JEFFERSON CITY -The Governor's plan to sell the state's student loan program to a private company has set off a flurry of questions about the benefits and problems of such a sale.
The Missouri Bankers Association has asked its member banks for input on how the governor's plan would affect them. The organization sent an email query to its members Thursday morning -- as Gov. Matt Blunt was flying across the state promoting his plan.
The banks provide the loans to the students through the state's loan program and then sell those loans to the Missouri Higher Loan Authority.
The program was created by the state's legislature in 1981.
Bill Ratliff, the association's vice president, said his organization is not too concerned about loan interest rates because he doesn't think the rates will be affected. But, he said other factors such as loan forgiveness could change.
"We just heard about this and we've just begun gathering information," Ratliff said.The association will probably know enough to take a position on the plan next week.
Senators debated the "Lewis and Clark Initiative" Thursday morning in the chamber as Blunt officially unveiled the plan at MU's School of Medicine.
Much of the projected $400 million or more generated by the sale of the loan program would go to fund building-construction projects and a scholarship program.
The building-construction emphasis in the program prompted a sharp attack from the Senate's senior Democrat.
"We do not need a fire sale on something that's working for our students," said Sen. Pat Dougherty, D-St. Louis.
"We shouldn't be...pitting students against bricks and mortar. That is not fair to our students."
Republicans, both on and off the Senate floor also questioned the governor's plan.
"A conservative figures if it isn't broke, don't fix it," said Sen. Jon Loudon, R-St. Louis County, during the Senate debate.
"If they're bought by a for-profit, the marketplacee loses a competitor that's keeping rates down."
On the other side, the Senate GOP Leader Charlie Shields, R-St. Joseph, defended the plan.
"It's building the buildings related to math and science and life sciences that are moving the economy of this state into the 21st century. That's the exciting part."
But, Sen. Joan Bray, D-St. Louis County, said she is "terribly suspicious" that private companies can offer the same rates as Missouri's loan program.
The program currently finances loans for more than 500,000 students sometimes at an interest rate that is 2 to 3 percent lower than the federal loan rate, according to its Web site.
Legislators from Columbia, where the largest part of the building-construction funds would be spent, were non-committal.
Rep. Jeff Harris, D-Columbia and the House Democratic leader, said it's too early to make a definitive decision on whether to allow a private company, such as Sallie Mae, to take over the Missouri Higher Education Loan Authority.
"When you're talking about a large company on the scale of a Fortune 500, you've got to look at this from all angles...approach it just like any CEO, any good business person would."
Some of the aspects of the sale Harris said he wants evaluated prior to supporting it include the seller's due diligence, the value of the program's assets, the buyer's record as well as the short term and long term effects on the state's economy, bond rating, taxpayers and students.
Whether a private company can provide the same rates and services that the Missouri Higher Education Loan Authority currently offers is also a question that Sen. Chuck Graham, D-Columbia said wants answered.
"I certainly appreciate the fact that the governor has finally figured out that an investment in the University of Missouri Columbia is a good investment," Graham said.
"My concern is I don't want it to be funded on the backs of students who pay higher interest rates on loans for the next 15 or 20 years."