MEMORANDUM
DATE: February 9, 2023
TO: Federal Personnel and Payroll System User Group Representatives
FROM: Christine Zertuche-Rocha, Chief, Payroll Operations Division and Robert Crest, Chief, Personnel Payroll Systems Division
SUBJECT: Action Required: Public Service Loan Forgiveness (PSLF) and Title 5 U.S. Code Student Loan Repayment Program (SLRP)
The Interior Business Center (IBC) is requesting you share the below information with Servicing Personnel Offices, and Payroll Coordinators/Liaisons.
The time-limited changes to the PSLF Program rules, ended on October 31, 2022, referred to as the limited PSLF waiver, allowed borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. As a result, individuals who worked in public service for 10 years or more (even if not consecutively), may be eligible to have all student debt canceled. If a former or current employee qualifies under the limited PSLF waiver and has also received student loans repayment(s) under the Federal SLRP, the following guidance issued by the Office of Personnel Management (OPM) to Shared Service Providers on January 10, 2023, may apply:
Congress authorized federal agencies to establish a Student Loan Repayment Program (SLRP) to “repay . . . any student loan previously taken out by [an eligible federal] employee.” 5 U.S.C. 5379. OPM’s implementing regulations include an ongoing obligation on agencies’ part to “verify remaining balances to ensure loans are not overpaid.” 5 CFR 537.106(b)(1).
Therefore, OPM’s view is that, to the extent an employee receives a refund for a loan payment the agency previously made on the employee’s behalf, that refund causes the agency’s prior payment to be an overpayment to the employee. The refund causes the agency’s earlier payment to cease being a “repay[ment]” of a student loan—the authorized purpose of the SLRP statute, see 5 U.S.C. 5379(b)(1)—because it instead goes to the employee. Such overpayments are inconsistent with the SLRP statute and OPM’s implementing regulations.
As a result of the guidance issued by OPM, the Interior Business Center (IBC) is currently conducting testing within the Federal Personnel and Payroll System (FPPS). Currently, there is no Nature of Action Code to stop or change the award entitlement amount. Testing is being done to determine the easiest and most efficient way to process transactions to support the PSLF. In addition, we will have to determine a process for the handling of debts, returned funds, tax impacts, etc. Once an efficient process has been identified for all impacted areas, we anticipate issuing guidance on how users should proceed within the next few weeks. We highly encourage agencies not to complete any personnel actions within FPPS related to this subject until our guidance is issued as there could be unintended outcomes/consequences resulting in inaccurate debts/overpayments and the cascading events/cleanup.
Please note that at this time, until guidance is issued, IBC cannot address any impacts to tax reporting or the issuances of Form W-2Cs, Corrected Tax and Wage Statements. Therefore, at this time, for 2022, we are recommending that employees file their 2022 tax return with the Form W-2, Wage and Tax Statement, issued to them. Our forthcoming guidance will address any impacts to taxes and issuances of Form W-2Cs if needed.
If the user group representatives have a time sensitive question or scenario prior to guidance issued by IBC, please send an email to ibc_psb@ibc.doi.gov with the subject ‘PSLF and SLRP Urgent Question.’