MCC Letter to the Missouri Senate - SS/SCS/SB 389 regarding sale of assets of Missouri Higher Education Loan Authority

TO: Members of the Missouri Senate

FROM: Larry Weber, Executive Director and General Counsel, Missouri Catholic Conference

RE: SS/SCS/SB 389 regarding sale of assets of Missouri Higher Education Loan Authority

Date: April 18, 2007

The Senate is poised to again consider SS/SCS/SB 389, which among other provisions authorizes the sale of assets of the Missouri Higher Education Loan Authority (MOHELA), and distribution of the sale proceeds to finance the governor’s proposed “Lewis and Clark Discovery Initiative”.

The Missouri Catholic Conference (MCC) opposes the proposed sale of MOHELA’s assets and distribution for capital improvements on Missouri’s public college campuses. The MCC’s objections are as follows:

1. MOHELA’s mission is to provide badly needed affordable low-interest loans to college students. Part of MOHELA’s historic mission is to provide access to higher education to a wide sector of Missouri citizens. Disbursal of MOHELA assets for purposes other than subsidizing college tuition hinders the ability of MOHELA to fulfill its historic statutory mission.

2. MOHELA’s assets have been built up by the families it serves – college students paying off loans for attendance at both public and private universities like St. Louis University and Rockhurst University in Kansas City. In fact, a disproportionate amount of the loans extended by MOHELA are to students at Missouri’s Catholic colleges and universities. The private universities that helped to build the wealth of MOHELA will receive no benefits from the MOHELA sale, and in fact will be harmed because their students will have fewer options to obtain financial assistance.

3. Despite claims by supporters of SB 389 that the new plan removes funding for the construction of life science labs which could engage in unethical human cloning and embryonic stem cell experiments, the plan retains $15 million in funding for the Missouri Technology Corporation (MTC). The MTC is a private corporation – thus it is unlawful to make a direct appropriation to it and once the appropriation is made, lawmakers have no control over how the private corporation expends those funds. The MTC’s Board of Directors is headed by Donn Rubin, who also is the chairman and a chief spokesman of the Missouri Coalition for Lifesaving Cures that spent over $30 million to enact Amendment 2 that placed in the Missouri Constitution a right to engage in human cloning and research involving the destruction of human embryos. The MTC's executive director, Rob Monsees, was also a supporter of Amendment 2. The Sept. 16, 2006 Columbia Daily Tribune, reported Monsees "said the stem cell research ballot issue will attract attention to Missouri because it will make the difference in whether the institutions like the university system, the Stowers Institute in Kansas City and Washington University in St. Louis will be able to recruit top talent in the fields of biomedical research." Many of the board members of the MTC as well as its affiliated organizations were heavily involved in support of Amendment 2.  Minutes of the MTC board reveal activities opposing bans on human cloning proposed in the legislature. The MTC's affiliated organization, the Research Alliance of Missouri (RAM), includes as a member the Stowers Institute for Medical Research in Kansas City, whose founders, James and Virginia Stowers, were major supporters and financiers of Amendment 2. 

MOHELA’s purpose and mission is to provide affordable low-interest loans to college students. Disbursal of MOHELA assets for purposes other than subsidizing college tuition hinders the ability of MOHELA to fulfill its historic statutory mission. Claims that MOHELA’s credit would be unaffected by this transaction are irrelevant – MOHELA may remain solvent in the short term, but its size and resulting impact on Missouri students will be greatly reduced. Because of this reduction of the MOHELA asset portfolio, the ability of the agency to extend loans, and the ability of MOHELA to subsidize student interest rates, is necessarily reduced – MOHELA no longer has the same volume of assets to make loans or subsidize interest rates. Reducing MOHELA’s ability to extend loans has a direct, detrimental effect on Missouri families with college students.

Continuing developments at the federal level, including efforts by Congress to reduce interest rates on student loans and recent budget proposal by the president to cut the federal subsidies payable to student loan entities like MOHELA, further diminish the financial outlook for MOHELA. The sale of student loan giant Sallie Mae was announced just this week, and the fallout throughout the student loan secondary market is already being felt. As a result of the current negative market, MOHELA will not be able to realize the anywhere near the same rate of return that it could just a few months ago for its assets proposed to be sold under this plan, and continuing prospects for sale returns continue to decrease.

In light of these factors, it is no wonder that recent polling distributed to a number of legislators indicates that the sale of MOHELA’s assets is supported by only 30% of Missouri voters, but opposed by about half (over a third of whom oppose this measure strongly). It is almost ludicrous that this issue is still viable considering current student loan markets and trends. However, apparently supporters of this legislation seek to end debate on this issue and bring this legislation to a vote. The Missouri Catholic Conference intends to publish information regarding how legislators vote on this issue, which is of crucial importance to Catholic families throughout Missouri.

The debate over the MOHELA sale is a politically charged issue, and many lawmakers want to back the proposals of the governor and the public colleges and universities. However, public officials cannot turn a blind eye to the causes of protecting human life and ensuring access to higher education to those who cannot otherwise afford its costs. Please feel free to contact me if I can provide any further information regarding this matter.