Future of loan group uncertain

A St. Louis legislator said she thinks the idea of selling the Missouri Higher Education Loan Authority, or MOHELA as it is commonly known, will be bad news for Missouri college students.

Democratic Sen. Joan Bray’s comments came after Gov. Matt Blunt’s staff met with loan authority representatives Tuesday to discuss the future and possible sale of the not-for-profit provider of student loans.

“MOHELA is a vital, vibrant, well-operated Missouri institution. It would be foolish to sell and not in the best interest of the students,” Bray said.

The authority partners with local, regional and nationwide lending institutions to provide students with the money needed to realize higher education.

Because it is not-for-profit, the loan authority is able to put money back into programs that help Missouri students afford education.

In 2005, over $10 million was given to Missouri borrowers through loan forgiveness and borrower benefits programs, according to MOHELA documents.

“MOHELA provides among the best borrower benefits in the country, bar none. Any drastic change in this entity would result in a reduction in benefits for students,” Quentin Wilson, the authority’s special associate director, said.

He added that few, if any, for-profit companies provide the level of loan forgiveness that MOHELA does.

The Missouri Democratic Party on Monday criticized Blunt’s supposed secret negotiations to sell the authority to Sallie Mae, the nation’s largest for-profit student lender.

According to a statement from Blunt’s office, the administration has not been in “secret” negotiations with private lending companies. The administration said it has been exploring opportunities to improve service to students, provide them with more student loan options and assist universities.

Tom Joyce, a Sallie Mae spokesman, said it was the company policy not to comment on market rumor and speculation. He did say, however, that in a time of tightening state budgets, other states are looking at similar options.

An informational document titled, “Lewis & Clark Discovery Initiative,” was recently obtained by Bray’s office and outlines the benefits of joining MOHELA with a private enterprise. It states that the sale of the authority would provide a one-time infusion of approximately $300 million for capital improvement projects at state higher education institutions and the establishment of an approximately $100 million student scholarship program.

However, Jack Cardetti, a Missouri Democratic Party spokesman is skeptical.

“This will be a rotten deal for Missouri college students and their families. Someone like Sallie Mae will have to charge more (than MOHELA) because they have a responsibility to their execs and shareholders. MOHELA put extra money back into loans for the students,” Cardetti said.

Bray shared Cardetti’s skepticism.

“MOHELA’s mission is to help students go to school and stay in school. I’m not convinced that is Sallie Mae’s (mission),” Bray said.