MOHELA board inches forward on student loan sale

CHESTERFIELD, Mo. -- Stymied by lawmakers' rejection of a plan to sell student loan assets to pay for a campus building boon, the board of Missouri's college loan authority met Wednesday to plot its next move.

Meeting by conference call, the seven-member Missouri Higher Education Loan Authority unanimously approved a $200 million increase in its line of credit through Bank of America, bringing its total borrowing line to $1 billion.

The 30-minute meeting was notable as much for what wasn't said, though.

There was no mention of the legislature's failure to approve a plan Gov. Matt Blunt dubbed the Lewis and Clark Discovery Initiative, a proposed infusion of $478 million for campus construction projects, health clinics for the poor and state debt retirement.

Nor did the board discuss -- publicly, anyway -- the legal questions that continue to swirl around the proposal. Board chairwoman Karen Luebbert said last week that questions remain about whether MOHELA has the legal authority to give money from an asset sale directly to state universities.

Also left unspoken was the status of an independent financial analysis commissioned by MOHELA to determine the proposal's viability. That report is expected to be complete next month, an agency spokeswoman said.

Following approval of the credit line increase, the board met in a closed executive session to discuss unspecified legal or personnel matters.

Raymond Bayer Jr., interim executive director of the loan authority, told board members the credit line increase is necessary to provide "added liquidity" in the event of an asset sale and to boost the agency's cash reserves.

In January, Blunt first unveiled a proposal to sell the loan authority outright. The MOHELA board responded with a plan to transfer $450 million to the state over several years by selling off loans, freeing up reserves, then buying and selling more loans.

Blunt embraced the revised proposal and asked the Legislature to approve a spending plan for college buildings, scholarships and other purposes. After the bill died in the Legislature, Blunt's office said it would pursue the direct transfer of MOHELA proceeds to universities to enact his spending plan.

The MOHELA board will next meet on June 9 at the authority's Chesterfield headquarters.