Letter to the Editor

Better uses for the MOHELA surplus

Tuesday, February 21, 2006

To the editor:

The Southeast Missourian should reconsider its endorsement of the efforts of Gov. Matt Blunt and other state leaders to extract from the Missouri Higher Education Loan Authority a large amount of money to fund projects at state universities. What is going on in Jefferson City should be seen for what it is: classic pork-barrel politics.

Why is it possible for MOHELA to make lots of money by selling student loans in its portfolio? The only logical answer is that those loans were made at interest rates that are considerably higher than today's market conditions require. MOHELA was established to provide loans at reasonable interest rate to college students. There are at least three alternatives for using the windfall.

One would be to renegotiate the outstanding loans, enabling many current and former students to pay off their obligations more quickly and with less strain on young families.

Another would be to subsidize part of the cost of providing student loans to be made in the future. These interest savings would help offset some of the rapid growth in tuition and other college costs.

Still another is to finance scholarships supplementing federal Pell grants for students from low-income families.

Putting the MOHELA surplus into university buildings will do nothing to inhibit the rapid growth of tuition and other charges that are creating serious financial problems for students and their families. The MOHELA surplus came from student borrowers. Let's return the surplus to them.