JEFFERSON CITY - One by one, representatives of MU alumni, students, administration and the UM system president lined up to tell the Missouri Higher Education Loan Authority board of directors why they should sell $2.4 billion in student loans.
Under Gov. Matt Blunt's plan for the $450 million profit that the sale is expected to generate, the University of Missouri-Columbia would get the largest share of the $300 million marked for campus building projects.
Then, at the end of the line of about 19 speakers from across the state, most of whom supported the sale, one Columbia resident said he opposed the sale.
Allan Purdy recalled the day former Gov. Kit Bond recruited him to help create a non-profit loan agency in the state. Purdy, who was on the MOHELA board of directors for 22 years, told the audience that every dollar MOHELA has received since its inception in 1981 has come from students.
"Therefore, if we depend upon MOHELA to solve the accumulated problems in higher education, we are taking part of the state's responsibility to support higher education and putting it on the back of the poorest students," Purdy said eliciting the loudest applause of the day.
Purdy and the others spoke Friday in a conference room overlooking Lake of the Ozarks, where MOHELA had opened the second half of a regularly scheduled meeting to hear public comment on its plan to sell student loans.
The planned sale was crafted after Blunt announced his own plan to sell MOHELA in order to generate $425 million for campus construction, scholarships and endowed professorships. The loan agency is the 12th largest lender in the nation with more than 500,000 borrowers, about half of whom reside in Missouri.
Karen Luebbert, the chairwoman of the MOHELA board of directors said, "Upon learning of the governor's initiative, MOHELA worked to determine whether there was an opportunity to provide both funding and yet preserve MOHELA as a viable entity for the families, students and schools of Missouri."
MOHELA approved a plan to sell half its assets to fund higher education at a Jan. 31 meeting that lasted less than five minutes and involved no public discussion.
As a result, the attorney general filed a lawsuit to put a halt to the sale, alleging that the board of directors violated the state's open meeting laws in a series of email, telephone and closed meeting discussions held from Jan. 19 to Jan. 31.
But Luebbert rejected the notion that the public meeting was called in response to the lawsuit.
"However, we recognize there has been some controversy, and it is important to MOHELA that its constituents - the students, parents, universities, colleges, lending institutions, everyone who is affected by the plan - are comfortable not only with the result, but also with the procedure that was used to arrive at the result."
Nixon said he will continue to proceed with the lawsuit despite Friday's meeting.
The seven-member board also asked the public to send them written comment on the plan. Of the 42 letters sent to MOHELA, Luebbert said almost half raised the concern about whether the loan agency can continue to offer the same services.
Because MOHELA is a non-profit, the loan agency can use its profits to offer reduced interest rates and to forgive some loan debts.
Luebbert said, "This transaction will not impact borrower benefit programs because the money that funds those borrower benefit programs comes from a specific fund that could not be used to fund the Lewis and Clark Discovery Initiative."
None of the assets considered for sale are among the low-cost tax exempt bonds, Luebbert said at the meeting. The agency also expects to buy $6 billion more in student loans over the four-year funding period to more than regenerate the loans lost in the sale.
One board member, John Greer, said at the meeting that he is not so sure the loan agency can sell half its assets without impacting the loan agency's ability to offer borrower benefits.
"Since this Lewis and Clark Initiative was announced by the governor, which did not even notify the board until after the plan was made for it to happen...I have lost a lot of sleep," Greer said.
He added that he thinks money for building projects should come from tax revenue and not from a student loan program that has never received a dollar from the state.
But Luebbert maintained that the plan to sell assets had not been finalized and that the board retained the right to reject a plan that would jeopardize borrower benefits.
Luebbert opened up the meeting by saying, "It is important to note that the MOHELA funding plan described in January was labeled a plan. No contract was or has since been signed by MOHELA to provide funding to the state."
Near the meeting's close, the board voted unanimously to both repeal its Jan. 31 resolution to sell assets and to reinstate it again with minor language changes to note that the money must go toward higher education.
Interim director, Raymond Bayer, said the the board will be closer to finalizing the details of a sale in May.