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News Now

CU System
PHEAAs student-loan suspension impacts under 100 CUs
HARRISBURG, Pa. (3/3/08)--Fewer than 100 credit unions in Pennsylvania will be directly affected by the decision of the Pennsylvania Higher Education Assistance Agency (PHEAA) to temporarily suspend its student lending program. According to Bob Hinchey, senior vice president, fee services, at Pennsylvania Credit Union Association (PCUA), PHEAA's action will impact less than one-third of the more than 300 credit unions working with the agency to provide student loans for their members (Life is a Highway Feb. 29). PHEAA announced last week it was suspending its activities as a Federal Family Education Loan Program (FFELP) lender, beginning March 7. That means it will no longer issue loans from its own funds. However, it will continue to provide the federal guarantee, origination and servicing for FFELP loans--essentially providing the systems and processes for loan delivery and repayment. The agency is one of more than 400 lenders participating in the low-cost KeystoneBEST student loan program. About 500,000 students attend postsecondary school in the state with the assistance of a low-cost FFELP loan. PHEAA will continue with other student aid programs and services and will help with the transition to other lenders who are prepared to pick up additional loan volume, said PCUA. It will continue administering the Pennsylvania State Grant Program and other state-funded student aid programs. Student aid providers throughout the nation have been forced in recent weeks to suspend or curtail the lending activity because of failed auctions and persistent turmoil in the capital markets. PCUA "will be working with any impacted credit union to find an alternate solution," Hinchey said.


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