PHEAA corruption hurts students

Auditor General Jack Wagner proposes a restructuring of PHEAA’s board of directors.

Dear Editor,

For thousands of Pennsylvania college students and their parents, fall is a season of conflicting emotions. Dreams of a prosperous future are tempered with the anxiety of paying off college loans well into adulthood.

As the father of one college student and another child who is approaching college age, I understand. It is why, as Pennsylvania’s auditor general, I have conducted the first-ever special performance audit of the Pennsylvania Higher Education Assistance Agency, the state’s primary source for loans and grants to post-secondary students. I wanted to see if PHEAA was fulfilling its primary mission of putting students first.

After an exhaustive, year-long investigation, I have concluded that PHEAA is not doing all that it can to help Pennsylvania students and families with their skyrocketing tuition costs. In fact, our audit concluded that, in many instances, PHEAA’s management placed its own self-interests ahead of students’.

For example, PHEAA managers awarded themselves more than $7.5 million in bonuses during our three-year audit period, and paid at least nine top executives more than Gov. Rendell’s annual salary of $164,500. These bonuses could have helped at least 2,000 students receive PHEAA grants.

PHEAA’s managers also wasted money on purchases that never should have been made. For instance, they spent $26,000 for “rally towels’’ that were passed out to fans at two Penn State football games. They spent $10,000 for iPod music players that were prizes for an Internet contest. And they spent $5,300 for steak dinners at an exclusive restaurant in Scottsdale, Ariz. Eliminating these purchases alone could have provided 10 Pennsylvania students with the maximum PHEAA grant of $4,500 a year.
PHEAA’s me-first culture must be changed, and it starts at the top. I am recommending an overhaul of PHEAA’s governing board of directors, because it’s the only way to achieve the accountability that taxpayers want and the responsiveness that students need.

I am proposing that eight of the 16 state legislators on PHEAA’s board be replaced with financial and education experts.

These would include the state secretaries of banking and community and economic development; a representative of the state-related universities (Pitt, Penn State, Temple and Lincoln); and one each to represent independent colleges and universities, community colleges, and post-secondary vocational or trade schools. Gov. Rendell would get four appointees, with one reserved for a full-time post-secondary student.

Adding a full-time post-secondary student to the board would provide board members with a real-life perspective on the challenges students face due to the increasing cost of higher education. I can’t think of a better dose of reality for PHEAA’s board members than to have a college student in their presence, reminding them of the financial demands placed upon them and their families.

Twenty states already have students as voting members on their higher education assistance agency boards. It’s time for Pennsylvania to join the list.

When I took office as auditor general in January 2005, my goal was to improve the performance of government so that it improves the quality of life for Pennsylvanians. I have attempted to keep that promise by conducting aggressive, non-partisan audits of aspects of state government that affect the everyday lives of Pennsylvanians, such as school safety, restaurant inspections, gasoline prices and energy assistance for needy families. I also have been an outspoken advocate for the reform of state government.

I encourage anyone who supports my desire for reforming PHEAA to contact your local state representative and senator and tell them that you want the General Assembly to approve my plan to restructure PHEAA’s board.

As Pennsylvania’s independent fiscal watchdog, I take seriously my responsibility of rooting our waste, fraud and abuse of taxpayer dollars.

Jack Wagner
Pennsylvania’s auditor general

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