Student Loan Reimbursement Procedures

For Student Loan Reimbursement Policy #WF035

Effective Date: March 8, 2024
Revised: October 21, 2024 (Clarified tax withholdings)

Request for Student Loan Reimbursement (Application currently closed)

Introduction

This document is the technical companion to the Minnesota Department of Transportation’s (MnDOT’s) Student Loan Reimbursement Policy and provides the application, review, disbursement, and repayment procedures for student loan reimbursement.

Definitions

Eligible student loan

A loan designated to help post-secondary students pay for college expenses, such as tuition, books, and associated fees for post-secondary education.

Eligible employee

An employee covered by a collective bargaining agreement that provides for student loan reimbursement, and who has been employed by the agency for a period of at least 18 months prior to application for student loan reimbursement.

Procedures

Application Period

MnDOT may schedule up to two application periods per year. Office of Human Resources must provide employees with the:

Application materials and deadline
Eligibility criteria
Projected disbursement date

Application Procedures

Employees must complete and submit the provided application and supporting documentation by the established deadline. Applications must include documentation of payments made within the previous twelve (12) months prior to application. The amount approved for student loan reimbursement must be equal to or less than the amount the employee has paid toward the loan in the twelve (12) months prior to application.

Mandatory Criteria

Applicants must meet the following criteria to be considered for student loan reimbursement.

The employee must be in a permanent classified position working full-time or part-time. An employee who accepts a temporary, unclassified, or work out of class appointment with MnDOT remains eligible.
The employee must have been employed by MnDOT for at least 18 months and be covered by a collective bargaining agreement or compensation plan that provides for student loan reimbursement.
The employee must have satisfactory work performance and be in compliance with all required agency and enterprise training requirements.
The employee has not exceeded the maximum allowable student loan reimbursement.
The student loan must be for the employee’s education. Spouse, child, and other family member loans are not eligible for reimbursement by MnDOT.
The student loan must be a loan that has or had an outstanding balance within the twelve (12) months prior to application.
The student loan cannot be consolidated with any other type of loan (for example, home equity loan).
The total student loan reimbursement received by an employee through all reimbursement programs, including federal student loan forgiveness, Public Service Loan Forgiveness Program, MnDOT Student Loan Reimbursement, etc., must not exceed the total student loan debt incurred.
Employees receiving tuition reimbursement for employee-initiated education or training within the previous twelve (12) months prior to application are not eligible for student loan reimbursement.

Application Review

The Office of Human Resources must review all applications received by the deadline and determine whether the mandatory criteria have been met. To further narrow the applicant pool, the Office of Human Resources may apply the following discretionary criteria:

Employee’s degree is related to the employee’s position (including, but not limited to, tech school programs, 2-year, and 4-year degrees)
Employee’s degree is from an accredited college
Employee’s position classification is included on the MnDOT shortage occupation list
Employee is working in a hard to fill geographic location
Employee has not received a written reprimand or higher-level discipline within the past three years
The amount of student loan reimbursement the employee has previously received from MnDOT and/or other Minnesota state agencies

Allocation of Funds

Student loan reimbursement is centrally funded through an annual allocation.
Student loan reimbursement payments shall not exceed five thousand dollars ($5,000) per calendar year, up to twenty-five thousand dollars ($25,000) in total payment, per employee. (Note: The maximum total payment applies to the entire length of the employee’s state service).
The Office of Human Resources, in consultation with the Division Business Managers, allocates reimbursement amounts to each approved applicant based on the number of approved applications and the percentage of the workforce represented by each collective bargaining agreement and compensation plan. Unused allocations may be redistributed to employees in other collective bargaining agreements or compensation plans.
The minimum amount the Office of Human Resources will allocate per employee per distribution is $1,000.

Note: The pool of funds available for student loan reimbursement is finite and varies each fiscal year. Therefore, depending on the number of applications received, every employee who meets the mandatory criteria may not be approved for reimbursement. Additionally, employees approved for reimbursement in previous application periods are not guaranteed to receive reimbursement during subsequent application periods.

Disbursement

The Office of Human Resources must inform all applicants of whether their request for reimbursement was approved or denied. For applications that are approved, the Office of Human Resources must notify Central Office payroll for payment processing.

Tax Withholdings

MMB identifies student loan reimbursement as income. The employee is responsible for supplemental tax withholdings and the employee portion of Social Security and Medicare payroll taxes on the value of the student loan reimbursement. Tax amounts will be withheld from the reimbursement amounts paid which will reduce the amount received on the employee’s paycheck.

Note: The Taxpayer Certainty and Disaster Tax Relief Act of 2020 allows for student loan reimbursements to be excluded from federal income tax, Social Security and Medicare taxes through calendar year 2025. The maximum amount that may be excluded from federal taxes is $5,250 per calendar year. Student loan reimbursements remain subject to state income tax.

Repayment Obligation

Employees who separate from MnDOT within twelve months after receiving a student loan reimbursement payment must repay the student loan reimbursement payments received in the previous year. The amount required to be repaid will be calculated based on the number of months the employee remained employed at MnDOT following the student loan reimbursement payment (for example, if the employee remained employed at MnDOT for three months following reimbursement, upon separation, they will be obligated to repay 75% of the amount reimbursed. If the employee remained employed at MnDOT for nine months following reimbursement, upon separation, they will be obligated to repay 25% of the amount reimbursed). Such amounts will be deducted from payouts of vacation leave and/or compensatory time and/or severance pay. If the amounts of payouts of vacation leave and/or compensatory time and/or severance pay are not sufficient to reimburse the State of the amount of student loan reimbursement payment, the employee will be required to reimburse the State for the remaining amount.

Retention and repayment requirements do not apply in the case of death or layoff of the employee who received the student loan reimbursement payment.