The Pennsylvania Higher Education Assistance Agency (PHEAA) is working on a proposal to increase the maxi-
mum state grant for eligible college students for the 2006-07 academic year.
The maximum increase from $3,300 to $4,600 for students is in response to the growing financial need in higher education.
Gov. Ed Rendell raised the amount of money going into PHEAA's state grant program for the 2005-06 academic year by $9 million from last year, for a total of $368.2 million, said Al Bowman, the Pennsylvania House appropriations committee policy director.
"The increase in state dollars does have to go through legislative approval," Bowman said. "However, how PHEAA wishes to distribute the money is up to PHEAA's board."
Rendell's office and state Rep. Jess Stairs, R-Fayette and Westmoreland, head of the state grant improvement task force, referred all comments on the proposal to PHEAA.
Mary Beth Kelly, PHEAA vice president for state grant and special programs, said the figures of the proposal have not been finalized and the highest maximum award could be higher or lower than the projected $4,600.
But to make the proposed increase possible, PHEAA has dedicated surplus business earnings from servicing student loans to the new higher education gifts initiative, Kelly said.
Rendell, legislative leaders and PHEAA announced the higher education gifts initiative on Feb. 2 as a plan to provide additional grant aid.
For the 2005-06 academic year, PHEAA has committed $25 million for the state grant increase. $32.5 million is budgeted for the 2006-07 academic year.
There is also another $20 million set aside right now for students in transition who will not get as much money with the new grant formula as they did with the old formula, Kelly said.
The $368.2 million state appropriation is being directly distributed to students because the state money does not need to be used for the grant program's administration expenses due to PHEAA's business earnings, said Chad Smith, PHEAA spokesman.
"PHEAA always invests its earnings back into state programs to give more to the students," Smith said.
Kelly said the main factors that could affect the proposed grant total are the application pool, family income and tuition cost.
Penn State's 2003-04 financial aid data, which includes all Commonwealth Campuses, reports that 78 percent of the total student body receives some form of financial aid, and 19,491 students receive state grants, said Kerstin Roan, director of communications and student service at the Office of Student Aid.
"We have no idea yet how it will impact students at Penn State because the proposal is not finalized," Roan said.
Roan said the present state grant is not as helpful because tuition costs are increasing and, therefore, the grant is covering a smaller amount of that cost.
Penn State spokesman Tysen Kendig said he believes all students would benefit if the money were being directed into the appropriations budget. But he added that the increased maximum on the state grant would be very helpful to low-income families.
Kelly said Rendell has signified his intent for higher appropriation levels to create more meaningful rewards without losing any recipients.
The state is improving grants because they have recognized a trend in rising tuition, Kendig said.
"Public education in Pennsylvania is becoming very highly priced when compared to a national level," Kendig said.
The PHEAA board will meet on April 21 for final approval of the proposal.
"There is quite a bit of work to do before the additional grant money can be implemented in January 2006," Kelly said.
