Penn State’s Old Main Campus. Source: Creative Commons via Flickr user Cole Camplese.
By Wayne D. Fontana
Most college students look forward to summer break and a reprieve from the classroom, but few have the resources to take the “summer off” from one of their most difficult challenges: Paying for their education.
A postsecondary education can be expensive, but it is an investment worth making. Whether a student attends the Community College of Allegheny County, learns a trade, or receives a four-year degree from the University of Pittsburgh, education is the key to a better future.
Fortunately, the Pennsylvania Higher Education Assistance Agency (PHEAA), in cooperation with the Pennsylvania Department of Community & Economic Development and state Treasurer Joseph Torsella, have launched the PA Forward Student Loan Program.
PA Forward is a new suite of affordable private student loan programs created to help families cover the full cost of higher education, without getting buried in unnecessary debt.
Students and families can benefit from this home-grown program more than ever. According to a 2012 Lumina Foundation study, Americans with associate degrees earn 51 percent more annually than high school graduates with no college degree. Bachelor’s degree holders earn 134 percent more annually. Those who attain degrees are more likely to find jobs, have health insurance, vote in elections, and even live longer.
More than 46 percent of Pennsylvanians have obtained their postsecondary education, including high-quality certificate programs and degrees. However, it is estimated that 60 percent of Pennsylvanians will need to obtain a postsecondary education by 2025 to meet Pennsylvania’s future workforce needs.
Additionally, low-income, first-generation students must often overcome difficult barriers when attaining their degree. These barriers can be even higher for people of color.
The recent Indicators of Higher Education Equity in the United States report, by the Pell Institute of Higher Education in Washington D.C., examined circumstances that can result in challenging situations for those seeking to improve themselves via higher education.
The report demonstrates how the cost burden of a degree is shifting to students and families, since there is less state and federal funding for college, as compared to prior decades.
At the same time, federal Pell Grants cover less of the cost of college than ever before. In 2017, the Pell Grant covered about 25 percent of college costs, down from 67 percent in 1976.
As a result, more students and their families are borrowing to pay for college than ever before. The report also found that African American bachelor’s degree recipients have both the highest borrowing rates (85 percent) and the highest average amount borrowed ($34,000).
Clearly, the rising cost of college means that private student loans are increasingly necessary after students exhaust grants, scholarships, campus-based aid, and low-cost federal student loans.
Under PA Forward, PHEAA makes borrower-friendly private student loans to Pennsylvania students at competitively low rates and with superior repayment benefits.
Students can borrow up to the total cost of attendance with no application or origination fees, flexible repayment options, interest rate reductions for successful graduation, additional rate reductions for enrolling in automatic debt, and no late fees during repayment.
Students pursuing a degree, diploma or certificate for completing certain trades training programs can also qualify for a loan.
The PA Forward Student Loan Program will make borrowing more affordable. However, students must also understand that the key to borrowing wisely is to do so only when it’s necessary. Again, low-cost, federal student loans should be the first option after all eligibility for gift aid is exhausted.
After careful consideration of the costs and options for financing college, and the many long-term positive returns on a college degree, student loans are increasingly the only way forward for many students. When this is the case, we are working to make sure students have the tools and resources to make smart choices, including PHEAA’s new PA Forward Student Loan Program.
State Sen. Wayne D. Fontana, a Democrat, represents the Allegheny County-based 42nd Senate District. He is a former vice chairman of PHEAA’s Board of Directors. He writes from Harrisburg
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