PHEAA Questions U.S. Inspector General's Audit Report
Urges U.S. Education Secretary Spellings to dismiss flawed "findings"Harrisburg, PA (November 19, 2007) - Interim PHEAA President & CEO James Preston today sent the attached letter to U.S. Education Secretary Margaret Spellings urging her to reject an audit report issued today by the U.S. Inspector General (IG).
PHEAA is one of several student loan organizations that has been or will be the subject of such an audit by the IG. The report focuses on submissions of quarterly billing statements to the U.S. Department of Education; specifically those related to student loans to which the minimum 9.5 percent yield provisions apply. This provision, originally adopted by Congress in 1986 in a high interest rate environment, was intended to apply only to certain loans made or held by not-for-profit entities, such as PHEAA. Recent guidance by the Department provided final clarification on this issue and curtailed most federal billing on these loans as of September 30, 2006.
"PHEAA has always been in compliance with the Department's regulations," said Interim President & CEO James Preston. "Unfortunately, the report is largely based on the IG's present-day interpretation of past department regulations and ignores ten years of our compliance with regulations, as documented by numerous audits that were conducted according to standards published by the IG itself. We believe that the Secretary will view this report in its proper context and not assess any undue penalties on PHEAA."
"At best, this audit report highlights the confusing regulatory guidance and oversight from the U.S. Department of Education," said Donna Cooper, Secretary of Policy for Gov. Ed Rendell and PHEAA Board Member. "There is simply no reason to assign liability to PHEAA for following the Department’s guidelines and we hope that Secretary Spellings will come to the same conclusion."