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Special Pennsylvania State Grant Notice

Pennsylvania State grants (PHEAA grants) could experience a serious reduction in the 2018-2019 academic year. Even though Governor Wolf has proposed flat funding for PHEAA Grants, PHEAA leaders have said they must reduce the agency's augmentation to the program by $47 million (which the Governor rejected in his budget proposal but remains a possibility) and new distance education grant recipients have been added to the program due to Act 5. As a result, current students could see their grants reduced by as much as $900.

We encourage students to contact their state legislators in order to prevent the cuts to this important grant program.  The site http://www.mypls.com/Admin/aicupzipsticker/tabid/1186/Default.aspx allows individuals to put in their zip codes and get emails of state legislators in student's area or district. More info can be found at www.legis.state.pa.us including the name, phone and address for a particular state legislator.

Please see below for a sample letter and suggested talking points when contacting your legislator:

Sample Letter/Email/Fax from Students to State Legislators:

Dear (Senator/Representative) __________:
My name is______________ and I am a student attending _(Name of your institution)__. I am sure you will have many constituents ask you to increase funding for worthy state programs. However, I am asking you to prevent a 25% cut in the PHEAA grant award. According to the financial aid officer at my institution, PHEAA staff has told them to expect a 25% cut in grant awards. PHEAA says this large cut will be required if 1) the state appropriation to PHEAA is flat funded (as proposed by Governor Wolf), 2) PHEAA reduces its contribution to the grant program by $47 million as it says it must, and 3) new distance education students are added to the grant program as required by Act 5 of 2018.

To prevent any cuts to my student aid, we need PHEAA Board members and other state legislators to insist that PHEAA restore its current level of PHEAA grant supplement (as Governor Wolf proposes in his budget) and increase the state appropriation to the PHEAA grant program by $15 million to cover the additional cost created by the expansion of the program to all distance education students.
If legislators don't pay attention, low and moderate-income students who rely on PHEAA grants will suffer the worse cut in the program's history. Please make sure this doesn't happen!

PHEAA grants should receive priority in the state budget because:

  • PHEAA grants only go to Pennsylvania residents who demonstrate financial need for these state dollars.
  • Students and families immediately know the value of the grant.
  • PHEAA serves Pennsylvanians no matter which Pennsylvania college or university they attend. It serves all sectors of higher education.

Please help Pennsylvania students afford the opportunity of higher education by supporting this grant program.

Sincerely,


Talking Points

  • You will have many constituents ask you for support for very worthy state programs during this budget season. I know that I am just another person asking for support for a good program. However, most of those other constituents will be seeking an increase in funding for their program. I am asking you to prevent a 21% cut in the PHEAA grant award.
  • Why will the PHEAA grant be cut by this much? PHEAA staff currently estimate next year's expected maximum PHEAA award will be reduced by about $900 (21% cut). PHEAA says this cut will be required if 1) the state appropriation to PHEAA is flat funded, 2) PHEAA reduces its contribution to the grant program by $47 million as it recommends, and 3) new distance education students are added to the program as required by Act 5 of 2018.
  • To prevent any cut to the grants used by our neediest students next year, we will need the General Assembly to add $15 million to Governor Wolf's proposed $272.9 million for PHEAA grants (flat funding) and to support Governor Wolf's request that PHEAA continue to supplement the grant program at $97 million ($47 million more than PHEAA recommends).
  • Pennsylvania policymakers have supported PHEAA grants because 1) the grants support students with demonstrated financial need attending all sectors of higher education, and 2) the policymakers recognize the benefit the state receives for its relatively small state investment in PHEAA grants when a student uses the grant at a private institution and thereby reduces the need for more funding at the state universities.
  • PHEAA grants should receive priority in the state's higher education budget because they serve only Pennsylvania students who can demonstrate financial need for these state dollars. All of these students will have to assume more loans if their grants are cut. And PHEAA serves Pennsylvanians in all sectors of higher education.
  • However, PHEAA grants have lost significant purchasing power over the last decade. In 2007, the maximum PHEAA grant was $4,700. If it had tracked the CPI over the last decade, it would have been set at $5,624 in 2017; instead, it was set at $4,318-lower than in 2007! And now it is facing a cut of $900 next year if the state flat funds the appropriation and PHEAA reduces its supplement as it recommends. Please don't let this severe downward spiral continue.
  • I also ask you to support a $5 million increase for the Ready to Succeed Scholarship (RTSS) Program, which was created to serve middle income students. As you know, middle income families need help paying for college. RTSS provides grants of up to $2,000 to students from families earning $110,000 and less if the student has demonstrated academic promise with a 3.25 gpa or more after 30 college credits. Students in all sectors of higher education receive RTSS grants. Governor Wolf recommended flat funding of $5 million for RTSS in 2018-19, but this amount will serve only about 1/3 of the eligible students.

