If you’re interested in public service, becoming a federal employee can be a terrific career choice. On average, federal employees earn more than private sector workers with similar education levels.
Even better, federal employees enjoy valuable health benefits and even access to federal employee student loan forgiveness programs.
If you have student loans, working for a government agency can help relieve the burden. In fact, you might be able to get as much as $60,000 in help paying off your loans, thanks to the Federal Student Loan Repayment program. Here’s how it works, and what to do if you think you’re eligible.
What is the Federal student loan repayment program?
The government launched the Federal Student Loan Repayment program to serve as an employee incentive; agencies can use it to recruit and retain top talent.
Under the program, the government agency you work for will make annual payments to your student loan holder. You could receive up to $10,000 a year (for a lifetime maximum of $60,000) to help pay off your student loans.
In return, the agency will ask you to sign an agreement stating that you’ll continue to work there for at least three years. If you leave your job early or if you’re fired for misconduct or poor performance, you’ll have to reimburse the agency for any money they’ve already paid for your student loans.
Only federal student loans are eligible for this repayment program. If you’re a federal employee and have Parent PLUS loans for your child, you still qualify for the program.
Unlike some forgiveness programs, the rules do not require you to have completed your degree to qualify. However, some agencies do ask for a degree to be eligible for the program, so ask your employer if you qualify based on their unique requirements.
Any federal employee is eligible, unless your role is confidential or involves policy-making duties. You must be in good standing with your employer and show acceptable performance at all times.
Schedule C employees, such as lobbyists, do not qualify. Members of Congress are also not eligible, but their staff members could qualify.
If you take unpaid leave, the time away from work does not qualify as part of your service term. In addition, the money you receive from your employer is taxable by the IRS, even though it’s for your student loans. Be sure to plan ahead for your tax bill in this case, since it might be higher than you expect.
How to apply
There isn’t a formal application for this federal employee repayment program. Instead, ask your employer or potential manager for more information if you are currently employed by a federal agency or are interviewing with one for a job.
Your employer will consider your request. Whether they issue the funds to you is decided on a case-by-case basis.
If the agency does decide to move forward — and they are not one of the 30+ agencies that already have a forgiveness procedure in place — they must prepare a plan that describes how the agency will implement the program and disburse the money.
Federal Student Loan Repayment program vs. Public Service Loan Forgiveness
Depending on your career, you might also qualify for another federal employee student loan forgiveness program: Public Service Loan Forgiveness (PSLF).
In this program, your loans are forgiven if you work for a nonprofit or government agency and make 10 years of qualifying payments. Payments made on an income-driven repayment (IDR) plan count toward PSLF.
In some cases, the Federal Student Loan Repayment program can be a better choice than PSLF. Because you can receive up to $10,000 a year for six years, you could use that money to pay off your loans ahead of schedule. Depending on your loan amount, you could be debt-free in just a few years, whereas you’d have to make payments for a decade with PSLF.
For example, say you had $37,172 of student loans at 3.9% interest. If you were single, had no dependents, and made $40,000 a year, you would qualify for an IDR plan such as Revised Pay As You Earn (REPAYE).
On the REPAYE plan, your payment would start at just $80 and you’d pay $13,276 over the course of 10 years before the loans were forgiven under PSLF.
If you signed up for REPAYE and pursued the Federal Employee Repayment program instead, your payment would still be $80 a month. However, you could get $10,000 a year for four years, which would cover the cost of your loans.
While it would take 10 years to eliminate your loans with PSLF, you’d be debt-free six years earlier with the Federal Employee Repayment program and you’d spend less of your own money. Instead of paying $13,276, you’d only spend $3,840 with the Federal Employee Repayment assistance program.
Those savings mean you have more than $9,000 that you could use for other goals, such as saving for retirement or building an emergency fund.
Even better, you don’t have to make a choice. You could pursue PSLF while inquiring about the federal employee student loan forgiveness program. Your time working for a government agency could still qualify for PSLF, even if you receive the money to pay back your loans. Pursuing both can help protect you in case your employer denies you for the program.
Managing your student loans
If you’re struggling to repay your student loans and work for a government agency, student loan forgiveness for federal employees might sound too good to be true. However, this repayment program is absolutely real, so ask your boss today if you’re eligible to receive the funds for your loans. Speaking up could save you thousands.
Want more ideas for student loan forgiveness? Check out this complete list to find even more forgiveness options.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|