PHEAA Gives $75 Million for Need-Based Grants

July 2, 2012

Schools in Pennsylvania have been hit hard by the downward economy, prompting the state to cut aids for student grants. The Pennsylvania Higher Education Assistance Agency decided in response to give $75 million from its own funds to offset the losses to student grants that help low income students get the financial aid for college. PHEAA is a semi-government agency, giving away grants to low-income students in Pennsylvania and also loan servicing through the federal government. The company will lose about $36 million in the spending plan by Governor Tom Corbett, which is being finalized now in the state legislature.

The total budget of PHEAA for 2012-13 would be $386 million, nearly 90 percent of these funds go towards student grants. Mike Reiber, PHEAA spokesman spoke of the agency's board of directors, including both Republicans and Democrats from House and Senate, who voted last week to offset the loss from business proceeds. The cash influx will also cover $13.8 million that PHEAA lost in January, when Governor Corbett requested that state departments curtail spending in current fiscal year due to poor tax returns.

"Our board of directors when this was considered reviewed the financial status and made sure we were on solid footing to make sure we were able to do that," said Reiber.

This is actually the second year in a row that the PHEAA has delivered student grants through its own profits to offset cuts in state funding. PHEAA gave $50 million to cover a reduction in last year's school year budget. Mardi McQuire-Closson, vice president of student affairs at Northampton Community College said that PHEAA had to give this money or it would mean less aid for students. She also said that more low-income students are applying every day to go to school.

The move by PHEAA is not a long-term solution. In fact, it has to be short-term. While small offset decisions can be made, they have to avoid in the future. However, for now, PHEAA's goal was to make sure that the able could provide the same level of financial aid to Pennsylvania students.

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