On January 17, 2008, NTEU entered into an agreement with the SEC resolving a national grievance regarding the Student Loan Repayment Program filed by the union a year ago. The grievance challenged the SEC’s decision to make unilateral changes to this popular program without first negotiating with the union.
The terms of the Student Loan Repayment Program negotiated by NTEU are set forth in Article 25 of the CBA. The SEC may make payments to help eligible employees repay their student loans, up to $10,000 per calendar year, and up to a total amount of $60,000. Eligible loans include Federal Family Educational Loans, William D. Ford Direct Loans (including PLUS Loans) and Federal Perkins Loans. Employees are required to sign an agreement to remain at the SEC for a period of at least three years. They also must reimburse the agency if they are separated involuntarily for cause or for poor performance, or voluntarily, prior to the completion of their three-year service obligation.
The new agreement with the union deals with three unilateral changes the SEC attempt to make to the program. First, the agency announced in 2006 that, if a participating employee separates from the agency prior to fulfilling his or her three-year service commitment, he or she would be required to repay all disbursements received under the program, even if some of those disbursements occurred more than three years prior to the date of his or her departure from the SEC.
NTEU’s position was that each separate disbursement under the program should be treated as a separate three-year commitment, and thus that the agency could only seek repayment of disbursements made in the three years prior to the employee’s departure. The SEC has now agreed with NTEU on this issue.
Second, the SEC also announced in 2006 that it would no longer make loan repayments for any employee who, as a result of a previous repayment under the program, was relieved of his or her obligation to continue making regular monthly payments to his or her lender for some or all of the previous year. Many student loan lenders automatically apply a lump sum payment (such as a distribution under the Student Loan Repayment Program) towards future payments of principal. In such cases, although the borrower is not obligated to make monthly payments for some period, he or she remains in repayment status and his or her loan remains current.
NTEU argued that the SEC’s position on this issue was not required under the regulations. Furthermore, imposing this requirement would undercut one of the basic purposes of the program – providing economic relief to employees who are earning less at the SEC than they could earn in the private sector, as an incentive to keep them at the agency. The SEC has now agreed that employees will only be required to make loan payments to their lenders when such payments are actually due under their loan agreements.
Third, the SEC also announced that it would make no further loan repayments under the program if an employee owed less than $10,000 in student loans after receiving a repayment under the program in a prior year. Because each program distribution is taxed as income, this policy could result in employees being left with thousands of dollars of student loan debt.
NTEU asserted that continuing participation in the program by eligible employees should be subject only to the $60,000 maximum lifetime limit provided under federal regulations (which includes income taxes paid by employees on the distributions that they receive), without regard to how much an employee currently owes. The SEC has accepted this interpretation as well.
“I applaud the SEC’s decision to resolve these issues with the union,” Chapter 293 President Greg Gilman noted after signing the new agreement with the agency. “This is a very important program that hundreds of SEC employees participate in each year – and this agreement is a win-win because it will allow the agency to continue to recruit and retain the best and the brightest, while assisting employees with the economic burden of their student loan debt.”