HARRISBURG -- Gov. Ed Rendell is at odds with the state's higher-education loan agency over whether it has enough money to offer "free tuition" for students at the 14 State System of Higher Education colleges.

Mr. Rendell has been talking this week about a budget "surplus" at the Pennsylvania Higher Education Assistance Agency, money that he claims could be used to fund a free tuition program -- sometime in the future -- at the 14 state-owned colleges and maybe even at state-related or private universities.

In an interview yesterday, Mr. Rendell said, "We are working towards that," referring to free tuition.

He said that he, his aide Donna Cooper and top PHEAA officials, including the board chairman, Rep. Bill Adolph, and the board vice chairman, Sen. Sean Logan, "have been looking at seeing what we can do to use the PHEAA surplus to produce either free or reduced tuition. It's a plan in progress and we don't know if the numbers work or if it has to be phased in.

"We also don't know how much [of the surplus] is going be applied to the state System of Higher Education -- that's our first interest -- and how much of it can be stretched out to the state-related and private institutions.

"So it's a work in progress," he said. "But it's been one of my goals, ever since I discovered that PHEAA had this significant surplus."

But Mr. Adolph, R-Delaware, and Mr. Logan, D-Monroeville, adamantly denied yesterday that there is such a surplus that can be used for free schooling.

"We don't have a surplus," Mr. Adolph said flatly. "There is no plan for free tuition. It's an idea that governor has, but the details have never been discussed. I don't know how in the world we could ever give free tuition to the thousands of students in the State System of Higher Education."

A report on KDKA-TV in Pittsburgh said the governor believes the PHEAA surplus could be as much as $25 million, but Mr. Adolph and Mr. Logan said that is totally wrong.

They admitted PHEAA does keep some funds in reserve -- they wouldn't say how much -- as a way to maintain their financial bond rating and so it can pay off student loans where a student or parents default.

"We are the guarantor on the loans," Mr. Logan said, and financially liable in case of a student's default.

But both men strongly denied there is any "surplus" that could be used for free tuitions or any other purpose.

"The governor is incorrect in the numbers he's been citing to the media about PHEAA's surplus," Mr. Logan said. "We don't have an outrageously large surplus as the governor has suggested. There is no money just sitting there" waiting to be spent

Told that PHEAA officials denied his claims of a surplus, Mr. Rendell would only say, "I'm not going to get into that."

Asked why Mr. Rendell would assert PHEAA has a surplus when there is no surplus, Mr. Adolph said, "I will give the governor the benefit of the doubt. He may have been given wrong information."

He did concede that Mr. Rendell "has talked to a few PHEAA board members about this idea for free tuition, but there's never been a meeting that I attended where they came up with the numbers," meaning there has never been an estimate as to the cost of free tuition for thousands of students.

Mr. Adolph said that by cutting PHEAA expenses, chiefly those for retirees' health care, the agency has been able to increase its amount of loan and grant aid from $60 million in 2006-07 to $72.5 million in 2007-08.

But creating a free tuition program "is just a thought" in the governor's head, he said.

There has been some tension between Mr. Rendell and PHEAA officials over newspaper reports about excessive spending by some PHEAA officials in the past five years for trips to conferences, lavish meals and other spending.

Mr. Rendell has said PHEAA must get its spending under control. But Mr. Adolph, who only recently took over as chairman, said he and Mr. Logan, who also is new in his role, have taken steps to trim spending.

"We passed a tight travel policy and we adopted a code of ethics," Mr. Adolph said. In talks with Mr. Rendell, "He told Sen. Logan and myself he is confident in our leadership."