PENNSYLVANIA.

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Author: Selingo, Jeffrey

RARELY does higher education directly make a small fortune for a state, but in 2004-5 lawmakers in Pennsylvania weighed an offer that would do just that: Sallie Mae, the nation's largest provider of student loans, made a $1-billion bid in December to take over the Pennsylvania Higher Education Assistance Agency.

The 41-year-old agency, known as Pheaa, administers grants to students attending colleges in the state and manages student loans. It is one of the largest student-aid organizations in the country, serving four million borrowers, managing more than $33-million in assets, and employing 2,300 people.

Under the proposed arrangement, Sallie Mae would give the state $1-billion over five years to purchase Pheaa's assets, including its student-loan portfolio, and to manage the agency. The state would continue to run the grant programs. Pheaa would still be able to make new student loans under its name, but Sallie Mae would administer the loans and collect payments.

Executives of the loan giant argued that the state could use the $1-billion to support its public colleges and provide more financial aid to its students. Soon after the offer was announced, Gov. Edward G. Rendell, a Democrat, called it "intriguing." But officials at Pheaa were furious. Two days after Christmas, the agency's board held a special session in which it unanimously rejected the proposal and passed a resolution opposing any effort to sell.

After that, Sallie Mae officials focused their energy on building support for their offer in the legislature, which will decide whether to accept or reject the deal. At an all-day hearing in February, legislators were mostly skeptical of the proposal, pointing out that Sallie Mae had already made inroads in the state â€" having lent $750-million to students at nearly 300 colleges in Pennsylvania in 2004. Lawmakers questioned how the takeover of Pheaa by one of its strongest competitors would bring increased competition into the state's loan market.

Pheaa's board also embarked on its own lobbying campaign, mainly through making its grant program, which serves about 160,000 state residents, more generous. The board approved a $200 increase in the maximum grant, to $3,500, for 2005-6, in part by committing $25-million from its earnings on student loans. It also voted to make the first changes in 39 years in its formula for awarding grants. The revisions were intended to cover a greater portion of college costs for students from low-income families, including those at private institutions. As of early August, the legislature had not acted on Sallie Mae's bid.

The purchasing power of the grants has diminished over the years, in part because the state's public colleges are among the most expensive in the nation. In 2004-5, the 14-campus state-university system attempted to restrain the upward trend by adopting its smallest tuition increase in seven years. It raised rates by 2 percent, with tuition for in-state students set at $4,906.

But the day after Governor Rendell praised the university system for keeping the tuition increase below inflation, two of Pennsylvania's four state-related institutions, Pennsylvania State University and the University of Pittsburgh, approved increases that went above that rate. Penn State approved a 5.9-percent increase, bringing annual tuition for incoming in-state freshmen on the flagship University Park campus to $11,024 in 2005-6. Pittsburgh enacted an increase of 6 percent, or $546.

Penn State said it had to raise tuition that much in part because of the paucity of financial support from the state. Tuition income now pays for more than 70 percent of the university's educational expenses. Penn State received $247.2-million from the state for 2005-6, a 2.5-percent increase. Meanwhile, appropriations to the state-university system rose 2.75 percent, to $445.4-million.

Even with the increase, state support of the system is smaller than it was five years ago. The sector of higher education that fared best in the budget was the state's 15 community colleges. They received an increase of 10 percent, or $23-million, their largest in 15 years.

In other developments, the State House of Representatives voted in July to form a committee to investigate claims by some students that professors had graded them unfairly because of their political views and used class time to talk about their own political opinions. Complaints from about 50 students who said they had been discriminated against because of their politics prompted Rep. Gibson Armstrong, a Republican from Lancaster, to sponsor the measure. The committee will hold hearings, take testimony, and conduct investigations', but it will not have subpoena power. It is to report its findings to the House in November 2006.

After a year of seesaw negotiations, members of the governing board of Penn State's Dickinson School of Law agreed in January 2005 to allow the university to build a new law school on the main campus without making a long-term commitment to Dickinson's current location, in Carlisle.

The deal was the result of negotiations that got under way in the fall of 2004, after the school's independent Board of Governors failed to act on a plan proposed by Penn State's president, Graham B. Spanier, to operate law programs on both campuses.

A sticking point in that proposal was a provision that would have allowed Penn State to give the Carlisle facility back to the Dickinson board or to close it after 10 years if the university decided that it could not sustain the campus. The new plan basically retained that provision. Under the agreement, Penn State would be required to operate a three-year law program in Carlisle until at least June 30, 2015, but would be free to open a law school on the University Park campus at any time.

The 170-year-old Dickinson School of Law, which is not affiliated with nearby Dickinson College, merged in 2000 with Penn State, which until then had had no law school.

In February the University of Pennsylvania agreed to pay the federal government $517,496 to settle allegations that Penn researchers had misled regulators and failed to protect patients during a 1999 gene-therapy study that led to the death of an 18-year-old research volunteer, Jesse Gelsinger. The civil settlement also restricted future clinical research by three scientists involved, including the principal investigator, James M. Wilson, who remains a faculty member at Penn.

