Missouri Board Chair Resigns

State loan agency Board members are dropping like flies in Missouri. The Chair of the Missouri Higher Education Loan Authority (MOHELA) Board resigned last week, making her the fourth Board member to resign since mid-September. Those resignations come on top of Executive Director Michael Cummins, who was pushed out in January 2006.

MOHELAs new former Chair, Karen Luebbert, was one of two Board members to vote against Missouri Governor Matt Blunts proposal to sell the agencys assets in order to finance new construction projects at several state universities.

Heres a quick summary of Blunts proposal:

MOHELA is to sell half of its existing student loan portfolio on the open market. The proceeds of that sale will be turned over to a state economic development agency. The state economic development agency will then distribute the estimated $350 million in profits to state colleges and universities for pet construction projects.

The entire deal is premised on the conditions that MOHELA will receive $1.1 billion to $1.8 billion in tax-exempt loans over the next 11 years from the State of Missouri and that the University of Missouri at Columbia make a "good faith effort" to encourage greater use of MOHELA loans by its students.

Attorney General Jay Nixon is none too pleased. He has mounted a fierce campaign against Blunts proposal. Nixon, who plans to run against Blunt in 2008, claims that: (a) it is illegal for MOHELA to originate student loans, and (b) that changing the agencys scope would violate its purpose of making college more affordable. According to Nixon, the plan will make it more difficult for future students to find low-cost loans.

Luebberts opposition is similar to Nixons. Like Nixon, Luebbert sees Missouri tuition costs rising and federal grant aid decreasing. She understands that there is a greater need for affordable student loans. And she views MOHELAs mission as helping Missourians find those loans: "This is not the time to take resources from MOHELA. Our role and our charter has been to provide low-cost loans to students, it is not bricks and mortar."

The two of them, Nixon and Luebbert, should also question why MOHELA is giving Michael Cummins, its former Executive Director who was fired in January, a severance package worth more than $830,000. With that money, the state could provide 875 students with free textbooks for an entire year at the University of Missouri, according to the office of financial aid. Heck, it could send 200 kids to the University of Missouri tuition free.

Sure looks like something fishy is going on behind the scenes. The requirements of Cummins severance package include: not suing the agency, not speaking ill of MOHELA, and not communicating with MOHELA employees for 10 years.

Sounds like "hush money" to us.