, skills, abilities, etc.
  • Prevailing or forecasted labor-market conditions.
  • Recent turnover in similar positions.
  • The success of recent efforts to recruit high quality candidates.
  • Impact on the morale of current employees.
  • The success of recent efforts to retain employees with similar qualifications in similar positions.
  • The availability in the labor market of candidates for employment, who with minimal training or disruption of services to the public, could perform the full range of duties and responsibilities assigned to the position held by the employee.
  • Effects on morale of co-workers.
  • Explain your knowledge of the employee's efforts to find employment outside the Federal Service and the results of those efforts (e.g., written job offers).
  • The high or unique qualifications of the employee or special need of the agency for the employee's services makes it essential to retain him/her and,
  • In the absence of offering this benefit, the employee would be likely to leave for employment outside the Federal service.
  • The written justification must describe the extent to which the employee's declination of a job offer or departure would affect the agency's ability to carry out an activity or perform a function deemed essential to the agency's mission.
Service Agreements

Before receiving this benefit, your employee must sign a service agreement agreeing to:

  • Remain employed with the Agency (i.e., AMS or APHIS) for a minimum of 3 years and,
  • Repay the agency if he/she fails to fulfill the terms of the service agreement.

The service agreement may also include specific employment conditions such as:

  • Position and the associated duties he/she is expected to perform,
  • Work schedule while employed, and/or
  • Level of performance to be maintained

Any additional limitations or conditions mutually agreed to, in writing, must be attached to the service agreement. The 3-year duration of the service agreement is established in statute and may not be changed, no matter how much of a student loan is repaid. The 3-years begins on the date the service agreement is signed. This means that if your employee leaves the Agency and as a result violates the service agreement, he/she must repay the benefit in full (gross before any tax deductions from the loan payment).

For Example: If your employee's agreement states that s/he will receive $6,000 per year for 3 years, and s/he leaves with 6 months remaining on the service agreement after receiving $15,000 in loan repayment benefits, your employee must reimburse the Agency for $15,000.

Increases or renewals of the benefit can be made without requiring your employee to enter into a new service agreement. This should be clearly stated in your initial agreement (and any subsequent agreement). Any subsequent changes (increases or renewals) must be documented.

This service agreement must state that it in no way constitutes a right, promise, or entitlement for continued employment or noncompetitive conversion to the competitive service.

Note: Prior Federal Service may not count towards the 3 year service agreement.

Service Agreement
Any employee who violates any condition of the service agreement, is no longer eligible for loan repayment benefits.
If you: Then you have violated your service agreement and must repay the loan benefit. Then you have not violated your service agreement.
Are involuntarily separated due to misconduct or performance
Are involuntarily separated and it is not due to misconduct or performance
Receive retirement disability or leave Federal service due to a disabling condition
Voluntarily leave the Agency for a job (including promotion or reassignment to a position with greater promotion potential) with another USDA or any other Federal agency.

(unless otherwise agreed to in the service agreement)

Voluntarily leave the Agency (i.e., leave Federal Service)
Violate any additional mutually agreed to written conditions

You have to repay a loan incentive if you become ineligible for the benefit. This means that if you receive $6,000/yr for 3 years and you violate your service agreement 6 months before it expires after receiving $15,000, you are obligated to repay the full incentive received of $15,000.

If you violate your service agreement and fail to repay your loan, any monies owed by you will be recovered under USDA's regulations for collection by offset from an indebted government employee under 5 USC 5514, and 5 CFR 550 Subpart K, or through the appropriate provisions governing debt collection if you have left the Federal service

The right of recovery of your debt may be waived in whole or in part by the appropriate Agency Administrator (or his/her designee) if s/he determines that recovery would be against equity and good conscience or against public interest. (5 U.S.C. 5379 [c] [3] and 5 CFR 537.109).

Any monies that are repaid or recovered are credited to the appropriation account from which the benefit was originally paid. If possible, credit monies are merged with other monies in the account and are available for the same purposes and period, and subject to the same limitations, if any, as the money with which merged.

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