News Articles

Feds urged to avoid cuts in student loans

By Craig Smith
TRIBUNE-REVIEW
Friday, February 22, 2008

Political, financial and education leaders in Pennsylvania called on federal officials Thursday to provide short- and long-term aid to continue the state's student loan program.

Lawmakers in Washington might not be willing to consider that request, said an area congressman.

"We must act now to ensure that Pennsylvanians are not caught in a funding crunch that could put their college plans out of reach," said state Rep. William F. Adolph, chairman of the board of directors of the Pennsylvania Higher Education Assistance Agency, which hosted a summit yesterday.

PHEAA says a crisis is looming in the $50 billion Federal Family Education Loan Program -- a student loan program that helps 80 percent of students pay for college. About $20 billion was cut from the program in October.

Congress decided to increase the size of Pell Grants awarded over the next five years to at least $5,200 by cutting $20 billion from the loan program, said U.S. Rep. Jason Altmire, D-McCandless, a member of the House Education and Labor Committee.

Those cuts, combined with uncertainty in various financial markets, are creating concerns there won't be enough student loan money to go around.

"There's a meltdown in the credit market taking place. We're aware of their concerns and are working to address those issues," Altmire said.

Summit leaders asked Treasury Secretary Henry M. Paulson Jr., Education Secretary Margaret Spellings and other federal officials to ensure funding for the student loan program.

Altmire doesn't see much chance that Congress will revisit the funding issue.

"We're comfortable with the levels of funding," he said.

PHEAA administers a number of state-funded student aid programs and is the designated federal student loan guarantor for Pennsylvania's families and schools. About 600,000 students attend colleges in the state with the assistance of a low-cost federal student loan.

PHEAA expects to award 160,000 grants to students this year. The average loan is $3,195.

Agency officials said the economic downturn should not affect the number of awards this year, although the impact on next year's awards is not yet known.

 

Craig Smith can be reached at csmith@tribweb.com or 412-380-5646.