Pa. Loan Agency Seeks $10 Million To Continue Student-Aid Program
Pennsylvania's higher-education loan agency is seeking a $10-million contribution from the state to enable it to float a bond issue vital to continuing a student-aid program for middle-income families.
Officials of the Pennsylvania Higher Education Assistance Agency said last week that the agency had stopped processing applications for its "non-subsidized loan" program. Said to be the only state effort of its kind, the program provides college aid for students who do not qualify for federal Stafford loans.
Without the state contribution, "55,000 to 60,000 students in Pennsylvania will not have access to this program," said John Ebersole, a spokesman for the agency.
The agency is seeking a $10-million appropriation from the state to fund the pheaa's contribution toward a $100-million bond issue needed to keep the loan program going.
"Pheaa used its own funds in the past, but we have used them all up," Mr. Ebersole said.
The program provides Stafford-like loans to families that do not meet federal income criteria for the federally subsidized loan program.
Under the state program, students or their parents must pay interest on the loans while students are in college. In contrast, the federal government pays the interest on Stafford loans while students remain enrolled.
Without the state loans, Pennsylvania officials say, middle-income students and their parents would have to look elsewhere for loans or other funds to pay for college.
The agency recently completed a separate $100-million tax-exempt bond issue that will fund the program through June 1, but loans for the next school year are in jeopardy.
To continue the program next year, the pheaa still needs a $100-million letter of credit from a financial institution and $10 million of its own resources to finance the issuer contribution required by federal tax law, officials said.
Agency officials said they were meeting with legislators and aides to Gov. Robert P. Casey in the hope of securing state backing, but conceded that the outlook was uncertain because the state budget is barely balanced.
The agency lent approximately $135 million to students this year under the non-subsidized-loan program, and it was expecting applications totaling at least $150 million for 1990-91.--mw