The Pennsylvania Higher Education Assistance Agency (PHEAA) board Thursday re-elected two long-serving members to lead the multi-billion dollar agency’s oversight panel as it navigates the evolving world of student debt.
State Rep. Mike Peifer, R-Pike County, a CPA and member of the board since 2010, was re-elected chairman, while state Sen. Wayne Fontana, D-Brookline, a 10-year veteran of the board, was re-elected as vice chairman.
Although PHEAA’s profits from processing student loan payments have underwritten nearly $1 billion in aid to Pennsylvania college students over the last decade, the agency has come under fire in recent years and is fighting suits in state and federal court.
Formed in 1963 as a backstop to guarantee student loans, PHEAA, with 2,900 employees ranging from financial experts to call takers, is now one of the nation’s largest student loan servicers.
The state agency that processes payments on $320 billion in federal student loans under contract to the U.S. Department of Education came under fire last week when an audit blasted the U.S. Department of Education for failing to hold contractors, including PHEAA, responsible for miscalculating payments and placing borrowers into pricey payment plans without offering other alternatives.
Some of the findings in the audit touched on problems the Tribune-Review reported last year when student borrowers turned to federal courts to sort out allegations that PHEAA’s FedLoan Servicing unit repeatedly erred in placing borrowers into forbearance, adding thousands of dollars in interest to outstanding debts. Borrowers filed 10 class-action lawsuits across the nation, which were consolidated into a single case against the agency. The case pending in U.S. District Court in Philadelphia.
Peifer and Fontana said they are committed to PHEAA’s mission of keeping higher education affordable.
“It’s an honor to serve once again as vice chairman of the PHEAA board – especially considering the many difficult challenges that Pennsylvania families can face when planning for a higher education,” Fontana said in a prepared statement. “We are fortunate for the collective experiences that my colleagues on the board bring to the table – including real-world education, finance, and business experience – that will help us address the evolving needs of today’s students and families.”
Peifer said he wants to ensure PHEAA works to keep higher education accessible not just for today’s students, but for the future.