MOHELA forgiving $500 on college freshmen loans

JEFFERSON CITY, Mo. (AP) -- More than 9,300 college freshmen are getting a $500 break on their student loans courtesy of the state's college loan authority.

The Missouri Higher Education Loan Authority said Thursday that it is forgiving up to $500 of loans for each freshman who has both a federal Pell Grant and a MOHELA loan. The program generally will affect students from low-income families.

The loan forgiveness program will cost the Chesterfield-based agency more than $4.6 million.

MOHELA regularly offers interest rate reductions and loan forgiveness programs as part of its mission as a quasi-governmental loan authority to expand access to higher education.

Associate Director Quentin Wilson said the authority chose to target this particular break to low-income freshman to try to encourage them to continue in college.

The agency's announcement came a day after the Missouri Senate passed legislation to take $350 million from MOHELA over six years to finance Gov. Matt Blunt's college construction plan. That bill now advances to the House.

MOHELA already has set aside $212 million -- generated partly by selling off thousands of loans made to non-Missourians -- to make it its initial state payment of $230 million called for by Sept. 15 under the bill.

Wilson said the anticipated state payment did not affect the amount of money MOHELA decided to dedicate to the freshman loan forgiveness program.