PHEAA Report Highlights Accomplishments and Reforms
Board leadership announces $77 million in savings since 2007
Harrisburg, PA (February 12, 2009) - The Pennsylvania Higher Education Assistance Agency (PHEAA) Board of Directors has released a report highlighting agency accomplishments and cost saving measures that have been achieved during a period of considerable federal regulatory change and the nation's worst economic downturn in decades.
PHEAA Board Chairman, Representative William F. Adolph, highlighted quick action and innovative solutions as the key factors in averting major interruptions in student loan funding for Pennsylvania students, families and schools. For the 2008-09 academic year, no qualifying student in Pennsylvania was denied a Federal Stafford Loan through the Federal Family Education Loan Program.
“By adopting a proactive strategy, we worked with the White House, Congress and the Department of Education to bring focus on the pending economic crisis, prompting the quick passage of “The Ensuring Continued Access to Student Loan Act of 2008” (ECASLA),” noted Adolph.
The ECASLA legislation:
- Increases the Federal Unsubsidized Stafford Loan limits for undergraduate students
- Allows parents to request a deferment on Parent PLUS Loans while the student is enrolled in school and a post-enrollment deferment for six months after the student graduates
- Clarifies Lender of Last Resort by granting additional authority to the U.S. Secretary of Education to ensure that students will have access to necessary financing resources
- Directs the U.S. Department of Education as a secondary market for the purpose of purchasing federal student loans to free up liquidity for future lending
Chairman Adolph and Vice-Chairman, Senator Sean Logan, also identified significant administrative and accountability changes that have taken place under their leadership since early 2007. These changes include:
- Establishing guidelines governing reimbursements for travel and business expenses which are stricter than those employed by the Commonwealth of Pennsylvania and the Internal Revenue Service
- Adopting an industry-leading Code of Ethics which clearly identifies PHEAA partnering with only those lenders and schools that provide the products and services that directly put the interest and financial needs of students and families first
- Appointing Jim Preston as the new, full-time President and CEO of PHEAA in March 2008, directing him to continue to make further reforms of the Agency
Under the Board's guidance, President and CEO Jim Preston was charged with conducting a complete evaluation of expenses to identify areas of potential savings. From October 2007 through December 2008, PHEAA was able to realize a savings of $77.7 million. This reduction in operating expenses included PHEAA's first-ever Workforce Optimization Program, made necessary to realign the workforce to match operations in the evolving student loan industry, which resulted in 264 voluntary employee departures.
Pennsylvania's Auditor General issued findings from a Performance Audit in August 2008 in which he identified 27 positive comments about PHEAA and the reforms that the Board of Directors have instituted including:
- Elimination of all management bonuses and incentives
- Elimination of all employee appreciation events
- Elimination of all professional services and sponsorship contracts that are not in line with PHEAA's mission
- Implementation of a policy to adhere to the policies of the procurement practice
- Elimination or reduction of any and all spending not in line with PHEAA's mission
- Implementation of a strict vehicle policy, specifically stating that agency vehicles can only be used for business use
Due to the turbulent economy, PHEAA realized an operating loss of $27 million for the 2007-08 fiscal year. However, for the first quarter in the 2008-09 fiscal year, PHEAA managed to generate a positive operating income of $17.1 million.
“Despite all of the financial challenges that PHEAA has faced and continues to maneuver through, the agency reacted effectively and will continue to adjust as needed to ensure access and choice to the students of higher education in the Commonwealth,” said PHEAA Board Vice-Chairman, Senator Sean Logan.