Gov. Matt Blunt's plan to sell billions in student loans remains on track

A plan to sell billions of dollars worth of student loans to finance Gov. Matt Blunt's higher education initiatives remains on track, but the process might not be as smooth as Blunt and some Missouri lawmakers first anticipated.

After a series of little-known January meetings drew public criticism and an open meetings lawsuit by Attorney General Jay Nixon, the governing board of the Missouri Higher Education Loan Authority on Friday again endorsed the plan -- this time after hearing public testimony.

But one board member, John Greer of Marshfield, said he would likely vote against the proposal as it now stands because it funnels too much money to capital improvement projects at the expense of student aid.

The amount available for student aid -- and the timing of the funding -- were one of the topics for discussion at a meeting Friday between lawmakers and the public at Southeast Missouri State University.

State Reps. Nathan Cooper, R-Cape Girardeau, and Scott Lipke, R-Jackson, both enthusiastically endorsed the proposed sale of MOHELA assets to provide $450 million for state coffers. The money is sorely needed, they said, but MOHELA's ability to keep student loan rates low is also important.

"Our No. 1 priority is to make sure we protect the students," Lipke said.

The plan proposed by Blunt envisions an endowed scholarship program that will, when fully funded, provide about $5 million a year for student aid.

The first scholarships could be available as early as this fall, Cooper said.

It is important not to overpromise the student aid portion, said Karen Walker, director of financial aid at Southeast. "I am concerned that it may not be funded at a level that would meet the needs of the student who would be qualified," she said.

Under Blunt's plan, the agency would sell $2.4 billion of loan assets this year and an unspecified amount over the next several years to generate a total of $450 million for the state.

At the MOHELA board meeting, several speakers -- including a 91-year-old Columbia man who helped create MOHELA 25 years ago -- vocally criticized the proposed assets sale.

"If we depend upon MOHELA to solve the accumulated problems in higher education, we are ... putting it on the backs of the poorest students," said Allen Purdy, a 22-year MOHELA board member who helped then-Gov. Kit Bond create the authority in 1981. "That is not the way the state of Missouri ought to be operating."

Under Blunt's plan, the agency would sell $2.4 billion of loan assets this year and an unspecified amount over the next several years to generate a total of $450 million for the state.

The governor's plan calls for $300 million of those proceeds to be spent on 20 campus construction projects at public universities, $100 million on endowed scholarships, $20 million on endowed professors and $30 million to attract high-tech businesses.

Those decisions require legislative approval, and House Republicans have offered an alternative that would direct more money to scholarships and less to construction while adding money to retire the state's debt.

Greer, who criticized the governor for not notifying the board "until after the plans were made to happen," said the proposed loan sale strays from the agency's original mission.

"I do not agree with our dollars going for capital improvements for a select few," he said. "This is not state money. This is money that has been earned by MOHELA."

Still, Greer joined the other six board members in voting to "work in cooperation with the governor's office to achieve common goals." The vote was taken with the understanding that much can change in the ensuing weeks and months, said board chairwoman Karen Luebbert, of Chesterfield.

"We have said all along this is a plan. We have not signed any documents," she said. "This is not a contract."

In her opening remarks at the Lodge of the Four Seasons, Luebbert also defended the board's previous efforts to mold the plan in private during a series of one-on-one phone calls between board members and MOHELA officials.

"We do not believe any laws were violated regarding the meetings in January," she said Friday.

Rather, the board convened Friday's meeting so interested citizens could be "comfortable not only with the result, but also the process."

A succession of university presidents and high-ranking officials spoke in support of the plan, noting that state money for capital improvement projects -- whether new construction or renovations of past-their-prime buildings -- has been unavailable for at least five years.

Bill Crist, dean of the University of Missouri School of Medicine, told the board that the $87 million proposed from the loan sale proceeds for a new $150 million health sciences center in Columbia is necessary for the school to "reach its full potential" and provide "spinoff prosperity" through the creation of new jobs and other economic development.

Three of the 19 public speakers, though, urged the board to make sure the proposed sale doesn't harm MOHELA's borrowers, many of whom are low-income students.

"All Missouri students deserve to receive the benefits that MOHELA provides," said Alana Jennings, a financial aid counselor at Park University in Parkville. "We find it unconscionable that the governor and the Legislature chose to change a structure that is working so well."

In voting to move forward -- and repealing the similar action taken at two meetings in January -- board members suggested that once the public angst over the proposed sale recedes, Blunt's move could wind up as a national example.

"If everything goes as it should go, I would be surprised if this is not a model that other states will follow," said board member James Ricks, of Cape Girardeau.

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MOHELA: http://www.mohela.org