Con­tinue fund­ing PHEAA grants for col­lege stu­dents

The Community Connection - - OPINION - By Thomas J. Botz­man Guest colum­nist Thomas J. Botz­man, Ph.D., is pres­i­dent of Mis­eri­cor­dia Uni­ver­sity in Dal­las, Pa.

The Key­stone State has tra­di­tion­ally been a strong ad­vo­cate for higher ed­u­ca­tion, es­pe­cially in pro­vid­ing aid di­rectly to stu­dents so they can choose the col­lege or uni­ver­sity that is the right fit for them and their ed­u­ca­tion.

In my view, that has made our state more in­no­va­tive and com­pet­i­tive, in­creas­ingly ef­fi­cient, and a model for how to fuel eco­nomic and so­cial de­vel­op­ment through sup­port for higher ed­u­ca­tion. In sim­pler terms, Penn­syl­va­nia is the na­tional leader in fund­ing higher ed­u­ca­tion for stu­dents with fi­nan­cial need.

Fifty-five years ago, Penn­syl­va­nia’s ex­ec­u­tive and leg­isla­tive branches cre­ated the Penn­syl­va­nia Higher Ed­u­ca­tion As­sis­tance Agency (PHEAA) as a ve­hi­cle to ad­min­is­ter grant sup­port to stu­dents with demon­strated fi­nan­cial need based on fam­ily in­come.

From the be­gin­ning, stu­dents were able to choose whether to use the grant at a com­mu­nity col­lege, a pub­lic four-year col­lege, or a pri­vate higher ed­u­ca­tion in­sti­tu­tion.

Ex­tend­ing the aid to pri­vate in­sti­tu­tions — which award 49 per­cent of col­lege de­grees in the state while re­ceiv­ing only 10 per­cent of state fund­ing — is cer­tainly an ef­fi­cient use of re­sources as it lim­its the need for more fund­ing at state uni­ver­si­ties. We have more than 90 pri­vate in­sti­tu­tions of higher ed­u­ca­tion in Penn­syl­va­nia to com­ple­ment the pub­lic uni­ver­sity sys­tem.

An­other as­tute ac­tion was to make PHEAA a provider of stu­dent fi­nan­cial aid ser­vices na­tion­ally, in­clud­ing loan ser­vic­ing and fi­nan­cial aid pro­cess­ing through Amer­i­can Ed­u­ca­tion Ser­vices. PHEAA re­ceives its rev­enues na­tion­ally, but the funds sup­port Penn­syl­va­nia’s stu­dents af­ter cov­er­ing op­er­at­ing costs.

Since 2005-06, PHEAA has pro­vided a multi-mil­lion dol­lar sup­ple­ment each year to the ben­e­fit of stu­dents in ev­ery in­sti­tu­tion of higher ed­u­ca­tion in Penn­syl­va­nia. That amount has risen to about $100 mil­lion an­nu­ally out of a to­tal grant bud­get of ap­prox­i­mately $400 mil­lion. Un­for­tu­nately, the amounts used to sup­ple­ment the state-funded pro­gram have been drain­ing re­serves, so state govern­ment is be­ing asked to fund PHEAA grants fully for the up­com­ing year.

It could have a neg­a­tive im­pact on PHEAA’s loan ser­vic­ing busi­ness if state leg­is­la­tors are un­able to main­tain nec­es­sary re­serves. As such, I am hope­ful the ex­ec­u­tive and leg­isla­tive branches of state govern­ment will fully fund PHEAA com­pletely in or­der to sup­port both stu­dent need and the on­go­ing suc­cess­ful busi­ness model.

PHEAA is tak­ing an ad­di­tional step that de­serves sup­port, as it be­gan mak­ing loans di­rectly to Penn­syl­va­nia stu­dents. The re­cent an­nounce­ment of the loan pro­gram pro­vides a route for stu­dents and fam­i­lies to re­ceive a lower cost loan than what they would have re­ceived from the for-profit sec­tor in the form of a PLUS loan. Fur­ther­more, any profit to PHEAA will once again go to sup­port­ing op­er­a­tional costs and grants to present and fu­ture Penn­syl­va­ni­ans.

That is again good news for stu­dents, their fam­i­lies, and tax­pay­ers. Through strong man­age­ment and care­fully planned op­er­a­tions, PHEAA is ready to make loans more af­ford­able while pro­vid­ing sub­stan­tial grants that do not need to be re­paid.

We all want ed­u­ca­tion that is ac­ces­si­ble to all ca­pa­ble stu­dents and is af­ford­able. This is a thought­ful and as­tute way to sup­port Penn­syl­va­nia’s stu­dents. Those stu­dents, in turn, will be our fu­ture civic lead­ers, fel­low cit­i­zens and neigh­bors, and skilled work­ers who will build a stronger econ­omy in our state.

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