Population: 12,406,292 (Rank: 6)
Age distribution:
Up to 4                                      5.8%
5 to 13                                     11.4%
14 to 17                                     5.6%
18 to 24                                     9.6%
25 to 44                                    26.6%
45 to 64                                    25.7%
65 and older                                15.3%
Racial and ethnic distribution:
American Indian                              0.2%
Asian                                        2.1%
Black                                       10.3%
Pacific Islander Less than                   0.1%
White                                       86.4%
More than one race                           0.9%
Hispanic (may be any race)                   3.4%
Educational attainment of adults (highest level):
8th grade or less                            3.9%
Some high school, no diploma                10.5%
High-school diploma                         39.4%
Some college, no degree                     15.4%
Associate degree                             6.7%
Bachelor's degree                           15.4%
Graduate or professional degree              8.8%
Proportion who speak a language other than English at home: 8.1%
Per-capita personal income: $33,348
Poverty rate: 10.0%
New high-school graduates in:
2005-6 (estimate)                         139,552
2015-16 (estimate)                        124,301
New GED diploma recipients: 13,269
High-school dropout rate: 8%
POLITICAL LEADERSHIP
Governor: Edward G. Rendell (D), term ends 2007
Governor's higher-education aide: Ian Rosenblum, 506 Finance Building,
Harrisburg 17120; (717) 787-1954;
http://www.governor.state.pa.us
U.S. senators: Rick Santorum (R), term ends 2007; Arlen Specter
 (R), term ends 2011
U.S. representatives:
7 Democrats, 12 Republicans Robert A.
 Brady (D), Charles W. Dent (R), Michael F. Doyle (D), Phil
 English (R), Chaka Fattah (D), Michael G. Fitzpatrick (R),
 Jim Gerlach (R), Melissa A. Hart (R), Tim Holden (D), Paul
 E. Kanjorski (D), Tim Murphy (R), John P. Murtha (D), John
 E. Peterson (R), Joseph R. Pitts (R), Todd Russell Platts
 (R), Allyson Y. Schwartz (D), Don Sherwood (R), Bill Shuster
 (R), Curt Weldon (R)
General Assembly: Senate, 20 Democrats, 30 Republicans; House,
 93 Democrats, 110 Republicans

Higher education:
Public 4-year institutions                     44
Public 2-year institutions                     21
Private 4-year institutions, nonprofit         98
Private 4-year institutions, for-profit         9
Private 2-year institutions, nonprofit         16
Private 2-year institutions, for-profit        74
Total                                         262
Statewide higher-education boards:
Pennsylvania Department of Education
333 Market Street
Harrisburg 17126
(717)787-5041
http://www.pdehighered.state.pa.us/higher
position of deputy secretary for postsecondary and higher
 education vacant
Pennsylvania State System of Higher Education
2986 North Second Street
Harrisburg 17110
(717) 720-4000
http://www.passhe.edu
Judy G. Hample, chancellor
Private-college association:
Association of Independent Colleges and Universities of
 Pennsylvania
101 North Front Street
Harrisburg 17101
(717) 232-8649
http://www.aicup.org
Don L. Francis, president
Institution censured by the AAUP:
Grove City College
Institution under NCAA sanctions:
Villanova University

Average pay of full-time professors
Public universities:
Professor                                $105,414
Associate professor                       $72,905
Assistant professor                       $63,011
All                                       $78,712
Other public 4-year institutions:
Professor                                 $85,495
Associate professor                       $67,140
Assistant professor                       $54,937
All                                       $63,891
Private universities:
Professor                                $123,901
Associate professor                       $81,518
Assistant professor                       $69,507
All                                       $94,531
Other private 4-year institutions:
Professor                                 $79,984
Associate professor                       $60,706
Assistant professor                       $49,889
All                                       $60,290
2-year colleges:
Public                                    $54,443
Private                                   $39,122

Enrollment:
At public 4-year institutions             252,442
At public 2-year institutions             117,944
At private 4-year institutions            252,974
At private 2-year institutions             31,466
Undergraduate                             544,358
Graduate                                   92,027
Professional                               18,441
American Indian                             1,746
Asian                                      26,571
Black                                      62,104
Hispanic                                   16,727
White                                     524,844
Foreign                                    22,834
Total                                     654,826
Enrollment highlights:
Women                                       55.8%
Full-time                                   71.2%
Minority                                    16.4%
Foreign                                      3.5%
Proportion of enrollment made up of minority students:
At public 4-year institutions               13.9%
At public 2-year institutions               22.1%
At private 4-year institutions              15.6%
At private 2-year institutions              20.7%
Degrees awarded:
Associate                                  24,177
Bachelor's                                 72,351
Master's                                   24,038
Doctorate                                   2,431
Professional                                4,442
Residence of new students: State residents made up 72% of
 all freshmen enrolled in Pennsylvania in the fall of 2002
 who had graduated from high school in the previous year;
 82% of all Pennsylvania residents who were freshmen attended
 college in their home state.
Test scores: Students averaged 1003 on the SAT, which was
 taken by an estimated 74% of Pennsylvania's high-school
 seniors.
Graduation rates at 4-year institutions:
All                                         62.2%
Men                                         59.1%
Women                                       64.9%

Average tuition and fees:
At public 4-year institutions              $7,633
At public 2-year institutions              $2,514
At private 4-year institutions            $21,209
State funds for higher-education operating expenses: $2,012,046,000
One-year change: Up 3.4%
State spending on student aid:
Need-based grants                    $360,816,000
Non-need-based grants                    $128,000
Non-grant aid                         $41,203,000
Total                                $402,147,000
Total spending on research and development by colleges and
 universities: $2,013,453,000
Sources:
Federal government                          71.7%
State and local governments                  4.7%
Industry                                     7.0%
The institution itself                      10.5%
Other                                        6.1%
Total federal spending on college-and university-based
 research and development: $1,378,756,000
Selected programs:
Department of Health and
 Human Services                      $926,188,000
National Science Foundation          $135,314,000
Department of Defense                $225,892,000
Department of Agriculture             $15,450,000
Department of Energy                  $26,307,000
National Aeronautics and
 Space Administration                 $33,156,000
Largest endowment:
University of Pennsylvania         $4,018,660,000
Top fund raisers:
University of Pennsylvania           $332,829,900
Pennsylvania State University        $148,463,500
University of Pittsburgh              $94,875,400

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By Jeffrey Selingo