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| Agency overview | |
|---|---|
| Formed | 1963 |
| Jurisdiction | State government of Pennsylvania |
| Headquarters | Harrisburg, Pennsylvania |
| Website | http://www.pheaa.org |
The Pennsylvania Higher Education Assistance Agency (PHEAA, better known as FedLoan [1] ) is a quasi-governmental agency that administers several state-level and national higher education student financial aid programs.
It was created in 1963 by an Act of the Pennsylvania General Assembly, and engages in loan guaranty, loan servicing, financial aid processing, outreach and other student aid programs.
It was announced on July 8, 2021 that the agency and the United States Department of Education would not continue their relationship, effective on December 14, 2021. [2] [3]
In October 2007, Jack Wagner, the Pennsylvania auditor general, released a report accusing the agency of giving excessive bonuses and incentives. Rep. Bill Adolph, chairman of the agency's board, subsequently scheduled an emergency meeting of the board for Wednesday, October 10, to request the early resignation of the president of the agency, Richard E. Willey, [4] based on reporting from the Pittsburgh Tribune-Review and the Associated Press.
Since 2007, PHEAA has undergone a series of reforms and cost-cutting initiatives including the elimination of management bonuses, automatic salary increases and all sponsorships and advertisements that were not in line with PHEAA's mission. The Board also instituted one of the nation's strictest business and travel expense reimbursement policies. Those reforms resulted in more than $77 million in savings. [5]
It administers the grant program for the Commonwealth of Pennsylvania, and serves as a coordinating body for other grant programs administered by other state agencies. It also served as one of several student loan guarantors in the United States for the Federal Family Education Loan Program (FFELP), under the Higher Education Act of 1965. It also has a loan servicing operation for student loans that it owns and for lenders under contract. Originally a small student loan guarantor with approximately 5,000 student loans a year after its formation, it at one point managed more than $100 billion in total assets and serves nearly four million students through its various programs.
PHEAA conducts its student loan servicing activities nationally as FedLoan Servicing and American Education Services (AES). FedLoan Servicing was established in 2009 to support the U.S. Department of Education's ability to service student loans owned by the federal government, and is one of a limited number of organizations approved by the Department to service these loans. AES was created to guarantee and service a variety of Federal Family Education Loan Program (FFELP) and private student loan products for lending partners nationwide. PHEAA exited the FedLoan Servicing Market in December 2022. [6]
PHEAA's earnings are used to support its operations and to pay its operating costs, including administration of the Pennsylvania State Grant and other state-funded student aid programs.
As a quasi-governmental agency, AES/PHEAA's board of directors consists of members of the Pennsylvania General Assembly, the secretary of education, and gubernatorial appointees. The legislative members of the Board were successful in passing legislation that restructures the PHEAA Board of Directors, which was signed into law by the Governor on July 9, 2010. This legislation was based on a PHEAA Board resolution that called upon the General Assembly to replace legislative seats on the Board with private-sector individuals who could provide leadership expertise in an increasingly complex financial environment. Specifically, the legislation reduces the number of lawmakers serving on the 20-member Board from 16 to 12. The four legislative seats were replaced with private-sector professionals with experience in banking, investments and information technology; adding their expertise to the decisions that the Board makes on behalf of Pennsylvania students and families. The legislation also reduces the six-year Board term to four years.
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy. This article highlights the differences of the student loan system in several major countries.
Student financial aid in the United States is funding that is available exclusively to students attending a post-secondary educational institution in the United States. This funding is used to assist in covering the many costs incurred in the pursuit of post-secondary education. Financial aid is available from federal and state governments, educational institutions, and private organizations. It can be awarded in the form of grants, loans, work-study, and scholarships. In order to apply for federal financial aid, students must first complete the Free Application for Federal Student Aid (FAFSA).
An asset-backed security (ABS) is a security whose income payments, and hence value, are derived from and collateralized by a specified pool of underlying assets.
Strada Education Network is a non-profit corporation which assists students into post-secondary education by providing financial support and other help. USA Funds links colleges, universities, proprietary schools, private lenders, students and parents to promote financial access to higher learning. The organization is formerly known as United Student Aid Funds or USA Funds. Strada's headquarters is in Indianapolis, Indiana.
EdFund is the United States' second largest provider of student loan guarantee services under the Federal Family Education Loan Program (FFELP). It is organized as a non-profit public-benefit corporation. EdFund offers students and their families a wide range of information on the value of higher education, how to pursue it, how to pay for it, and debt management. In addition, EdFund supports schools with advanced loan processing solutions and default prevention techniques.
