The Pennsylvania Higher Education Assistance Agency is celebrating its selection Wednesday as one of four companies to service the U.S. Education Department's $550 billion student loan portfolio.
Most Pennsylvanians know PHEAA only for its aid programs that benefit the state's low- and moderate-income students and for scandals related to extravagant spending and salary packages that led to reforms in 2007.
But PHEAA, with its affiliate American Education Services, is one of the largest, full-service student financial aid organizations in the nation, employing 2,200 Pennsylvanians and managing more than $80 billion in assets.
It had to compete against some financial giants to win the performance-based federal contract. The nonprofit was selected along with a similar organization in Wisconsin, as well as Nelnet Inc. and the Sallie Mae Corp., two publicly traded companies that saw their stock value soar on Thursday in response to the government work.
The new contracts were awarded because President Barack Obama is shifting most of the nation's $90 billion in student lending into a direct loan program, which he estimated could save taxpayers more than $4 billion a year and ensure that all eligible students have access to loans they need.
PHEAA's selection is more than a feather in its cap. The contract maintains existing jobs in the state and is likely to create new positions down the road -- welcome growth in a shrinking economy. In addition, because PHEAA is a nonprofit, any income that exceeds administrative expenses is funneled back to provide more loans for Pennsylvania students.
It hasn't always been true in the past but, in this case, what is good for PHEAA could be very good for Pennsylvania.