When it comes to student loans in Pennsylvania, PHEAA is big.
The Pennsylvania Higher Education Assistance Agency -- known nationwide as American Education Services in its loan business -- considers itself the largest comprehensive student financial aid organization in Pennsylvania and one of the largest such nonprofit groups in the nation.
There are others -- such as Sallie Mae and PNC Bank -- that originate more student loans nationwide than AES does, but in Pennsylvania, PNC is No. 1, PHEAA No. 2 and Sallie Mae No. 3, according to Keith New, PHEAA spokesman.
The state agency also services loans for some other lenders and is the designated federal guarantor in the state. AES handles only federal loans, not private ones.
Founded in 1964, PHEAA, through AES, guarantees $47.5 billion in student loans for 2.5 million borrowers. It manages more than $100 billion in total assets, including the state grant program.
Through the federal student loan program, AES offers the KeystoneBEST loan -- essentially a federal Stafford loan -- with a 6.55 percent interest rate for those who choose a direct debit option, a rate lower than the federal maximum of 6.8 percent.
AES also waives some fees. AES boasts that KeystoneBEST can save borrowers $2,300 over the life of a $10,000 loan.
AES lends money to students throughout the nation and is the federally designated guarantor for students living in or going to school in Pennsylvania, West Virginia and Delaware.
AES is the federally mandated lender of last resort, meaning that if other lenders won't offer a student a federal loan, AES is required by law to lend.
As with any lender, bills from PHEAA and AES are serious.
Robin Sears, 44, of Homewood, got federal Pell grants and borrowed from PHEAA to go to Duquesne University, where she graduated with a degree in journalism in 1987.
Living in the pre-Internet age, at a time when hardly any of her family or friends had been to college, Ms. Sears didn't know much about grants or scholarships. She ended up $25,000 in debt.
Working for the Homewood Informer newspaper, Ms. Sears said she was unable to afford the $300 a month PHEAA asked in repayments, starting six months after she graduated, and she defaulted.
Now a city employee, she has about $150 garnisheed from her wages every month, she said, and PHEAA takes the $4,000 she receives in earned income tax credits for her children every year. As of the end of November, she owed nearly $37,000.
"If it comes between buying food and paying PHEAA, I'm sorry, I've got to buy food," said Ms. Sears, who has three children, ages 5, 7 and 17. "Now I don't have a choice."
PHEAA spokesman Keith New stressed that graduates who can't pay the required amount should contact PHEAA.
"If a borrower starts to run into problems, he needs to come to us so we can help them." Mr. New said.
Of the federal loans, he said, "It is an obligation. It adds to the national debt. Uncle Sam is very serious about having that repaid."
With her mounting debt, Ms. Sears' credit rating is shot, and she said she now gives talks to students at Westinghouse High School in Homewood about the perils of loans, using her own story as a cautionary tale.
She is proud of being the first in her family -- and one of few students from her neighborhood -- to graduate from college, but said that rather than lifting her out of poverty, the degree has given her crippling debt that promises to keep her there.
Ms. Sears said students should use the Internet to search for the plethora of scholarships available to them, and look at taking a part-time job as well, rather than borrow.
"Don't just go to the student loan business because it's easy, it's quick," Ms. Sears said. "You can get a loan in two months, it will leave you broke in one week, and you owe for 30 years."
PHEAA and AES advocate the same approach when students start to explore funding their college education -- look for scholarships first before turning to loans.
Grants are given out by a wide range of organizations, from the federal government to local churches. One place to look is on the Internet at an AES site, www.educationplanner.org.
PHEAA offers some scholarships as well, including the New Economy Technology Scholarship that gives $3,000 to students seeking a four-year degree in a technology field who agree to work in Pennsylvania for at least two years after graduation.
There are also special PHEAA grants for students from foster homes or children of police officers, firefighters, rescue squad members, National Guard members or correctional facility employees who died in the line of duty. And when it comes to the agency's many borrowers, PHEAA offers loan-forgiveness programs for students who choose certain fields.
For those working in nursing, early childhood education, agriculture education or the armed forces, PHEAA -- sometimes with a match by the student's employer -- will pay down a significant percentage of the former student's loan balance. While the requirements vary, all include working in Pennsylvania.
"As we were able to earn enough revenues in the past, we've ... created programs that help students but also address public policy needs in Pennsylvania," Mr. New said.
"A perfect example of that is the nursing program. There's a nursing shortage that's only projected to get worse. Creating a loan-forgiveness program encourages students to pursue that field. It's a benefit for the student and a benefit for the commonwealth."
But Mr. New said such programs could be in jeopardy this year, as PHEAA's investments have not done as well because of the sub-prime mortgage crisis and subsequent economic downturn. After giving out $200 million in free student aid last year, PHEAA expects to distribute less money in grants and loan forgiveness this year.
Aside from the struggling economy, PHEAA has also been hurt in the past year by scandal. Its lavish spending habits were revealed -- including large bonuses and extravagant employee perks -- culminating in the forced termination of former CEO Dick Willey in October.
Last month, PHEAA's vice chairman, state Sen. Sean Logan, D-Monroeville, reported the organization had saved $40 million as a result of spending reforms.
Daniel Malloy can be reached at firstname.lastname@example.org or 412-263-1731.