MOHELA plan loses key support
Issue date: 2/23/07 Section: State News
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JEFFERSON CITY, Mo.(AP)--The top House Democrat dropped his support Monday for Gov. Matt Blunt's plan to finance a college building boom with student loan agency money, citing recent concerns raised by a financial analyst.
Blunt's proposal would take $350 million over six years from the Missouri Higher Education Loan Authority to finance building projects at nearly all of Missouri's public colleges and universities. In exchange, MOHELA would receive a 10-year, $1 billion pledge of tax-exempt bonding power from the state, which would allow it to replenish its losses through new loans.
House Minority Leader Jeff Harris (D-Columbia) had been one of the few Democrats to publicly support the plan, which includes new facilities for the University of Missouri-Columbia.
But Harris said in a letter to the Republican governor that he longer backs the sale of MOHELA loans to finance the buildings because of concerns the plan could jeopardize the quasi-governmental agency's ability to continue providing low-interest loans.
Harris cites a recommendation last week by Liscarnan Solutions LLC that MOHELA take no further financial action on the plan until the effects of proposed federal changes on student loan interest rates and fees are known.
Liscarnan Solutions said the federal uncertainty calls into question its November conclusion that MOHELA should be able to make the state payments without jeopardizing its financial health, its credit rating or its current discounts and loan forgiveness programs for Missouri students.
MOHELA's executive director, Raymond Bayer Jr., has said the agency should have no trouble making its initial $210 million in payments. Bayer notes that an agreement between MOHELA and Blunt's administration already allows the agency to cancel any of its 24 subsequent quarterly payments of $5.8 million if MOHELA determines they are not financially feasible.
Even if changes in federal loan policies do not reduce MOHELA's profitability this year, Harris said there are no guarantees for the future.
Blunt's proposal would take $350 million over six years from the Missouri Higher Education Loan Authority to finance building projects at nearly all of Missouri's public colleges and universities. In exchange, MOHELA would receive a 10-year, $1 billion pledge of tax-exempt bonding power from the state, which would allow it to replenish its losses through new loans.
House Minority Leader Jeff Harris (D-Columbia) had been one of the few Democrats to publicly support the plan, which includes new facilities for the University of Missouri-Columbia.
But Harris said in a letter to the Republican governor that he longer backs the sale of MOHELA loans to finance the buildings because of concerns the plan could jeopardize the quasi-governmental agency's ability to continue providing low-interest loans.
Harris cites a recommendation last week by Liscarnan Solutions LLC that MOHELA take no further financial action on the plan until the effects of proposed federal changes on student loan interest rates and fees are known.
Liscarnan Solutions said the federal uncertainty calls into question its November conclusion that MOHELA should be able to make the state payments without jeopardizing its financial health, its credit rating or its current discounts and loan forgiveness programs for Missouri students.
MOHELA's executive director, Raymond Bayer Jr., has said the agency should have no trouble making its initial $210 million in payments. Bayer notes that an agreement between MOHELA and Blunt's administration already allows the agency to cancel any of its 24 subsequent quarterly payments of $5.8 million if MOHELA determines they are not financially feasible.
Even if changes in federal loan policies do not reduce MOHELA's profitability this year, Harris said there are no guarantees for the future.
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