The arrangement that would ultimately become the Lewis and Clark fund first came about because Missouri’s then-governor floated the idea of selling all of MOHELA’s assets to fund the capital improvements and other higher education initiatives. In response, MOHELA officials hastily developed an alternative to the governor’s plan to sell half the organization’s assets to generate funding for the state, and quietly approved it. That process is what prompted Missouri’s attorney general at the time to file a lawsuit against MOHELA and force the organization’s board to vote on the proposal again in public.
In exchange for contributing to the fund, MOHELA received access to the state’s tax-exempt bond authority, allowing the organization access to cheap capital to make student loans. At the time, MOHELA was one of many state-affiliated organizations that were part of the bank-based student loan program where the government would guarantee student loans made by private entities. Lawmakers got rid of that program in 2010, providing little incentive for MOHELA to continue making payments into the fund, Seamster said.
To Sandler, who protested the arrangement at the time, it was never about furthering the educational interests of Missourians, she said recently.
“It was a fight amongst interests that were operating like private, not public interests,” Sandler said of the battle over MOHELA’s assets. “Nowhere in this mix,” were they discussing “what is our obligation to students? What is our mission?” she said.
When Sandler went to the Ozarks to testify about the proposed deal in 2006, she remembered feeling that “the people who are supposed to be benefitting are not even in the room,” she said, referring to Missouri students.
Sandler who has helped low-income students access college affordably for more than 30 years through her work as the executive director of the Scholarship Foundation of St. Louis drafted an op-ed at the time drawing attention to the distance between the arrangement and MOHELA’s mission to provide Missourians with affordable student loans.
“No matter the means chosen for sale of student loans, the dollars are not a windfall,” Sandler wrote. “They are a public trust fund generated by the hard work and sacrifice of students. Looting the student loan fund is not a morally defensible means to biotech development.”
Reflecting on the fight now, Sandler says that at the time if you’d asked students how they wanted the proceeds of the sale of the loans they were paying towards to be used, “I feel fairly certain it would be to address the front end issue,” of college costs, “and support the neediest students more fully,” she said. “Not capital improvements on campuses.”
‘At this higher level, debt is much more abstract’
Many of the projects that received funding through the initiative weren’t even priorities for the state’s public college and university leaders at the time, according to a 2010 audit of the fund. Three projects that were recommended by the Missouri Department of Higher Education — which is responsible for the goals and administrative duties of Missouri’s public colleges — didn’t get any money from the Lewis and Clark Fund, while 19 projects that were not recommended by the organization did.
When auditors contacted officials at schools where some of those projects were located, “two officials stated they did not know why these projects were eventually selected by the General Assembly,” the auditors wrote, referring to Missouri’s state legislature.
Once the Missouri governor froze spending on the Lewis and Clark funded projects because MOHELA wasn’t making its payments, the Missouri Department of Higher Education wasn’t “directly involved” in deciding what projects should be prioritized, the auditors wrote.
Now, the money MOHELA still owes to the fund, — which was touted as a means to support education initiatives, but which focused on capital improvements over student scholarships, according to Sandler; paid for projects that weren’t priorities for the state’s higher education institutions, according to the audit; and which MOHELA hasn’t paid towards in years — is being cited as a reason why Missouri can sue to block the student debt cancelation plan.
For Seamster, the story highlights how a lack of state funding for public higher education has both made college more expensive for students, pushed them towards debt to afford it and steered schools and states towards “strange deals” with lack of public oversight, like MOHELA’s arrangement with Missouri, to fund schools’ coffers. It also shows how the obligations of organizations benefiting from the student loan program are treated differently from those belonging to borrowers.
“The crux of it is that a debt that both the state and MOHELA have acknowledged is unlikely to be repaid is being used to try and force student borrowers in a much more precarious economic position to repay their debt,” she said. “At this higher level, debt is much more abstract, it’s all part of a game and political gamesmanship — but at the end of that all the cost gets passed on to the borrower.”
-Jillian Berman
(END) Dow Jones Newswires
01-12-23 0835ET
Copyright (c) 2023 Dow Jones & Company, Inc.
Source link
