We’ve all heard the old saying that if something seems too good to be true, it usually is.
Such is the case with Missouri Gov. Matt Blunt’s plan to sell off part of the Missouri Higher Education Loan Authority’s assets to provide funding for capital improvements on Missouri college campuses.
Those assets consist of millions of dollars of notes receivable for low interest loans made to Missouri residents to finance college educations. Outside investors are willing to purchase those notes at a premium price, providing the profits that MOHELA intends to give to the state to fund capital improvements.
The reason that those investors are willing to pay a premium is because they know that they can jack up the interest rates on the notes and reap huge profits over the years as the loans are paid off by students who have graduated.
Thus, the real price for these capital improvements will be paid by Missouri students who have, or will need, loans for higher education. MOHELA was created not to make a profit, but rather as a way for Missouri students to be able to afford a college education.
If the governor and the legislature want to fund capital improvements, they should appropriate the funds directly or authorize the issuance of more bonds for capital improvements. They should not disguise the cost of those improvements by hiding it in the form of higher interest rates to college students.
Bill Fleischaker
Joplin
Opinion
Voices: Student loans
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