Kentucky Higher Education Assistance Authority
The Student Loan Peoplesm
2009 Annual Report
The 1966 Kentucky General Assembly created the Kentucky Higher Education Assistance Authority (KHEAA) as a governmental agency to improve access to college and technical training. KHEAA administers federal student loan programs, provides state student financial aid and distributes information about college opportunities.
In 1978, the state legislature created the Kentucky Higher Education Student Loan Corporation (KHESLC) to ensure funding would be available to Kentuckians by making, purchasing and financing Federal Family Education Loan Program (FFELP) loans. KHESLC assumed the name of The Student Loan Peoplesm in 1999.
KHEAA is attached to the Finance and Administration Cabinet for administrative purposes. Both KHEAA and The Student Loan People are governed by a board of directors composed of the same 10 voting members appointed by the Governor. In addition, the President of the Association of Independent Kentucky Colleges and Universities, President of the Council on Postsecondary Education, Secretary of the Finance and Administration Cabinet, Commissioner of the Kentucky Department of Education and Kentucky State Treasurer serve as voting, ex officio members. The Board appoints the Executive Director/CEO and adopts rules and regulations to govern agency operations. By statute, the Executive Director/CEO of KHEAA also serves as the CEO of The Student Loan People.
KHEAA and The Student Loan People leverage their participation in FFELP to provide direct contributions to student aid programs, provide low-cost loans and administer college outreach programs tailored to meet the needs of Kentuckians.
Dear Fellow Kentuckians,
The economic viability of the Commonwealth, and the quality of life for those who live here, is unequivocally linked to the education level of our citizens. That is why affordability and access to higher education are top priorities of my Administration.
To ensure that no Kentuckian with the drive to succeed is denied access to a college education, the Commonwealth offers several student financial aid programs administered by the Kentucky Higher Education Assistance Authority (KHEAA) and The Student Loan People. These programs enable thousands of Kentuckians to obtain a college education or technical training every year.
This year, the Commonwealth has made critical investments to ensure access to higher education for Kentuckians. When the national credit crisis threatened the ability of states around the country to offer low-cost student loans for the 2008 fall semester, we developed an innovative solution for our families. The Commonwealth purchased a repayable and collateralized private placement bond from The Student Loan People that enabled it to meet all federal student loan needs of Kentucky students for 2008-2009.
Having demonstrated its experience and expertise in counseling students on college planning and financial aid, KHEAA was designated as the agency to apply for the federally funded College Access Challenge Grant to continue its comprehensive outreach programs.
The Higher Education Work Group (HEWG), a broad-based, bipartisan group of business leaders, higher education policy experts and key legislators, was established to examine and identify opportunities to reduce college costs and improve efficiencies in our student aid programs.
Thank you for your interest in the activities of KHEAA and The Student Loan People. Our efforts will ensure the citizens and entire Commonwealth will enjoy the benefits of higher education.
Steven L. Beshear
A Top PriorityAccess to Higher Education
Jerry T. Shroat
Serving KentuckiansAccomplishing Our Mission
Executive MessageLooking back on Fiscal Year 2009, we can say with certainty it was the most challenging in the history of KHEAA and The Student Loan Peoples 43-year history of making higher education more accessible for Kentuckians.
The year was underscored by the student loan funding crisis, reduced resources and a federal budget proposal to eliminate the Federal Family Education Loan Program (FFELP), which has successfully served Kentucky students, families and postsecondary schools for more than four decades.
Despite these challenges, KHEAA and The Student Loan People achieved success in serving the students and families of the Commonwealth during Fiscal Year 2009. KHEAA disbursed more than $194 million to 120,830 Kentucky students to help them pay their college costs. To fill the gap between family resources and other student aid, The Student Loan People disbursed $572 million in FFELP loans, while KHEAA guaranteed $1.3 billion.
