Thu, Nov 26 2009
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Building projects should still receive funds Governor-elect Jay Nixon has been opposed to funding the building projects with MOHELA money from the beginning. He feared the initiative would hurt student borrowers and eventually end up bankrupting the loan authority.
After the December MOHELA board meeting, The Associated Press reported the loan agency is selling $369 million in student loans to cancel an equal amount of bonds. MOHELA has more than $3.5 billion in failed auction-rate bonds, which its investors have been unable to sell and the agency has been unable to refinance. The AP reported MOHELA officials plan to sell another $1 billion worth of student loans to cancel more bonds in the next few months. Raymond Bayer Jr., MOHELA executive director, told the AP the sale will give the agency greater cash flow and improve its equity-assets ratio, an important step toward being able to issue new debt in the future. Missouri State Sen. Gary Nodler, R-Joplin, author of the Lewis and Clark Discovery Initiative bill in the state Senate, said although the move to delay payments paints a dismal picture of the loan authority’s future, it may help save it. “They are pre-paying interest rates right now to help secure them being financially stable in the future,” Nodler said of MOHELA. Nodler said most — $242 million — of the total payments have already been made and the loan authority has up to 15 years to fulfill its commitment. In addition, he said legislators built provisions into the initiative to allow MOHELA to skip payments. “I’d rather see it paid off as soon as possible, but I don’t think it’s anything to be concerned about,” Nodler said of the delayed payments. “We’re in a troublesome time and it could be another year before we come out of it. (MOHELA) theoretically could skip payments for two or three years and be fine.” Leading loan servicer The Higher Education Loan Authority of the State of Missouri, MOHELA, is one of the largest student loan secondary markets in the country and a leading national holder and servicer of student loans. Source: www.mohela.com 
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