Student Loan Payments, With Strings Attached
The Student Loan Repayment Program can be a financial boon to many Capitol Hill staffers. But what happens when an office offers loan payments in lieu of a raise? Hill Navigator discusses.
Q. I was hired as a Staff Assistant in June after graduation, and my student loans just entered repayment status, so I have recently begun the Student Loan Repayment program offered to staffers. This money comes from allotted student loan budgets given to each office to divide among staffers however the office wants. My office decided to pay a higher monthly amount than my minimum monthly amount because no one else in our office had student loans to repay. However, before the student loans began they said they thought my work deserved a raise because my quality of work is better than the other staff assistant, and now the Chief of Staff and Member are insinuating that since the other staff assistant does not receive student loans, that this will count as my “raise.”
To me, it seems weird to offer benefits and money only to be used for student loans as a “raise,” since the money would just be returned to the House if it wasn’t given out for student loans, and no one else in the office needs that student loan money. Is this common practice? How would you suggest I address this topic with my boss, since I would rather only receive the minimum student loan money that my student loan requires and get an actual salary raise. Thanks for any help you may be able to provide!
A. Your office certainly wins creativity points for avoiding raises. Unfortunately, those antics aren’t much consolation.
Offices are given a limited Members’ Representational Allowance that pays for the overhead costs, staff salaries and related office expenses, including postage, supplies and travel.
Both House and Senate offices also have the option of participating in the Student Loan Repayment Program, which is managed and funded by a third party (either the House chief administrative officer or the secretary of the Senate). Your office may be generous with repaying your loans, but it can afford to be because that money is not coming from the MRA. It is possible the office would prefer to spend its MRA money on a new copy machine, laptops or flying business class.
Since 2011, Congress has also repeatedly cut or frozen MRAs. Salaries are squeezed tighter, even as staffers are expected to do just as much, oftentimes more.
So what can you do when faced with a tight-fisted office? Unfortunately, not much, particularly in entry-level positions where job competition is fierce and salaries are low.
But all is not lost. When you do sit down for salary discussions, here are several ways to explain why your Student Loan Repayment is not the same as a raise:
- Anytime you get money in a restricted form, it’s worth less dollar for dollar. By reallocating your salary to student loan payments, you are also losing funds from the potential Thrift Savings Plan matching contribution and the Federal Employees Retirement System pension accrual.
- Federal student loans have assigned minimum monthly payments based on income. By paying more than your minimum monthly payment, your office is making the last student loan repayments now, instead of 10 (or 20 or 30) years from now. If you decide to stay in public service, this money may ultimately be forgiven through the Public Service Loan Program after 10 years of service. If so, those prepayments your office is making are worth nothing.
- Right now, you’re a staff assistant — a position known for low salaries and upward mobility. In 10 years time, the minimum monthly student loan payment is likely to be a much smaller fraction of your disposable income. Additional cash in your current paycheck is worth much, much more now than it would be down the road, when you’ve become a chief of staff or K Street lobbyist.
There is a way to make the student loan overpayment work more in your favor, especially if you’re considering leaving Capitol Hill in a few years. Those over-payments can count as “advance payments” on your loans, so that the additional money above your monthly payment goes toward the following months’ payments.
When you leave Capitol Hill, you may have many months of accrued loan repayments already paid. Hill Navigator spoke to a former staffer who left Capitol Hill after accruing advance payments and had three years before he was required to make a minimum monthly payment on his loans.
Finally, while your question does not address this, another point to consider is what upward mobility looks like in your office. Getting a few more bucks to answer phones may be nice, but having a path to a better position, preferably one with greater responsibilities and salary, is far better. If your office likes your work, consider focusing your conversation on what your next job steps may be, rather than quibbling over the immediate salary details.
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