Thomas Botzman: State should fund PHEAA grants for collegians
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.
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 multimillion-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.
Thomas Botzman is president of Misericordia University in Dallas, Pa.