Higher Education Services Corporation, New York State

Note: Most recent estimates as of 01/22/08.

Mission

The Higher Education Services Corporation (HESC) was established in 1974 to provide centralized processing of student financial aid programs. The Corporation administers the State's Tuition Assistance Program, the Federal Family Education Loan Program and other State and Federal aid programs.

Budget Highlights

The Executive Budget recommends $988.5 million ($821.8 million General Fund, $166.7 million Other Funds) in support of the Corporation. This reflects a net decrease of $68.6 million (a $103.1 million General Fund decrease and a $34.5 million Other Funds increase) from the 2007-08 budget. This decrease primarily reflects the continued implementation of prior-year Tuition Assistance Program (TAP) eligibility reforms, such as increased minimum academic standards and more stringent requirements related to the use of the Ability to Benefit (ATB) test, as well as 2008-09 savings and revenue actions highlighted below.

The Executive Budget recommends a staffing level of 700 FTEs for the Corporation, unchanged from 2007-08 staffing levels. Virtually all employees are paid through funds received for the administration of Federal student loans. Agency administrative operations are located in Albany.

Major budget actions include:

• Veterans' Tuition Coverage Program: The 2008-09 Executive Budget includes $2 million to provide all returning combat veterans who served in the Vietnam, Afghanistan or Persian Gulf conflicts with a tuition benefit in the amount of up to the full cost of SUNY tuition ($4,350) to be used at any college or university in New York State. This will expand upon the benefits already available through the existing Veterans' Tuition Assistance program, which provides awards up to $2,000, and the Recruitment Incentive and Retention Program, which provides some active National Guard members and Guard Members who have been deployed with the equivalent of full SUNY tuition at New York State colleges and universities.

• Challenge Grant Program: This new federal program awards matching grants to organizations to increase the number of eligible students from underserved populations who enter and complete college. Organizations that receive these funds must provide need-based grants to eligible students. It is expected that HESC will receive a grant of up to $7.0 million for the 2008-09 academic year.

• Default Collection Collaboration with the U.S. Department of Education: The Corporation and the U.S. Department of Education (DOE) will collaborate to collect on defaulted Federal FFELP and Direct loans. The Executive Budget authorizes the New York State Department of Taxation and Finance to provide HESC with certain information for educational loan borrowers to enable this collaboration. Revenues generated by this initiative will be used to support TAP program expenditures.

• Default Parity: Currently, students in default on Federal loans guaranteed by the Corporation are ineligible to receive TAP payments, but students in default on Federal loans guaranteed by organizations other than the Corporation retain TAP eligibility. The 2008-09 Executive Budget provides that all students in default on Federal loans would be ineligible for TAP awards, regardless of guarantor. This measure is expected to produce savings of $2.6 million in 2008-09.

• Federal Default Fee: The Executive Budget assumes that the Corporation will no longer cover a federally mandated student loan default fee on loans that it guarantees. The fee is assessed to borrowers, and is equivalent to one percent of the loan amount. In 2008-09, this action will reduce the Corporation's costs by $26.6 million, which will be used to support TAP program expenditures.

2008-09 Executive Budget — Agency Presentation
Higher Education Services Corporation, New York State (PDF)