Most Pennsylvania students bound for higher education, and a growing number across the nation, cross paths with the colossus called the Pennsylvania Higher Education Assistance Agency.
PHEAA says it will award $458.7 million in grants this school year to state residents enrolled in undergraduate programs inside and outside of Pennsylvania. But its reach is much broader.
The agency, operating outside Pennsylvania as American Education Services, calls itself the nation's second largest guarantor of federal education loans and second largest servicer of federal and private education loans.
As a guarantor, PHEAA covers a loan when a student defaults. As a servicer, it tracks loan balances, operates customer call centers and keeps in touch with borrowers.
The Harrisburg-based nonprofit agency has 2,700 employees and offices around the country and in Puerto Rico.
Overseen by a 19-member board, which includes state Education Secretary Gerald L. Zahorchak and 15 legislators, the agency operates the www.youcandealwithit.com Web site to give students "the real story on money, student loans and life" and the www.educationplanner.org site with information about schools, financing options and careers.
PHEAA has made its borrowers eligible for Upromise, a program that gives borrowers rebates -- to be used for loan repayments -- when they shop at participating businesses.
"In 2004, 160,000 participants joined the AES-Upromise program, and our borrowers have realized almost $1.5 million in savings," the agency said in a report that year.
PHEAA's business is booming.
In August, the agency said it had expanded its loan guaranty volume by 81 percent, to $19 billion, during the past fiscal year. It said it increased its loan servicing business by 37 percent, to $9.5 billion, during the same period.
PHEAA said the growth would allow it to funnel $200 million in earnings -- 57 percent more than the past fiscal year -- into grants, scholarships and other student aid.
PHEAA spokesman Michael Reiber said PHEAA will contribute $72.5 million to the 2006-07 state grant program. With the Legislature's appropriation of $386.2 million, he said, PHEAA will be able to award $458.7 million.
PHEAA this school year also raised the maximum individual grant from $3,500 to $4,500. Awards are based on financial need. Students apply via the Free Application for Federal Student Aid, or FAFSA.
Seton Hill University senior Christopher Bertsch said annual PHEAA grants and university scholarships were key to paying for his studies in management and finance. He said he's still had to borrow, "but not as much."
In addition to the grant program, PHEAA offers or administers additional aid to students meeting special criteria, including:
Free tuition at state-owned universities for members of the Pennsylvania National Guard.
Grants for students aging out of the foster care system, an initiative of the state Department of Public Welfare.
Loan forgiveness for members of the armed forces; graduates of agriculture, nursing and veterinary science programs; and people working in the state's six homes for military veterans.
Grants for students nominated by a community group that's part of the Partnership for Access to Higher Education. Students also must have federal student loans, receive state grants and demonstrate need.
Aid for certain adult students who plan to enter a field with high demand for workers. Prospective recipients must be ineligible for the regular state grant program, demonstrate need and study an approved field at an approved school.
Scholarships for students in science and technology fields. Recipients are required to work in Pennsylvania for a specified period after graduation.
From the science and technology scholarships, Jesse Evans, a senior at Indiana University of Pennsylvania, received $3,000 to help pay for his studies in computer science.
"It actually saved me this year. I was running out of money," said Mr. Evans.
Many students receive both grants and loans through PHEAA, including both subsidized and unsubsidized federal Stafford loans.
Through an alliance with 400 lenders, PHEAA offers both subsidized and unsubsidized federal Stafford loans to undergraduates and graduate students in varying amounts.
The federal government pays interest on subsidized loans during enrollment. Students are responsible for all interest on un-subsidized loans, but they may defer payment during enrollment.
PHEAA says its version of a Stafford Loan, called KeystoneBEST, can save a student $2,300 over the life of a $10,000 loan. Benefits include a 2 percent interest-rate reduction after a borrower establishes a record of on-time payment and a 0.25 percent reduction for electronic payment.
In addition, PHEAA has the KeystoneEXTRA program, which offers private loans; the KeystonePLUS loan for parents, offering discounts for on-time and electronic payment; and the MedBEST loan for medical students, funded with money from the state's share of the 2001 multi-state settlement with tobacco companies.
Mr. Reiber said PHEAA makes money as a guarantor and servicer of education loans and makes loans directly with proceeds from bond issues it floats.
In 2004, rival education lender Sallie Mae estimated that PHEAA "controls 80 percent of the state's student loan market either directly or through its Keystone program lenders."
At the time, Sallie Mae proposed a $1 billion buyout of PHEAA, saying it would operate more efficiently and generate additional money to benefit Pennsylvania students. PHEAA rejected the offer.
Joe Smydo can be reached at firstname.lastname@example.org or 412-263-1548.