Web-Based Special Payroll Processing System (SPPS Web)

Updating Student Loan Repayment Details

This topic has been updated to add a new field for the Calendar Year Total Amt which displays the total of the Calendar Year Taxable Amt and Calendar Year Non-taxable Amt fields.

The Federal Student Loan Repayment Program authorizes Agencies to set up their own student loan programs to attract or retain highly qualified employees. The program permits Agencies to repay certain types of Federally-insured student loans as recruitment or retention incentives for candidates or current employees of the Agency. The student loan repayment benefits may be offered in conjunction with recruitment and relocation bonuses and retention allowances. Student loan repayment benefits may also be used in conjunction with a physicians' comparability allowance (PCA). However, the amount of the PCA must be reduced by the amount of the student loan repayment.

The Coronavirus Aid, Relief and Economic Security (CARES) Act was approved on March 27, 2020. Employers may contribute toward principal or interest on an employee’s qualifying student loan of up to $5,250 per year are tax-free for both employer for payroll purposes and the employee for income tax purposes when these contributions are made any time after March 27, 2020, through December 31, 2025.

The user can continue to process student loan payments as taxable, but will need to keep track of both taxable and non-taxable amounts to ensure it does not exceed the maximum amount allowed per calendar year. Non-taxable and taxable student loan payments must be processed as a separate payment and cannot be combined in one payment.

Eligibility

All employees are eligible for student loan repayment benefits, unless they are specifically excluded by law or regulations (e.g., Schedule C appointee). Following is a list of employees who qualify for student loan repayment benefits:

• Temporary employees who are serving on appointments leading to conversion to term or permanent appointments
• Term employees with at least 3 years left on their appointment
• Permanent employees (including part-time employees)
• Employees serving on excepted appointments with conversion to term, career, or career-conditional appointments (including, but not limited to, Career Intern or Presidential Management Intern appointments)

Loans That Qualify Under the Federal Student Loan Repayment Plan

A student loan is eligible if made, insured, or guaranteed under parts B, D, or E of Title IV of the Higher Education Act of 1965 or a health education assistance loan made or insured under Part A of Title VII of the Public Health Service Act. Loans covered under the Higher Education Act of 1965 include:

• Federal Stafford loans - Federal subsidized, Federal unsubsidized, direct subsidized, and direct unsubsidized loans
• Federal Plus loans - Federal and Direct Plus loans
• Federal Consolidation loans - direct subsidized, direct unsubsidized, and Federal Consolidation loans
• Federal Perkins loan
• Loans made or insured under the Public Health Service Act - nursing student, health profession student, and health education assistance loan programs

Limitations

Although the student loan is not forgiven, Agencies may make payments to the loan holder of up to a maximum of $10,000 per employee per calendar year and a total of $60,000 per employee. To limit the total amount of all payments, Agencies are responsible for monitoring, tracking, and ensuring that the student loan repayments do not exceed the outstanding student loan balance.

The non-taxable student loan amount cannot exceed $5,250 per year and can be processed any time after March 27, 2020, through December 31, 2025. The student loan non-taxable plus student loan taxable amounts cannot exceed the amount allowed per calendar year. The Calendar Year End Total field displays the total of the Calendar Year End Taxable field and the Calendar Year End Non-taxable field.

Service Agreement

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/she is separated voluntarily or separated involuntarily for cause or poor performance. In addition, the employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.

Reports and Records

Agencies must keep a record of student loan repayments and make the records available for review upon request. Records may be destroyed after 3 years or after OPM Office of Personnel Management formally evaluates the program, whichever comes first.

Agencies are required to report annually to OPM Office of Personnel Management on the use of the student loan repayment authority. Before January 1 of each year, Agencies must submit their reports for the previous fiscal year. The report must contain:

• The number of employees selected to received the benefit
• The job classifications of the recipient
• The cost to the Federal Government of providing the loan repayment

OPM uses the information in its annual report to Congress on Agencies' use of the student loan repayment program.

Tax Liability

Agencies that repay student loans incurred by employees must include repayments in the employee’s gross income and in wages for Federal employment tax purposes.

Agency Responsibility

The Agency authorizing the benefit is responsible for ensuring that the student loan repayment regulations are adhered to. This includes monitoring and tracking the calendar year maximum benefits and the maximum career benefit, as well as ensuring that the student loan repayment does not exceed the outstanding student loan balance.

Agencies must also monitor the calendar year and career maximum benefits for employees who transfer into the PPS Payroll/Personnel System and have already had student loan repayments. The PPS Payroll/Personnel System does not capture student loan repayments that were made made by any prior Agency which was not serviced by NFC.

While the student loan repayment is not considered to be a deduction, it is recorded as a receipt account. The gross amount of the student loan repayment benefit is recorded as supplemental income to the employee, as well as the deductions Federal Insurance Contributions Act (FICA Foundation Financial Information System), Medicare, Federal, State, and local income taxes. All payment data pertaining to student loan repayments processed through SPPS Web Web-based Special Payroll Processing System is provided to Agencies, upon request.

For more student loan repayment information, see:

• Title 5 USC 2105
• Title 5 USC 5370
• Title 5 USC 5379
• Title 5 USC 5379(h)(1)
• Title 5 CFR 537.104
• Title 5 CFR 537.110
• Title 5 CFR 595.105(e)

To Update Student Loan Payment Details:

1. Search for the related transaction using the instructions under Searching for Record Details. The Adjustment List page is displayed showing all transactions for the specified employee.

   Note: If the search does not return the specified transaction, the transaction must be established in the system before the payment or adjustment record can be processed.

2. Select the SSN Social Security number for the transaction that is to be adjusted by double clicking the SSN. The Student Payment page is displayed.

   

3. At the Student Payment page, perform one of the following functions:

   To delete a line of accounting, select Delete on the applicable line of accounting. The line of accounting is removed from the employee’s record and the SPPS Web Web-based Special Payroll Processing System database.

   OR

   To add accounting, type the number equivalent to the rows of accounting that are to be entered and select Add. A row of blank fields equivalent to the number entered will display in the Accounting List section of the page.

   Note: (1) Use TC transaction code 56, Student Loan Process, to process student loan repayments. (2) Use Suffix Code 00, Student Loan Process, to process loan repayments and adjustments for all Agencies except Agency 56, Department of Commerce, Patent and Trademark Office (PTO). Suffix Code 01, Education Assistance Program, is used to process loan repayments and adjustments for Agency 56. (3) Accounting must validate against MASC Management Account Structure Codes System if stored accounting is to be used. Select Copy to copy stored accounting information from the selected pay period record to the pay period record being processed.

   Note: When adding a non-taxable record, you must delete information on the default taxable record before checking the box and adding a non-taxable record.

4. Complete the applicable fields on the Student Payment page.

   Prefix

   TC

   Suffix

   Amount

   Accounting

   In BETC

   Gross Amt

   Net Amt

   Stored Accounting

   Career Maximum Amt

   Calendar Year Total Taxable Amt

   Calendar Year Taxable Amt

   Calendar Year Non-Taxable Amt

5. After completing all functions, select Save to apply all changes and update the record.
6. Select OK.
7. Select any Tab to return to a previous page.