PHEAA proactive in preventing defaults
Pennsylvania historically has been below the national average when it comes to student loan defaults.
Keith New, communications director for the Pennsylvania Higher Education Assistance Agency, said PHEAA may play a role in that.
The agency has been around for the past 50 years, providing state assistance to students and through 2010 guaranteeing federal student loans. New said PHEAA is now one of only four agencies in the country contracting with the federal government to service the federal direct student loans created in 2010.
“We work very closely with the borrower to manage their repayment plans,” New said. “We work with Pennsylvania borrowers very proactively.”
New said the money PHEAA makes by servicing loans goes back into student services and to cover the operating expenses of the agency.
“This year we returned $90 million to support student aid programs,” New said.
New said PHEAA always has been the exception rather than the rule in state student aid programs, offering the loan guarantee program even when other states did not.
“We insure the loan on behalf of the lender. As a public servant, everything we do is to serve the students and their families,” New said.
New said his agency’s involvement begins even before a student takes out the first loan, offering early financial planning with online tools. One tool, the education planner, lets prospective college students estimate the cost of their education, anticipated earnings in their selected career field and provides an approximation of their loan repayment.
“We encourage students to borrow only what is absolutely necessary. I don’t know that that message is getting out nationally,” New said. “I’ve seen some awfully high student debts.”
The U.S. Department of Education is trying to promote its repayment options, including three income-driven options, by sending out emails and posting information on social media.
“Reaching out to borrowers to ensure that they have the information they need to manage their student loan debt is an important part of the administration’s proposals to improve college value and affordability,” U.S. Secretary of Education Arne Duncan said in a recent news release. “Thanks to this outreach, coupled with ongoing outreach provided by student loan servicers, borrowers have the opportunity to learn more about their options to lower monthly loan payments and stay on track of their student loans.”
Additional information is available online at https://studentaid.ed.gov/About/announcements/income-driven, www.educationplanner.org and at www.mysmartborrowing.org.