Members of the student loan industry expressed mixed reactions after the announcement of an upcoming Missouri Higher Education Loan Authority (MOHELA) proposal. Governor Matt Blunt will propose a detailed plan to transfer $350 million dollars from Missouri's student loan agency to campus-enhancement projects. He believes that financing the buildings in which future students will learn will lead to success. However, opponents of the proposal state that if Governor Blunt's plan is implemented, these same future students will have greater difficulties with affording loans.
MOHELA insists that the new plan will not inhibit access to future student loans and has assured the public that it will continue to offer the same benefits that were the catalysts for its creation. MOHELA was, in fact, founded in order to give students more affordable options when borrowing student loans. The loan authority offers borrower benefits and loan forgiveness programs, including a new loan forgiveness program for engineering students.
The actual proposal will be made during the 2007 legislative session. There is buzz that Blunt may even call for a select session to actualize the plan's objectives more quickly.
In a follow-up to his previous article on MOHELA, David A. Lieb elaborates on the proposal's details: "In exchange for its money, MOHELA would get a 10-year pledge of continued tax-exempt bonding allocations from the state, which would allow it to underwrite more student loans. The University of Missouri also would make a ‘good-faith effort' to consider increased use of MOHELA loans."
Both supporters and critics are awaiting the response of Missouri lawmakers. While some justify the proposal by saying it prevents large private loan lenders from dominating over smaller lenders, some feel that MOHELA is squandering an opportunity for improvement.
Michael Dannenberg, Director of Education Policy at the New America Foundation in Washington, DC, is quoted in Lieb's article as saying, "I think the MOHELA deal is a harbinger for other states. But the big problem with the MOHELA deal is it shows governors how student loan assets can be perverted into pet college construction projects instead of programs that increase college affordability or access."
Others who would be affected by MOHELA's potential changes include current student loan borrowers and their parents. Both groups are worried that present borrower benefits will change. However, MOHELA has stated that the money that will potentially be transferred will come from an allocation that would not otherwise fund loan forgiveness and similar programs.
Despite the revisions to the plan that have taken place over the past year, a consensus has not been reached, as Lieb explains: "Plenty of objections remain about the legality and the merits of the plan, especially from [...] some Democratic lawmakers."
Article Title : Mixed Reaction to MOHELA Proposal
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