UNIVERSITY PARK – The Pennsylvania Higher Education Assistance Agency, or PHEAA, will suspend participation as a federal Stafford Loan lender in the Federal Family Education Loan Program (FFELP) as of March 7 in response to a credit crunch that has created turmoil in the bond markets, the agency’s acting chief executive told the Associated Press on Tuesday (Feb. 27). As a result of this announcement, Penn State students who selected PHEAA as their federal Stafford Loan lender before March 7 and who will apply for a Stafford Loan in the near future will need to secure another lender and sign a new loan application better known as the Master Promissory Note (MPN).
In most cases, students who sign a new MPN will not need to do so again in their college career as long as they continue to borrow each year from the same federal student loan lender. PHEAA will continue to service loans from past borrowers. However, this PHEAA decision will not affect the availability of federal student loans through other lenders.
Approximately 40,800 Penn State students who used PHEAA as their Stafford Loan lender will receive written notification this spring from Penn State’s Office of Student Aid about the process for obtaining a federal student loan before the 2008 summer sessions or the 2008-09 academic year.
”The Office of Student Aid staff will provide clear guidance on the steps current PHEAA borrowers will need to take to secure a federal student loan after March 7 and will assist students with this process,” said Anna M. Griswold, assistant vice president for undergraduate education and executive director for student aid. “New students will not be affected by this change.”
Although PHEAA has suspended making federal Stafford Loans, they will continue to serve current and past borrowers as a loan servicer.
The Office of Student Aid administers all major federal, state, and University student financial aid programs at Penn State and coordinates multiple funding sources on behalf of more than 64,000 students and sponsoring agencies. For more information about the Office of Student Aid, visit here on the web.
For more information on the PHEAA decision, visit their Web site online.
Tips for students – What should I do?
— Students who had PHEAA as a lender before March 7 will need to find another lender and sign a new loan application, better known as a Master Promissory Note, before the start of the Summer Session, if applicable, or the 2008-09 academic year.
— Penn State’s Office of Student Aid will be sending written notification this spring to students affected by PHEAA’s announcement about the process for obtaining a new Stafford Loan in the future. The information also will be readily available on the web later this spring.
— Not sure if you use PHEAA? You can check whether or not you use PHEWeb site AA as your federal Stafford Loan lender by accessing the National Student Loan Database (NSLDS) Web site or the American Education Services (AES) Web site online.
— Students should check their e-mail, eLion, and the Office of Student Aid site often for updated information. Students can e-mail Penn State’s Office of Student Aid with additional questions through the Web site.