The Pennsylvania Higher Education Assistance Agency announced a new loan for the 2001-2002 academic year that might give a boost to students filling out financial aid applications for next year.

The new loan, KeystoneBEST, which stands for Benefits Expanded for Student Tuition, gives immediate assistance and long-term benefits to student borrowers.

A $10,000 loan balance would save a student $1,084 in the repayment period of the loan, said Keith New, vice president of communications for PHEAA.

For the KeystoneBEST loan, PHEAA will cover two percent of the traditional 4-percent borrowing fee and have participating lenders pay another percent of the fee, leaving students with only one percent of the initial fee.

For example, with a $10,000 loan, borrowers would be charged $400 up front for taking out the loan, Chad Smith, PHEAA spokesman, said.

Students also have the benefit of having a two-percent interest rate reduction after 48 consecutive on-time payments, he said.

Smith said the new loans are available because of the $600 million credit line through the state treasury and were created to help students save money.

"It's our public service to the student," Smith said.

With the growing problem of debt management, New said the loan reduces recent graduates' problems of repaying loans and falling into credit trouble.

"The most important thing to us is that students start their life on the right foot," he said.

In order to apply, students must complete a Free Application for Federal Student Aid (FAFSA). PHEAA will then determine whether the applicant is eligible for aid.

Students were able to file FAFSA applications Jan. 1. Throughout the 18 months that students can file for aid, the U.S. Department of Education receives up to 8 million applications, department spokeswoman Stephanie Babyak said.

"This is the peak period for the year because (so many) students enroll (in universities) in the fall," she said.