Thursday, June 25, 2009

Money Well Spent

The WSJ today makes the SHOCKING discovery that the government is paying up to $60 million per year to help employees pay off their student loans. It says the practice is coming under growing "scrutiny".

WASHINGTON -- Congress and federal agencies are expected to spend as much as $60 million in fiscal 2009 on a little-known taxpayer-funded perk: repaying government employees' college loans.

Paying off staffers' old student loans is rare in the private sector. And while total spending on the benefit in the federal government remains relatively small, it has multiplied since the program began seven years ago, according to federal records and government officials.

And gives us this "helpful" quote:

Carol Sladek, head of the work-life consulting practice at Hewitt Associates, a human-resources consulting company in Lincolnshire, Ill., called student-loan repayments an unusual benefit. "I have never heard of that practice in the private sector, much less in this economy," she said

First, why do people insist on compartmentalizing compensation into things like perks, rather than just looking at the overall pay package? Instead of making student loan payments, the government could instead just pay staffers $10,000 more per year. I highly doubt there would then be a story about the "scrutiny" growing over staffers getting paid too much. For some reason people tend to view "free" stuff as having a value much higher than what it's really worth.

Second, it seems to me this is money well spent. About 48.7% of the student loan payments occurred within the Department of Justice, where staffers get paid far below the standard rates they could earn in the private sector. An entry-level DOJ attorney would have made just $60,989 this year, nowhere near the $160,000 top law firms have typically paid first-year associates*. Even an experienced attorney joining the DOJ at the top of its payscale can't make more than $153,200. An extra $10,000 in loan payments seems like a small price to pay to give the government a chance to attract top-level talent that would otherwise not be able to afford work in the public sector.

* Even some of the firms that have deferred associates have offered to pay more than $70K.

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