Third Party & Independents Archives

A government perk you didn't know about

If you weren’t furious with Congress before today, you will be by the time you finish reading this blog entry.

Without any hyperbolic introduction, I’m just going to state the point flat-out and let you decide how high to let your blood pressure spike.

Staff members of United States Congresspersons do not have to repay the full amount of their student loans. Instead, their loans are repaid by — you guessed it — a special taxpayer-funded account. In short, you’re paying for the college tuition of the staff of the member of Congress you hate the most.

According to Title 2, Chapter 4, Section 60c-6 of the Student Loan Repayment Program for Federal Employees Program description by the United States Office of Personnel Management (OPM):

“The Student Loan Repayment Program for Federal Employees permits agencies to repay Federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency. Although the student loan is not forgiven, agencies are allowed to make payments to the loan holder of up to a maximum of $10,000 for an employee in any calendar year, up to a maximum of $60,000 for any one employee. An employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years. An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination. In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits. Employees enrolled in the program must count such assistance as income and pay taxes on it.”

So, any federal employee participating in the program pays only the tax percentage of their entire student loan debt, which is capped at a maximum of 22 percent for federal employees making less than $150,000 per year. And that percentage is before they apply whatever deductions, exemptions, shelters and loopholes they’re allowed as federal employees. So, in the long math, Congressional staffers pay an average of $7,194 for a $60,000 college education, and they pay that with income they receive from your tax dollars.

Also, as federal employees, they are allowed to apply for (or transfer their existing) student loans through the Pentagon Federal Credit Union and qualify for a special 1.6-to-3.2 percent (maximum) interest rate on their loan. The current average interest rate for a commercial student loan in 7.1 percent.

And here’s the best part: Congress isn’t the only federal body entitled to the perk. *ALL* federal agencies have the option of implementing it.

So, if they work in a high-salary, perk-laden federal job for three years, more than 94 percent of their student loan debt is paid for by … you.

According to a press release issued by the OPM about the program’s official purpose, the program is part of a directed effort for agencies to compete with the higher salaries offered in the private sector and maintain a highly skilled workforce to ensure that this Government is as efficient as possible and that every taxpayer dollar that is spent is being spent wisely.”

According to the OPM’s August 2010 annual report on the Federal Student Loan Repayment Program, during the previous year 36 different federal agencies provided 8,454 employees with a total of more than $61.8 million in student loan repayment benefits.

Those are the facts, despite the erroneous, distorted and politically calculated misinformation provided about the loan program by Fox News in January (and the subsequent deceptive hoax chain e-mail) which blamed Democrats in Congress for the outrage and claimed that even family members of staffers were eligible for the program.

The “Student Loan Repayment Program for Federal Employees” program was signed into effect in 2001 by then-president George W. Bush for executive branch employees (eligibility has since been expanded to all federal employees), and managed by the Chief Administrative Officer of the OBM, a position appointed by Bush.

And just in case you aren’t hyperventilating yet, you should know that the Public Service Loan Forgiveness program was created by the College Cost Reduction and Access Act of 2007 – also signed into law by Bush – and it allows the Department of Education to begin to forgiving direct federal student loans for employees who have worked for 10 years in “public service” jobs — including federal, state and local governments — as long as those employees made 120 consecutive payments on those loans over a 10-year period.”

So, regardless of what balance remains after 10 years, government employees get to see their debt wiped away entirely, as long as they paid their 120 minimum-interest payments using the income they get from you and I.

I sincerely hope you know where your blood pressure medication is.

Posted by Gary St. Lawrence at May 17, 2011 4:34 PM
Comment #323300

Gary, just one of the millions of cuts used to break the back of the middle class workers in getting us ready to compete in a globalised society. The Corpocracy has spent your tax dollars way beyond a wild sailor on his best night for decades, doing any and everything possible to get rid of the dollar. The great recesssion didn’t just happen out of the blue. It is the culmination of the great scheme to ‘harmonize’ the world economies and the screws are just now starting to tighten on the US middle class.

For something to relate to let’s take the IMF thing. The US plows in 18% of the IMF budget as they go around the world propping up socialist entities such as the PIIGS. Otherwise, just whizzing money away because thats what they do. 25% for the UN, 18% for the IMF and probably the same for the World Bank and WTO. The US taxpayer is supporting a ‘world government’ without having ever been asked, informed about it or voted on it.

For over 30 years and look at the outcome. Was the US ever a recipient of $1 from any of these organizations? I hear the EUR is going to need yet more billions from the IMF pdq.

This IMF head was sleeping over in a $3k/night SOFITEL. Leaves one wondering, would he, as an individual pony up $3k nightly to futz around with the maid service? Or, is it more likely that he is on the IMF dole?

Can we audit the IMF? Don’t think so. The FED? Not only no, but hell no, etc.

