Financial analysis clears MOHELA deal

The student loan agency could even make some of its state payments early.

By DAVID A. LIEB

The Associated Press

JEFFERSON CITY, Mo. -- Missouri's student loan authority should be able to give up $350 million for Gov. Matt Blunt's college construction plan without jeopardizing its financial health, according to an analysis released Thursday by the loan agency.

The Missouri Higher Education Loan Authority could even afford to make some of its state payments sooner than planned, the long-awaited report by Liscarnan Solutions LLC concluded.

The $350 million payout should not negatively affect the student loan agency's credit ratings nor its ability to continue its current level of borrower benefits, such as its loan forgiveness programs for certain Missouri students, the report said.

But the report said the agency could improve its borrower benefits -- and its bottom line -- if it gained an expanded ability to originate student loans. But that prospect remains uncertain because of stiff legislative opposition from the banking industry.

The Liscarnan financial report provides a bit of after-the-fact support to a plan endorsed Sept. 27 by a MOHELA board dominated by recent Blunt appointees.

That agreement -- subject to legislative approval in 2007 -- calls for MOHELA to transfer $350 million over six years to the Missouri Development Finance Board, which would pass $335 million of that on to public colleges and universities for buildings. The remaining $15 million would help the Missouri Technology Corp. attract high-tech businesses and spin off university research into commercial products.

In exchange, the Department of Economic Development would provide MOHELA $1.1 billion to $1.8 billion in tax-exempt bonding authority over 11 years, which MOHELA would use to underwrite additional student loans. The University of Missouri would pledge to consider increased use of MOHELA loans, and Blunt's administration and the universities would support legislation to expand MOHELA's authority to initiate loans.

The MOHELA board voted Saturday to authorize the sale of up to $1.5 billion in student loans, which would provide cash to make a portion of the scheduled state payments. The actual sale of student loans is likely to occur in small increments over several months, said executive director Raymond Bayer Jr.

Blunt spokesman Brian Hauswirth said the financial analysis "vindicates what Governor Blunt has said and what MOHELA has said -- that they have the resources to support this."

The quasi-governmental student loan agency contracted for the report. It originally was due May 31 but was postponed after Blunt's higher education plan failed in the legislature. When staff for the governor and MOHELA outlined a revised plan in August, the financial analysis was restarted.

"We've always believed we could do it, we just wanted to make sure we had the documentation in place to satisfy the curiosity of everyone else," said Will Shaffner, MOHELA's director of business development.

Among those questioning whether the deal makes financial sense is MOHELA board member John Greer, of Marshfield, who cast one of two dissenting votes at the Sept. 27 meeting. The other was cast by board chairwoman Karen Luebbert, of Chesterfield, who subsequently resigned, citing her opposition to the plan.

Greer complained at the time that the board was endorsing the plan before it received a written financial analysis. He said Thursday that he had not seen the Liscarnan report, adding: "I still have my doubts whether this is going to be an easy step to take or not."

After selling of a portion of its assets, Greer believes MOHELA won't be able to offer some of the discounted loan rates, scholarships or loan forgiveness programs it might otherwise have initiated.

When Luebbert resigned, Greer was serving as vice chairman and so temporarily was elevated to the board's chairmanship. But Greer, an appointee of Blunt's Democratic predecessors, was replaced as chairman Saturday by Blunt-appointee John Smith of St. Charles.

When the new titles were decided, Greer was the only of the five board members left out of an officer position. The other four members are appointees of Blunt, and two positions are vacant.

---

On the Net:

MOHELA: http://www.mohela.org