Student Aid News - Update on Student Loans
Don't Panic! If you've heard rumors PHEAA won't be able to help you get a loan, they're just not true. If you want to go to college, PHEAA can help you pay for it.
In the News
Updated April 10, 2008 9:35 AM EST
News Clip on Student Loan Crisis, featuring PHEAA Interim CEO James Preston CNBC (2/29/2008)
- Ed. Dept. Relaxes Its Rules on Preferred-Lender Lists
The Chronicle of Higher Education (5/30/2008) - 7 KB PDF - Toward Federal Funding of Guaranteed Student Loans
Inside Higher Ed (5/27/2008) - 16 KB PDF - Key Lawmakers Plan for Student Loan Credit Crunch
Inside Higher Ed (4/4/2008) - 12 KB PDF - PHEAA names new CEO at critical time
The Patriot-News (3/20/2008) - 5 KB PDF - Congress Prepares for Student-Loan Crisis, While Declaring It Unlikely
The Chronicle of Higher Education (3/20/2008) - 11 KB PDF
Additional Resources for Our Partners
Materials we are using to communicate and explain the current student loan funding situation. More
Facts on Student Loans
Students, families, and borrowers have told us that recent media articles covering our decision to temporarily suspend our lending activities are alarming. Many feel this means PHEAA is no longer involved in providing student loans and funding through the Pennsylvania State Grant and Special Programs. Nothing could be farther from the truth.
Here are some basic facts to help you understand.
What is happening?
PHEAA has decided to temporarily suspend acting as a lender in the Federal Family Educational Loan Program (FFELP). This includes Stafford, Parent PLUS, Graduate PLUS, and Consolidation loans. PHEAA is still committed, as we have been for 44 years, to serve the financial aid needs for Pennsylvanians and other students from around the country.
Currently, for the 2007-2008 academic year, over 200 lenders continue to participate in our low-cost KeystoneBEST student loan program and we remain committed to meeting the borrowing needs of students and families. Although we will temporarily no longer issue loans from our own funds, we will continue to pay the 1% federal default fee for KeystoneBEST loan borrowers. View the growing list of 2008-2009 participating lenders.
Let us be clear, PHEAA is NOT going out of business. Rather we are changing some of our business practices to ensure we can best serve our customers during this difficult time. PHEAA will remain the organization most borrowers work with to receive and pay for financial aid. We simply won't be the lender, another bank or institution will.
Why is this happening?
Issues in the markets related to the sub-prime mortgage mess everyone is talking about have made it difficult for PHEAA to raise the cash it needs to fund student loans. Other banks and institutions who don’t have this problem will continue to work with PHEAA to ensure students and families have access to the money they need to pay for their education.
How will this affect me?
For most students, this will have little to no impact. We remain committed to Pennsylvania students and families. You can be assured that:
- We will continue to administer the Pennsylvania State Grant Program and other state-funded student aid programs.
- We will also continue to provide students and schools with other student aid programs and services, and help with the transition to other lenders who are prepared to pick up the additional loan volume.
- For most borrowers, AES/PHEAA will continue to service their new loans. This means you can still contact us whenever you have a question or problem.
Need More Help? We're here for you.
Student/Parent Borrowers
- Call us at 800.692.7392
- Email us at studentloans@pheaa.org.
- You can also visit us on line at www.pheaa.org or www.aesSuccess.org.
Questions and Answers
I'm new to student loans. Can I get one? Absolutely! PHEAA, along with participating lenders, have collaborated to make the KeystoneBEST Family of loans, the most economical loan available to you. In order to qualify for a KeystoneBEST loan, the student must be a Pennsylvania resident attending any school, or an out-of-state resident attending a Pennsylvania school.
How do I get my loan? Contact your school’s Financial Aid Office. If you are a Pennsylvania resident or a US resident student attending a school in Pennsylvania, ask for information about the KeystoneBEST Loan Programs. The Financial Aid Office staff can direct you to a list of participating lenders from which you can choose one to be your loan provider. As with all federal loans, students who intend to borrow must complete the Free Application for Federal Student Aid (FAFSA) to determine eligibility.
If I have a current loan from PHEAA, will you still pay my school? As long as your first disbursement, or payment, was scheduled before March 7, 2008, PHEAA will make the payment. If the first payment is scheduled after that date, you will receive a cancellation letter, and you will need to select a new lender and fill out a new Master Promissory Note (MPN).
For any Stafford or PLUS loan where your school has only received the first of two or more payments, PHEAA will continue to honor your loan and make the second and/or subsequent payments to your school.
What if I already had a loan with PHEAA and need one for next year? If you have previously borrowed with AES/PHEAA as your lender or another lender that is no longer participating in the KeystoneBEST program, you can continue receiving the benefits of borrowing through the KeystoneBEST program. To do this you MUST complete a new Master Promissory Note (MPN) and select a new lender from a current list of participating lenders. Your school’s Financial Aid Office staff can direct you to a list of participating lenders. They can also help you answer any questions you have about how to pay for your education.
What is the KeystoneBEST loan program? KeystoneBEST is a reduced cost loan program which includes both Stafford and PLUS loans. In order to qualify for a KeystoneBEST loan, the student must be a Pennsylvania resident attending any school, or an out-of-state resident attending a Pennsylvania school. Benefits include:
How do I find a participating lender?
You can
view current lists of lenders who participate in the 2008-09 KeystoneBEST loan programs online.
View the current list of participating lenders for:
Can you give me more detail as to why PHEAA has stopped lending? Historically, PHEAA sold securities to investors to raise money to fund new student loans. Due to the sub-prime mortgage problems, many investors are not buying securities backed by loans - even ones backed by federally guaranteed student loans. This, combined with changes in regulations and the implementation of new federal laws, including the College Cost Reduction and Access Act, have impacted our lending operations. Because PHEAA is not a traditional bank it relies on money from selling these securities, and since the investors aren’t buying them, we simply can not raise the money to fund the loans. Banks and other institutions that don’t depend on this type of funding are still able to lend. PHEAA is partnering with these institutions to ensure students and families have the money they need to fund their education.
Will PHEAA continue to provide State Grants and other services? If you have heard that PHEAA is going out of business, it simply isn't true. PHEAA does much more than serve as a lender. We continue to administer the Pennsylvania State Grant Program and provide students with other state-specific Special Programs. In addition, PHEAA will still guarantee, originate and service both federal and private student loans. With more than 44 years in business, we remain a viable employer of the Commonwealth and plan to be around for a long time.