Because traditional bond financing for student loans had become impossible to access, Governor Beshear and The Student Loan People developed an innovative solution to ensure low-cost college loans remained available to Kentuckians. In August, the Commonwealth purchased a $50 million repayable bond from The Student Loan People, which enabled us to take part in the federal loan participation program created by the Ensuring Continued Access to Student Loans Act (ECASLA). This financing method remained in place throughout Fiscal Year 2009 and enabled The Student Loan People to fully meet the student loan needs of our borrowers. In return, the Commonwealth received a high quality investment collateralized by guaranteed and federally re-insured loans and a reserve fund.
As public, nonprofit student aid providers, KHEAA and The Student Loan People have historically given back their federal loan-related income to Kentuckians in the form of additional state student aid awards and borrower benefits as well as comprehensive outreach, financial literacy and default prevention initiatives. Our goal to continue
this tradition in 2009 was never more challenging; however, we achieved success by prudent management of our available resources.
In an environment of drastically reduced revenue, both KHEAA and The Student Loan People adopted significant cost-saving measures in every possible area and, by doing so, were able to contribute $2 million to fund awards from the National Guard Tuition Award and Mary Jo
Young Scholarship, $7.1 million for default fee reductions for our Stafford and PLUS borrowers, and $4.3 million to pay for administration costs of state student aid and FFELP programs. We also designated $3.5 million for eligible Best In borrowers.
We also intensified our search for new partnerships and resources to serve Kentuckians. Governor Beshear appointed KHEAA as the state agency to apply for the new federally-funded College Access Challenge Grant. KHEAA applied, and the U.S. Department of Education awarded KHEAA a $1.2 million grant to continue our comprehensive outreach programs that encourage Kentuckians to pursue higher education. Through the Federal Teacher Loan Forgiveness Program, KHEAA provided more than $7.6 million to Kentucky teachers. For nurses with loans from The Student Loan People, Norton Healthcare announced it would help repay a portion of its nurses loans for each six months of service.
During much of the year, Congress has been deliberating the future of student loan programs, which may result in elimination of FFELP in favor of Direct Lending beginning in the 2010-2011 academic year. Regardless of the outcome, we will continue to use all our energy, experience and resources to assist students in pursuing their educational dreams. We embrace the future with unwavering dedication to our mission, enthusiastic support for students and continued confidence that the agencies will provide valuable higher education programs and services to Kentuckians for many years to come.
Jerry T. ShroatFY 2009 Board Chair
To Our School and Lender PartnersI am pleased to extend our sincere appreciation to our school and lender partners for your continued support and participation in the Federal Family Education Loan Program (FFELP) administered by KHEAA and The Student Loan People.
Your participation allows us to make certain that Kentucky students and families reap the benefits of KHEAA and The Student Loan Peoples federal loan-related earnings. Through the years, those benefits have included:
Additional funding for state student financial aid awards.Low-cost student loans and borrower benefits.Free college planning and financial aid publications.GoHigherKY.org, Kentuckys one-stop higher education website.Outreach counselors who make presentations and participate in college fairs and financial aid workshops all across the state. Cost-free administration of FFELP and state student financial aid programs.Locally-administered student aid programs, which create jobs in the Commonwealth.
For more than four decades, KHEAA and The Student Loan People have been pleased and honored to be your local partner in helping Kentuckians pursue higher education.
As we look to the future, we reaffirm our commitment to our public-purpose mission. Helping our fellow Kentuckians pursue higher education opportunities will remain at the heart of everything we do. We look forward to serving you and the students of Kentucky for many years to come.
Edward J. Cunningham Executive Director/CEO
Serving KentuckiansBoard of Directors (as of June 30, 2009)
Jerry T. Shroat, Chair, Union David L. Allen, FrankfortRonald D. Butt, LouisvilleJohn Cheshire, III, LexingtonDr. Barbara Holsinger, WilmoreDr. Jim A. Jackson, Frankfort Brent A. McKim, LouisvilleCharles Simpson, SomersetDr. James Henry Snider, FranklinDaniel W. Stanfield, Lexington
Ex Officio Members Dr. Gary S. Cox, President,
Association of Independent Kentucky Colleges and Unive