Students can now look forward to an extra $55 million in student aid for the 2005-2006 academic year from Pennsylvania's student loan and grant organization.

The Pennsylvania Higher Education Assistance Agency (PHEAA) announced yesterday that $45 million of the total amount of PHEAA's earnings will go toward student grants, while the other $10 million will be dedicated to helping working adults go back to school.

Kate Philips, a spokeswoman for Gov. Ed Rendell, said this is the first time PHEAA has taken its profits and put so much of its money toward grants.

The funding increase follows PHEAA's initial rejection of a $1 billion bid by private student loan lender Sallie Mae in December.

The state legislature is currently considering the bid. However, PHEAA spokesman Keith New said Sallie Mae would give PHEAA's earnings to its shareholders instead of allocating them back to the state if the proposal is approved.

The $55 million is in addition to the original $100 million in grants and loans PHEAA provides to students annually, New said. He added that Rendell has also asked for an increase in state funding for PHEAA in his updated budget.

The exact amount of funding will be announced next Wednesday, Philips said.

"The governor is trying to make college more affordable to any Pennsylvanian who wants to go," she said. "This will help families send their kids to college without breaking the bank."

Penn State spokesman Tysen Kendig said additional funds for students would help alleviate the burden of paying for college.

New said the increase was not unusual, and added that since PHEAA's earnings increase each year, the board of directors considers where it could add additional funds to public service programs on a yearly basis.

"We look where the best use is for the money," he said. "Every year, conditions change."

New also said the announcement is not in response to the proposal Sallie Mae made so it could control funding for PHEAA.

"We talked to the governor about this back in October. [The proposal] has nothing to do with [the additional money]," New said. "This is consistent to what we've been doing year in and year out. Sallie Mae is just late to the game."

Sallie Mae Spokesman Tom Joyce said it was good that additional money within PHEAA was going to the students.

"We're certainly pleased that PHEAA has begun using money that is lying fallow within PHEAA to benefit the students in the commonwealth," he said.

Joyce also said that although the money PHEAA is providing to students is helpful, it is not comparable to the $1 billion Sallie Mae is offering to the state.

However, New said he expects PHEAA's earnings to exceed $1 billion in the next five years because their earnings increase each year. He added that Sallie Mae would not be able to provide low-cost loans to students long-term.

"It goes against their purpose for existing. Their shareholders will be upset if they do," New said. "I can't blame them because they're for-profit; but they can't blame us, because we're non-profit."