Several board members of the Pennsylvania Higher Education Assistance Agency, impatient with the pace of the state’s 11-month probe of the student-loan agency’s spending habits, plan to ask the Pennsylvania auditor general to bring his investigation to a close, The Patriot News, a newspaper in Harrisburg, Pa., reported.
The auditor general, Jack Wagner, began investigating the agency last spring following news-media reports that it had spent in excess of $860,000 on employee and board travel expenses. Mr. Wagner’s interim report on the investigation in October concluded that the agency, which is known as Pheaa, had spent lavishly on employee benefits and bonuses for high-ranking executives.
Some members of Pheaa’s Board of Directors say Mr. Wagner’s investigation has dragged on, putting a strain on the staff at a time when the agency, like many other lenders, is feeling the pinch of the downturn in credit markets and the subsidy cuts in the student-aid bill passed last fall. Last month Pheaa announced that it would temporarily suspend offering federal student loans because of the credit crunch. The agency is also under the gun with the U.S. Education Department, which has said it will seek a $15-million repayment from Pheaa after finding that the agency had received $33-million in improper federal subsidy payments on student loans through a federal aid loophole that allowed lenders to receive guaranteed subsidies at above market-based interest rates.
“We’re beginning to wonder about the scope of the audit being conducted,” State Sen. Jane Earll, a Pheaa board member, said at a board meeting last week. “There is some question as to whether this is exceeding general accounting standards and general auditing standards.”
Mr. Wagner, however, has refused to bow to pressure. “We will be there as long as we need to be to make sure our audit is done professionally and factually,” he told the newspaper.
Among the spending and policies under investigation by the auditor general are $8.9-million spent on advertising; a bonus of nearly $65,000 paid to a D.C. lobbyist; and the agency’s outfitting of an executive conference room with $1,000-apiece leather swivel chairs. —Paula Wasley