A Pell Grant is a subsidy the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with exceptional financial need, who have not earned their first bachelor's degree, or who are enrolled in certain post-baccalaureate programs, through participating institutions. Originally known as a Basic Educational Opportunity Grant, it was renamed in 1980 in honor of Democratic U.S. Senator Claiborne Pell of Rhode Island. A Pell Grant is generally considered the foundation of a student's financial aid package, to which other forms of aid are added. The Federal Pell Grant program is administered by the United States Department of Education, which determines the student's financial need and through it, the student's Pell eligibility. The U.S. Department of Education uses a standard formula to evaluate financial information reported on the Free Application for Federal Student Aid (FAFSA) for determining the student's Expected Family Contribution (EFC).
A loan guarantee, in finance, is a promise by one party to assume the debt obligation of a borrower if that borrower defaults. A guarantee can be limited or unlimited, making the guarantor liable for only a portion or all of the debt.
College tuition in the United States is the cost of higher education collected by educational institutions in the United States, and paid by individuals. It does not include the tuition covered through general taxes or from other government funds, or that which is paid from university endowment funds or gifts. Tuition for college has increased as the value, quality, and quantity of education have increased. Many feel that increases in cost have not been accompanied by increases in quality, and that administrative costs are excessive. The value of a college education has become a topic of national debate in the U.S.
The Higher Education Act of 1965 (HEA) was legislation signed into United States law on November 8, 1965, as part of President Lyndon Johnson's Great Society domestic agenda. Johnson chose Texas State University, his alma mater, as the signing site. The law was intended "to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education". It increased federal money given to universities, created scholarships, gave low-interest loans for students, and established a National Teachers Corps. The "financial assistance for students" is covered in Title IV of the HEA.
The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans are now provided under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education.
Federal Student Aid (FSA), an office of the U.S. Department of Education, is the largest provider of student financial aid in the United States. Federal Student Aid provides student financial assistance in the form of grants, loans, and work-study funds. FSA is a Performance-Based Organization, and was the first PBO to be established in the US government.
In the United States, the Federal Direct Student Loan Program (FDLP) includes consolidation loans that allow students to consolidate Stafford Loans, Graduate PLUS Loans, and Federal Perkins Loans into one single debt.
The Higher Education Loan Authority of the State of Missouri, also known as the Missouri Higher Education Loan Authority or MOHELA is one of the largest holders and servicers of student loans in the United States. Its headquarters are in St. Louis, Missouri.
In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses. With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have to be repaid. Student loans may be discharged through bankruptcy, but this is difficult. Research shows that access to student loans increases credit-constrained students' degree completion, later-life earnings, and student loan repayment while having no impact on overall debt.
Nelnet, Inc., is a United States–based conglomerate that primary focused on financial services including student and consumer loan origination and servicing. Additionally, the company operates an investing arm, an internet bank and owns Allo Fiber, a cable and internet provider. The company is headquartered in Lincoln, Nebraska.
American Student Assistance (ASA) is a national non-profit organization to help students make informed choices to achieve their education and career goals. It is headquartered in downtown Boston, Massachusetts.
The Voluntary Flexible Agreement (VFA) was created by the United States Congress in 1998 during a reauthorization of the Higher Education Act of 1965. The VFA enables Federal Family Education Loan Program (FFELP) guarantors to develop programs and techniques to help borrowers avoid student-loan default and all of its negative consequences. The VFA objective is experimentation for the purpose of finding the best practices, collecting long-term data, and sharing results in order to determine what benefits schools, students, the federal government, and the American taxpayer. [1]
Great Lakes Higher Education Corporation was one of the largest student loan providers and guarantors in the United States. Headquartered in Madison, Wisconsin, the corporation is non-profit. It was one of the four largest companies which service United States federal student loans: Great Lakes, Nelnet, Navient, and the Pennsylvania Higher Education Assistance Agency. In 2018, the loan servicing part of the organization was sold to Nelnet.
Navient Corporation is an American student loan servicer based in Wilmington, Delaware. Managing nearly $300 billion in student loans for more than 12 million debtors, the company was formed in 2014 by the split of Sallie Mae into two distinct entities: Sallie Mae Bank and Navient. Navient employs 6,000 people at offices across the U.S. As of 2018, Navient services 25% of student loans in the United States.
Educational Credit Management Corporation (ECMC) is a United States nonprofit corporation based in Minnesota. Since 1994, ECMC has operated in the areas of student loan bankruptcy management and loan collection. ECMC is one of a number of guaranty agencies that oversee student loans for the United States Department of Education. As a guarantor working on behalf of the U.S. Department of Education, ECMC charges fees to debtors and earns commissions from taxpayers by collecting on defaulted student loans pursuant to the Higher Education Act. In return, the U.S. government has retrieved billions of dollars from student loan debtors. From 1994 to 2015, according to ECMC, they returned $4.3 billion to the U.S. Treasury.
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