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MOHELA sale causes a stir as the Capitol

January 25, 2006
By: Daniel Frumson
State Capital Bureau

Today (Thursday), Governor Matt Blunt is expected to announce plans to sell MOHELA, MIssouri's non-for-profit student loan company. The sale could fund projects at MU and other Missouri universities. But could the deal put college students in an even deeper financial hole? Daniel Frumson has more from the state capitol.

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Although it seems the Governor will announce plans to sell MOHELA, the Missouri Higher Education Loan Authority, he denies any intention to sell to Sallie Mae.

Democrats released a report saying the Governor will sell MOHELA to Sallie Mae. They cited an article in Fortune Magazine, which says the private loan company charged as much as 28% interest on student loans.

The Associated Press also confirms plans to sell MOHELA.

It reports that the Governor expects around 400 million dollars of profit.

The AP also reports that 300 million dollars of the total profit will pay for 20 new science buildings for various state universities.

In a statement by Democratic Party spokesmen Jack Cardetti, Democrats maintain that the Governor's plan will mean higher student loan rates for Missouri students.

Republican response did not follow party lines.

Senior Republican House member Mark Wright of Springfield, says the sale of MOHELA should spell relief for college students.

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"I agree with the Governor in regards to how, that MOHELA ought to be sold, it ought to be ran by a private company, because I think they'll do it much more efficiently, do a much better job than the state government has been able to do."

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Wright says most Republicans hope this deal will assist families and students with tuition, or student loans.

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"I'm a little concerned by any university out there talking about tuition increases. I would prefer to see tuition reductions. And I would be suprised if we don't go through this process of this MOHELA sell, that you don't see maybe a provision somewhere along the way that maybe would require some tuition reductions if we're going to do this."

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Another Republican, Senate Education Chairman Gary Nodler of Joplin, had a different reaction.

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"I think I'd really prefer to react to this after the Governor has made his announcement rather than to ... in an anticipitory way, try to guess what exactly he's going to say. I think I'd rather wait for him to say it and then react to that."

So as it stands, Democrats, equiped with the AP and Fortune Magazine articles, stand firm in their belief that the Governor plans to sell MOHELA to a group like Sallie Mae. They say the sale would hurt current students and prevent future students from enrolling in college. even more would-be college students from enrolling.

From the state capitol, I'm Daniel Frumson