I don’t want to play anymore. I want a new 3rd party with a different political attitude - - -

Otherwise - - -

Posted by: Roy Ellis at May 17, 2011 7:27 PM
Comment #323326

The military pays for part of the costs for college tuition for those in military service. I think few have a problem with that. But, as big gov’t is prone to do, putting the costs of education for congressional staff is overreaching by any stretch of the imagination, IMO.

Somewhat synomonous with the tax codes. Niche groups relegated to either winners or losers based on congressional manipulation of the codes. A flat income tax would remove the winner/loser aspect but will never happen through this Corpocracy.

Otherwise - -

Posted by: Roy Ellis at May 17, 2011 11:15 PM
Comment #323329

Roy Ellis wrote:

A flat income tax would remove the winner/loser aspect but will never happen through this Corpocracy.

Exactly. I don’t know any rational, thinking people who object to the idea of EVERYBODY paying the same amount, without exception.

And personally, I wouldn’t care if it was 5%, 10% or 20% … as long as I knew that EVERYBODY was paying it, without exception. Most leading economists agree that the actual amount to resolve the entire U.S. debt within four years and sustain a perpetual annual economic growth rate of 3 percent would be a tax rate of 8.26%.

Shred the entire tax code and make it a one-page document.

1. All money earned by an individual, regardless of source, frequency or intent, shall be taxed at a rate of ___ percent.

2. All money earned by a business entity, regardless of size, purpose or function, shall be taxed at a rate of ___ percent.

3. There shall be no exceptions, exclusions, exemptions or variations from this tax code.

Let’s say they decide on a national 10% flat tax. If you make $10,000 a year, you pay $1,000. If you make $10 Billion, you pay $1 Billion.

The Republicans maintain that it’s unfair to the poor.

I’m still waiting for anyone to provide a rational, logical explanation of how that isn’t fair to everyone involved.

Posted by: Gary St. Lawrence at May 17, 2011 11:29 PM
Comment #323353

A flat tax is a great idea. Politicians don’t like it because it weakens their power to reward and punish.

You will not get a rational or logical argument against a flat tax. But I expect you will get an impassioned “justice” or “compassion” arguments.

I agree that everybody has responsibility to their country, the poor as well as the rich.

Posted by: C&J at May 18, 2011 10:37 AM
Comment #323359

My wife was a staffer for three years and took a pay cut to do so. When the new Congressman came in he offered to keep her but at an even lower salary. And the benefits were o.k. but the benefits from my company were better so we never took the fed stuff.

Also, that program only addresses federally insured loans. The majority of student loan debt is with private lenders like Sallie Mae.

There’s a lot of things to get upset about out there, but I’m not sure this is one of them. And FYI you can see what the staff is making by Congressman or staffer name at Legistorm

Posted by: George at May 18, 2011 11:18 AM
Comment #323819

AND the ‘loan forgiveness’ program is a scam… if you miss one payment, or have to take unemployment deferment, or go over their ‘income guidelines’, you have to pay ALL the back interest, fees, etc. And public service jobs - grant funded - are NOT that well-paying or secure…

Posted by: D'Anne at June 2, 2011 11:44 AM
Comment #323900

WTF are you people talking about? Have you even read about how this works?

I am a lawyer—in a group of individuals with over $100k of student loan debt from 1 degree (doctors average about $350k). This legislation is the last great hope for my profession, as the cost of education has outpaced the legal economy so far and fast that NO ONE can afford to work in public interest anymore and people are begging to work for free. I have several friends who have taken advantage of and gotten bumped out of this program.

In order to qualify, you have to not only work in a qualified public interest job, but a very low-paying one. Typically you have to qualify for the IBR/ICR repayment program, which you only qualify for if your debt-to-income ratio is really high. Plus, as was pointed out, you are taxed on the full value of whatever balance is forgiven as personal income. So, with interest being what it is, after making my 120 payments, I would still owe the feds about $100k. Even capped at 22%, that means I would owe the feds, in cash in one year, $22k…oh wait, it’s capped at $60k! Still screwed.

Plus it only covers federal loans, which, for law school, maxes out at about $60k and typically only covers about 1/3 of the cost of tuition and does not account for living expenses. The salaries of people who can use this program typically max out at like $80k unless they have a really high level of debt. I have a friend who got bumped out of the program this year because she got a raise: she now makes $65k.

Also, news for you, NO ONE on the fed payscale is particularly highly-paid or has a job with extensive perks. I now work in a fed agency in DC, do not qualify for the loan program, and had better (and significantly cheaper) health insurance (the most well-known govt perk) when I lived in MA and worked in the private sector. Other than the good hours in my agency and the ability to have a somewhat flexible schedule, I cannot name any other significant federal “perks” that are better than those typically given in my profession in the private sector.

On a side note, a flat tax is regressive and only benefits rich people, which is completely obvious when you consider that different people have different incomes. Same thing with a tax on consumption.

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Comment #360790

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