Pennsylvania 9.5% Loan Holder Responds to Negative Press

The CEO and President of Pennsylvania's Higher Education Assistance Agency (PHEAA) says the lender is not being "investigated." Rest assured, it's only being "audited." What a relief. We know how much better it is when the IRS audits us, instead of investigates.

PHEAA's CEO Dick Willey penned a letter-to-the-editor on the Education Department Inspector General's 9.5 percent loan audit, which we reprint in full below. The takeaway line from Willey's response is that "not one penny" of PHEAA's aid to students comes from taxpayer dollars. That's unbelievably great news.

PHEAA's announcement that taxpayer dollars do not finance Pennsylvania student benefits means that the federal government can take back all of PHEAA's excess claimed 9.5 percent loan subsidy payments and not endanger students at all. In fact, if those excess subsidy payments are recouped and then redistributed to students directly, they'll be even better off.

Thanks for the great news, Dick.

Patriot-News
Friday, October 13, 2006

Your headline, "Federal probe targets PHEAA," (Oct. 4) is flat-out wrong. There is no "probe" or "investigation" under way, according to the Inspector General's office at the U.S. Department of Education. The IG is conducting an audit -- a far cry from an "investigation."

The Pennsylvania Higher Education Assistance Agency is not a "target," as you stated in your inflammatory headline. The fact is that the entire financial aid industry and the DOE have a disagreement over a financing vehicle that is the subject of numerous audits involving the entire industry. Your headline using the term "probe" further misleads readers to assume that a simple audit, one of many, somehow involves impropriety. PHEAA is audited more than 40 times a year by state, federal and private auditors on behalf of our clients, and those who regulate us at every level. This fact was omitted from your article. Rarely a week goes by that teams of auditors are not present in our building. Yet, after the hundreds of audits that have occurred over the past 10 years, with no significant findings, you choose to place one review, which is at the preliminary stage, out of context and in a defamatory tone by calling it an "investigation" and characterizing PHEAA as a "target." It is important that your readers know that an outside, independent auditor, KPMG, recently concluded an audit of PHEAA's financial operations and determined that the agency is in compliance with federal statutes, regulations and other published guidelines in connection with federal government payments we have received.

We are confident that the current audit will result in the same conclusion. PHEAA is providing $1 billion in grants, scholarships, loan forgiveness and fee eliminations to students and families in Pennsylvania over five years. Not one penny of this comes from tax dollars. Notwithstanding your continued attacks, PHEAA will continue to fulfill our public service mission by delivering more than $200 million in free benefits to the commonwealth annually.

-- RICHARD E. WILLEY, President and CEO, PHEAA Harrisburg

For more on PHEAA and the 9.5 percent student loan scandal, see our blog posts here, here, and here; news coverage here and here; and the event where we unveiled the original whistleblower here.