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Department of the Navy Student Loan Repayment Plan



Title 5, United States Code, section 5379 and the Code of Federal Regulations, Part 537, establish statutory and regulatory authority for the use of student loan repayment as recruitment or a retention tool.  This plan provides parameters for implementing the Student Loan Repayment Program within the Department of the Navy (DON).  Repayment is limited to outstanding federally insured loans made by educational institutions or banks, and other private lenders as authorized by the Higher Education Act of 1965 and the Public Health Service Act.  This program can be used in coordination with other recruitment and retention incentives.


Approving Officials: 

The authority to approve repayment of student loans is delegated through, and subject to, heads of Echelon 1 and 2 commands to the officials who exercise personnel appointing authority (normally, the head of a command or activity).  This authority may be further delegated to the lowest practical level.


Employee Eligibility:

Eligible employees include temporary employees on appointments leading to conversion to term or permanent appointments; or term employees with at least 3 years remaining on their appointments; or permanent employees and employees serving on excepted appointments with conversion to term, career or career conditional.


Written Determination: 

Approving officials will identify in writing the basis for the repayment of any student loan.  When used as a recruitment tool, the justification is to include a statement that:


(1)          in the absence of offering this incentive, the agency would encounter difficulty in filling the position with a highly qualified employee, and

(2)          provides details on difficulties faced in previous recruitment efforts.  A statement may be added to job announcements when student loan repayments are authorized as a recruitment incentive, but is not required.


When used as a retention tool, the justification will address the special skills, unique qualifications of the employee or the special needs of the agency and how the employee’s departure or potential departure would affect the activity’s


Determination for Retention: 

The approving official determines that in the absence of offering to repay a student loan, the employee would be likely to leave for employment outside the Federal service. 


Selecting Employees: 

In selecting employees for repayment of their student



Determination for Recruitment: 

Each determination (including the amount to be paid) must be made before the employee actually enters on duty in the position for which recruited.

t loans, approving officials shall consider both equitable treatment and diversity of the workforce.


Dollar Value of Repayments: 

Approving officials will determine the amount of the loan repayment based on the employee’s value to the activity and budgetary considerations.  The maximum payment allowable in 1 year is $6,000.00, with a total of $40,000 per employee. 


Procedures for Making Loan Repayments: 

Repayment of student loans will be based solely on the outstanding debt at the time the employee and the activity enter into an agreement.  Payments cannot be made prior to the employee entering on duty.


The Human Resource Office (HRO) will verify the existence of, and the balance remaining on qualifying outstanding loans as required by 5 CFR 537.105.  This can be accomplished by requesting the candidate/employee complete a DON Student Loan Repayment Application (Attachment 1) and forwarding to the loan holder for verification. 
Activities can repay more than one loan as long as the loan repayments do not exceed the $6,000 per year/$40,000 lifetime limit.  Activities cannot reimburse late fees assessed by the loan holder if the student loan repayment is not received in time. 
The employee is responsible for continuing to make loan payments on the portion of the loan for which he/she is responsible and for any income tax obligation resulting from the student loan benefit.


Service Agreement: 

Prior to any repayment of student loan, the employee is required to sign a service agreement (Attachment 2)  All service agreements require a 3-year commitment, which begins on the date DFAS makes the first payment to the loan holder as stated in the service agreement.  A copy of the service agreement once signed by all parties will be transmitted to the Defense Finance and Accounting Service (DFAS) who will utilize this document to begin making payments to the lender on a bi-weekly basis.


Loss of Eligibility for Loan Repayment Benefits:  An employee loses entitlement to continued benefits if he/she:


(1)          separates from the agency, or

(2)          does not maintain an acceptable level of competence (employee’s most recent rating must be at least successful), or

(3)          violates the conditions of the service agreement.


Within the criteria addressed in this plan, the service agreement can specify other employment conditions for continued authorization.  These can include a requirement that the employee perform specific duties, meet all conditions of employment for the position, or retain employment within the organization.  These conditions must be defined on the first page of the service agreement, under ″Conditions of Employment.″


Employee Reimbursement: 

An employee who is separated from the Department of Defense (DoD) for reasons of misconduct or performance, or leaves DoD voluntarily before completing the period of service specified in the agreement will reimburse the DoD for the entire amount of any student loan repayment the employee received.


The authorizing official may waive all or part of a recovery if he or she feels the recovery would be against equity and good conscience or against the public interest.


Records and Reports: 

The HRO will submit annual reports through their Directors of Civilian Personnel Programs to the Office of the Deputy Assistant Secretary of the Navy (Civilian Personnel/Equal Employment Opportunity), (Code DP1) each fiscal year.  The reports will identify the number of employees receiving the loan repayment incentive, the job classification of each recipient, and the total cost of the student loan repayment incentive.


Documentation and Record keeping:

Approving officials are responsible for ensuring that the basis for repaying a student loan is fully justified.  The HRO will maintain documentation for each student loan repayment to include verification of the employee’s outstanding student loan (typically the Student Loan Application/Verification), the manager’s justification for authorizing the loan repayment, and a copy of the service agreement.  A copy of the service agreement will be filed on the left-hand side of the employee’s official personnel folder.  Use of this authority will be evaluated during periodic assessment of HR programs.


As stated

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Office of Naval Intelligence, Washington DC