Background Information

Why do PHEEA grants exist?

  • As a college degree became more essential in obtaining good jobs, higher education expanded dramatically during the 1950s and 1960s. At that time, the Governor and Legislature created the Pennsylvania Higher Education Assistance Agency (PHEAA) to provide access and choice to low and moderate-income students through need-based grants that could be used at any Pennsylvania college or university.
  • While Pennsylvania has always supported its public universities, it has also chosen to fund higher education differently than many states through a larger state grant program since it is the second largest private college state in the nation with 90+ private colleges and universities. Private colleges and universities enroll 42% of the students and award 49% of all degrees for only 10% of the state's spending on higher education.
  • Therefore, Pennsylvania policymakers have supported PHEAA grants because 1) the grants support students with demonstrated financial need attending all sectors of higher education, and 2) the policymakers recognize the benefit the state receives for its relatively small state investment in PHEAA grants when a student uses the grant at a private institution and thereby eliminates the need for more funding at the state universities.

How does the expansion of PHEAA grants to all distance education students affect the grant program?

  • This year the General Assembly passed legislation to expand the number of students receiving PHEAA grants to all students who are enrolled in distance education. Previously, the law prohibited PHEAA grants to students who took more than half their credits on line. For the past five years, the General Assembly had allowed PHEAA to operate a pilot program that funded up to $10 million annually (using PHEAA earnings) to full-time distance education students. PHEAA staff estimate that making all distance education students eligible will cost $18 - $22 million. PHEAA has also said it cannot afford to continue to contribute its $10 million annually toward these distance education students.

How has the addition of PHEAA earnings to the PHEAA grant program actually put students at risk?

  • In 2005-06, PHEAA offered to use $25 million of its earnings from its student loan servicing business to supplement the PHEAA grant program. This was perceived as a positive development that would provide more aid to needy students. However, state policymakers have responded to revenue shortfalls since the Great Recession by asking PHEAA to increase its supplement while simultaneously cutting the state appropriation to the grant program in order to use those funds elsewhere in the budget. Consequently, PHEAA provided a total of $97 million ($87 million for grants and $10 million for the distance education pilot) to the grant program in 2017-18, while the state appropriation was $272.9 million-down from $407.4 million in 2008-09.
  • Making matters worse, PHEAA staff says that the agency no longer is able to continue to support the grant program at this level since federal auditors require them to maintain their reserves at a certain level to backstop their loan servicing business. In its budget recommendation to the Governor, PHEAA recommended to reduce its supplement by $47 million.
  • Using flat funding for the state appropriation, the reduced contribution from the PHEAA agency, and the expanded number of eligible students due to the distance education expansion, PHEAA staff now estimate that the maximum grant awards will be cut by about $900 next academic year. This would be a cut of 21%!

What is the Governor's proposal and what would it mean for PHEAA grant recipients?

  • Governor Wolf proposes flat funding for the state appropriation to PHEAA grants at $272.9 million in 2018-19. The Governor also proposes that PHEAA maintain its current supplement of $97 million ($87 million for grants and $10 million for the distance education students).
  • PHEAA estimates that it will need $18 - $22 million to fund all distance education students; therefore, even with the Governor's request for $10 million in agency supplement for distance education, the grant program will be $8 - $12 million short. PHEAA also estimates that additional eligible applicants in the regular grant program will cost another $3 million next year. Result: we need an additional $15 million in state appropriation to ensure that students can maintain the grants they received this year.

What is the Budget Request for PHEAA funding?

  • An estimated $15 million increase in the state appropriation is required to maintain current PHEAA grant funding provided that PHEAA can supplement the grant appropriation by $97 million. If PHEAA cannot meet this requirement, then even more state funding will be required to help our neediest students.

Why should PHEAA Grants receive priority in higher education funding?

  • PHEAA grants should receive priority because they serve only Pennsylvania students who can demonstrate financial need for these state dollars. All of these students will have to assume more loans if their grants are cut. And PHEAA serves Pennsylvanians no matter which Pennsylvania college or university they attend. It serves all sectors of higher education.

What about middle income students? What can we do for them?

  • The Ready to Succeed Scholarship (RTSS) Program was created to serve this population. It provides grants of up to $2,000 to students from families earning $110,000 and less if the student has demonstrated academic promise with a 3.25 gpa or more after 30 college credits. Students in all sectors of higher education receive RTSS grants. 
  • Governor Wolf recommended flat funding of $5 million for RTSS in 2018-19, but this amount will serve only about 1/3 of the eligible students. AICUP requests an additional $5 million for RTSS so more middle income students can be served.