Penn State's first attempt at a direct loan program has gone "smoothly," a university official said yesterday.
About 2,000 students have used the new direct loan program to pay for their summer tuition, amounting to about $7.6 million in financial aid, said Anna Griswold, assistant vice president for undergraduate education and executive director of student aid.
The program began after the Pennsylvania Higher Education Assistance Agency (PHEAA), announced Feb. 27 it would no longer be able to provide student loans, said Donald Heller, director of Penn State's Center for the Study of Higher Education.
"It is important that no student has a delay in registration because of loans," he said.
After PHEAA's exit, Penn State wanted a system that would be more stable and predictable than what a third party lender could offer.
"Our concern was that students might pick a lender, and that lender might subsequently quit making loans," Griswold said.
In the fall, Griswold estimates about 40,000 students will receive loans totaling $400 million in aid from the program.
Though PHEAA no longer provides loans, a 5.5 percent increase in the organization's grants was approved by the legislature July 8, as well as an increase in the amount of loans that can be offered, bringing the 2008-2009 total to $407.4 million for 163,000 people, PHEAA spokesman Keith New said. PHEAA was expecting only a 3 percent increase.
The maximum grant will be $4,120, down from $4,700 during the 2007-2008 year, New said, adding PHEAA expected the maximum would be about $4,000.
Penn State was expecting a university maximum of $3,660 from PHEAA, but the amount will actually be $3,770. Penn State's maximum grant is less than the overall maximum because private schools generally get more funding than public universities, Griswold said.
PHEAA may be able to provide loans once more in the future, depending on the state of the economy, New said.
"If and when it's economically feasible, we will," he said.
With the advent of the Penn State's direct loan program, Griswold said a reappearance of PHEAA's loan program would be of little importance to students.
