By Representative Mike Peifer, Chairman, PHEAA Board of Directors – Earlier this year, millions of Pennsylvanians awoke to a new and uncertain normal. Individuals, families, businesses, educators, healthcare providers, and government leaders all struggled to understand the risks of COVID-19 and the responses that would be needed. At the same time, government mandated lock-downs restricted businesses as unemployment rates reached historic highs – literally overnight.
Beyond the stresses on our healthcare system, the negative economic impact was felt everywhere. This includes millions of student loan borrowers who found themselves unemployed through no fault of their own.
Here in Pennsylvania, thousands of PA Forward Student Loan borrowers benefited from the bipartisan efforts of Governor Wolf, Treasurer Torsella, and members of the Pennsylvania General Assembly who worked together to allocate $2.2 million of federal relief funds to support them during this time of need.
Now in its second year, the PA Forward Student Loan Program is a suite of borrower-friendly student loans with PHEAA serving as both the lender and servicer, with a line of credit from the PA Treasury and tax-exempt allocation from the PA Department of Community and Economic Development (DCED).
As Pennsylvania’s student loan program, PA Forward stands unique among non-federal loan programs as evidenced in how decisively the Commonwealth rallied to the aid of its borrowers. This included automatically pausing payments, allocating federal relief funds to underwrite 0% interest rates for all borrowers, and backdating such benefits to March 13 through September 30, 2020.
These benefits were in addition to everyday benefits such as no application or origination fees, no pre-payment penalties, a .50% interest rate reduction as a graduation benefit for the undergraduate and graduate loans, a .25% interest rate reduction for undergraduate, graduate and Parent loans upon enrollment in automatic payments and a bi-weekly payment options to promote positive repayment habits.
Earlier this year, existing PA Forward Student Loan Undergraduate, Graduate, and Parent Loan customers also received a permanent .98% interest rate reduction. This means PA Forward Undergraduate and Graduate Loan borrowers were able to reduce their existing interest rate by 1.73% when combined with the program’s graduation and direct debit benefits, and PA Forward Parent Loan borrowers were able to reduce their interest rate in total by 1.23%, when combined with the program’s direct debit benefits.
As students and families face more uncertainty as they plan for college in 2020-21, it’s important to remember that loan debt should be avoided if at all possible and should be minimized as much as possible when it is unavoidable. This means first exhausting eligibility for grants and scholarships, and then for low-cost federal Stafford Loans. But when money is needed to bridge any funding gaps, PA Forward Student Loan borrowers have the peace of mind knowing that their program, and the Pennsylvania government leaders who support it, will prioritize their needs – even in the face of an economically debilitating global pandemic.