HARRISBURG — Pennsylvania's embattled student loan agency decided Thursday to hire its interim chief executive five months after his predecessor resigned following criticism of the agency's spending practices.

The Pennsylvania Higher Education Assistance Agency board voted unanimously at its meeting to make James Preston the president and CEO.

Preston, 57, replaces Dick Willey, who resigned in October following a state auditor's report on bonuses and perks given to employees after PHEAA executives had pledged to curb unnecessary spending.

He takes over at a time when PHEAA has suspended its student loan business because of turmoil in "auction-rate" bond markets, but continues to service and guarantee student loans. The agency also has said it may need to reduce what it contributes to the state's college grant program, which is largely funded by the Legislature.

"I want to see PHEAA do well," Preston said after the board meeting. "I think I can help them get back to where they want to be."

His name was one of 15 submitted to a board search committee by an executive recruiting firm that initially interviewed 200 candidates from across the country by phone, said Sen. Sean Logan, the board's vice president and a member of the search committee.

Preston was the best choice because of his experience in the student loan industry and on Wall Street, where he spent 25 years in various investment banking jobs, said Logan, D-Allegheny.

"He doesn't need any on-the-job training," Logan said.

Preston will receive a $320,000 annual salary, more than Willey's base salary of $289,118, but less than his total compensation last year of nearly $470,000, which included a bonus of more than $180,000. Preston will not be eligible for a bonus because the board's executive committee, which determines how PHEAA executives are compensated, suspended all bonuses in December.

Preston joined PHEAA in 2003 as the executive vice president of client relations and loan operations.