HARRISBURG, Penn. – As many as 100 of the 300 credit unions that use the Pennsylvania Higher Education Assistance Agency for student loans could be affected after the PHEAA said it will temporarily suspend its activities as a Federal Family Education Loan Program (FFELP) lender, according to the Pennsylvania CU Association.
The decision means PHEAA no longer will issue loans from its own funds, but will continue to provide the federal guarantee, origination, and servicing for FFELP loans; essentially providing the systems and processes for loan delivery and repayment, the PCUA said.
The issue is the same in the Keystone State as other states, where lenders are being affected by issues in the broader capital markets. PHEAA reported it expects to resume issuing student loans if the capital markets stabilize to the point of making new loans financially feasible.
“I think the suspension is going to be short term,” Greg Smith, president of Pennsylvania State Employees Credit Union, told the Credit Union Journal. Smith said the $2.96-billion CU, the largest in the state, will be getting the word out very soon that PSECU will still be funding loans. “It’s a good program for us,” he said.” We were the first credit union in the state to absorb all of the origination and document fees.”
