www.HouseAppropriations.com/HDAPPROPS@hacd.net 717-783-1540 Higher Education: Primer March 25, 2022 - Page 7 PHEAA receives no state appropriations to pay for its costs to administer the State Grant Program and other financial aid programs. Instead, these costs are covered by its business earnings from different enterprises. Through its subsidiaries’ contracts with the federal government, PHEAA grew to become the largest student loan servicer of federal direct loans by volume. However, the agency announced in July 2021 that it will not extend its servicing contract with the US Department of Education’s Office of Federal Student Aid and will exit the federal student loan servicing business starting in December 2021. The impact of PHEAA’s changing business is discussed near the end of this document. While PHEAA will no longer service federal loans, it will still act as a lender. PHEAA’s PA Forward loan program offers undergraduate, graduate and parent loans to help finance postsecondary education, separate from federal student loans. PHEAA State Grant Program The largest PHEAA offering is the state grant program, which provides money to students who demonstrate financial need and attend a PHEAA-approved postsecondary institution. To qualify for aid, students must be Pennsylvania residents and enrolled at least half-time. Over 118,000 Pennsylvania students received a PHEAA state grant in the 2020/21 program year. The number of recipients is dramatically lower than it was just ten years ago, when over 205,000 students received grants in 2011/12. Aid primarily goes to students whose families earn less than the median household income, consistent with the program’s need-based philosophy. Around 73 percent of students who received a PHEAA grant during the 2020/21 academic year were from households who earned less than the statewide median household income.
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