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Blunt proposes selling student loan authority
Southeast Missouri State University could benefit from move, officials say.
Gov. Matt Blunt wants to sell Missouri's student-loan agency and use the estimated $400 million in proceeds to fund new buildings, student scholarships and endowed professorships on college campuses.
The proposal includes $5 million toward an $18.6 million life-science lab at Southeast Missouri State University's planned research park along Interstate 55. The remaining $13.6 million would have to come from local sources.
At least some of that funding could come from St. Louis-based Chlorogen Inc., a bioscience firm that wants to establish a lab at the new research and technology park. The company uses genetically modified strains of tobacco to grow proteins for making pharmaceuticals used to treat ovarian and pancreatic cancers.
Blunt's initiative so far doesn't include funding for Southeast's River Campus arts school development to help pay off bonds for the project.
But Southeast president Dr. Ken Dobbins said he hopes local lawmakers and the governor will earmark some of the proposed student-loan-sale funds for the River Campus project. That project is already well under construction along Cape Girardeau's riverfront.
The university wants the state to appropriate $17.2 million on top of the $4.6 million previously appropriated for the River Campus development.
Dobbins believes the governor's proposal could be revised. "We have been told it is a work in progress," he said Wednesday.
The River Campus project has been second on the Missouri Coordinating Board for Higher Education's capital improvements priority list for the last four years, Dobbins said.
The governor plans to ask the legislature to create a five-member board that would oversee competitive bids for the purchase of the Missouri Higher Education Loan Authority known as MOHELA, according to documents obtained by The Associated Press.
Blunt was expected to discuss his plan today.
Higher education commissioner Dr. Gregory Fitch said other states have looked to sell their education loan agencies or have sold them to raise money.
Fitch expects the coordinating board will discuss the plan at least informally when it meets on Feb. 8 in Jefferson City.
Investment banker Goldman Sachs has projected the sale would bring in between $375 million and $425 million, government documents say.
Blunt's plan, dubbed the "Lewis & Clark Discovery Initiative," proposes to spend:
* $300 million on 20 capital improvement projects at state universities including the life science lab at Southeast. Many of the proposed projects relate to science, health and technology programs.
* $50 million to create an endowment for a new student scholarship program that would provide a minimum of $2.5 million a year in aid to Missouri students.
* $30 million to create an endowment for the new Missouri Discovery Alliance designed to spur development of technology businesses near college campuses.
* $20 million for endowed professorships at colleges.
"By tapping into the high market value of the Missouri Higher Education Loan Authority, we can invest in our students and state institutions to help spur economic growth and employment opportunities in an area in which Missouri is poised to excel -- science and technology," states the documents outlining the proposal.
Some Democratic senators have questioned the plan. They said student-loan interest rates are likely to rise if the not-for-profit loan authority is sold to a for-profit company.
Missouri Democratic Party leaders accused Blunt, a Republican, of wanting to sell the loan authority to SLM Corp., commonly known as Sallie Mae. SLM Corp. is a private, for-profit company and the nation's largest lender to students.
"The difference between MOHELA and Sallie Mae is that one uses its extra money to provide more low-interest loans while the other uses its extra money to pay stockholders and executives," said Sen. Pat Dougherty, D-St. Louis.
Blunt denied any secret negotiations with Sallie Mae.
A spokesman for Sallie Mae declined to comment Wednesday.
Sallie Mae tried unsuccessfully last year to buy Pennsylvania's student-loan agency. The agency's governing board and the Pennsylvania legislature rejected the plan. Critics had said students would have been saddled with higher interest rates if the sale had occurred.
The Associated Press contributed to this story.
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