Blunt's Sallie Mae Giveaway

Dear Secretary Paulson,

You're already spending $700 billion of our money to bail out big players in the financial sector after they made huge, costly and potentially destabilizing mistakes.

Please accept this request that MOHELA be included in the federal bailout as Matt Blunt has made huge, costly and destabilizing mistakes in the sale of the student loan agency's assets that have left it consistently unable to pay its bills.  MOHELA will apparently again miss a scheduled payment at the end of this month --an occurrence which has become a quarterly tradition.

Due to Matt Blunt's utter failure, a failure not unlike the ones perpetrated by execs at Bear Stearns and Lehman Brothers, MOHELA's viability is threatened and should therefore be included in your bailout, Mr. Secretary.  What's a few hundred mil in the context of a $700 billion package, anyway?

Your friend,

 

Rarely do we respond to a comment on the site, but one recent comment deserves a front page reply.  Specifically, a commenter with the handle 'blessedcurse' fired off a comment in response to a recent post about MOHELA's recent failure to make another scheduled Lewis & Clark payment.  'blessedcurse' wrote:

MOHELA's woes have very little to do with Lewis & Clark and are mostly due to the colapse [sic] of the auction rate bond market and changes in federal regulations governing student loan lenders...

In other words, 'blessedcurse' makes the case that Matt Blunt's sale of MOHELA can't be blamed for any the loan agency's current woes because those difficulties are attributable to fluctuations in the market and interceding federal action.  Implicit in the argument is the idea that the events 'blessedcurse' cites were either unforeseen or unforeseeable, leaving the proponents of the sale of MOHELA's assets free from any responsibility.

Of course, the trouble with this line of reasoning is that all of the "unforeseeable" occurrences cited by 'blessedcurse' were the very same reasons pointed to by opponents of the MOHELA sale while it was being discussed in the legislature as reasons why the asset sale was a terrible idea.

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The latest chapter in the rousing success of Matt Blunt's crowning legislative achievement, the sale of assets from the state's student loan agency.

This good news about MOHELA's continued inability to make scheduled payments follows last month's good news about MOHELA seriously curtailing borrower benefits.

Uhh, can we officially call Blunt's asset sale a failure yet, or are we supposed to keep pretending until he leaves office?­

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Jo Mannies has the Jay Nixon response to the depressing news --released in hush-hush style on a holiday weekend Friday-- that MOHELA will end some borrower benefits because of financial hardships now faced by the lender after Matt Blunt's sale of MOHELA assets:

Attorney General Jay Nixon has just weighed in on the quietly reached decision last Friday by the board of the Missouri Higher Education Loan Authority ”to eliminate several critical student benefit programs.

“As a result, Missouri students now will be forced to pay as much as 3% higher rates on their student loans,” Nixon said in a statement. “Specifically, the agency voted to eliminate the Public Service Reward Program and Rate Relief Program, which provide benefits to thousands of future Missouri teachers, police officers and nurses."

In case you're wondering where the GOP gubernatorial candidates stand on affordable higher education (though you probably have little doubt), Kenny Hulshof explicitly supported Blunt's legislative sale of MOHELA assets.  Sarah Steelman, while not speaking a word, sat idly by and watched as Blunt's crowning legislative achievement became law and allowed the raiding of funds intended to assist in access to college. 

Alyson Raletz of the St. Joseph New Press has a piece today that notes reaction to recent news that MOHELA has been unable to make expected payments for higher education building projects.  As we've written about here at length, the sale of MOHELA's assets at Matt Blunt's request has left the entity cash-poor and without the resources to make scheduled payments.

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Remember, the sale of MOHELA assets was the greatest legislative accomplishment of Matt Blunt's first and only term as governor.  

Remember also that Kenny Hulshof did and still does support the asset sale that has left the loan agency unable to pay its bills.

What's wrong with these people?

From a speech last week by Matt Blunt to the Missouri Municipal League:

“As a candidate, I pledged to provide leadership, vision and change for Missouri, and with the help of leaders in the General Assembly, we have kept commitments. Our changes are working and providing new opportunities and greater prosperity for Missourians. Missouri is more prosperous today than it was three years ago. But if we want continued prosperity, we must continue to work for change, at the state, county, and municipal levels.”

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Teased a couple weeks ago by ArchCityChronicle, today we see a sad story from The Journal of Webster University:

The Missouri Higher Education Loan Authority recorded its only loss in its 27-year history, MOHELA announced in late January. During the first half of the fiscal year, MOHELA lost $6.9 million. To offset part of its losses, MOHELA will cut 23 jobs, said Ray Bayer, Jr., chief executive and executive officer.

Back in early December 2007, we wrote:

...Blunt went ahead and forced his sale through the legislature despite grave concerns about how it might affect the agency's continuing survival.  It now appears as though many of those fears have been realized.

MOHELA leaders are reportedly slashing to the bone, urging employees to quit, refusing to fill in-house jobs that open because of attrition and even scrutinizing borrower benefits for possible cutbacks.

To get a full sense of the vast success of the Matt Blunt administration, consider that the MOHELA sale was his crowning legislative achievement.  

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Roy and others here have been pointing at the sad fact from the beginning.  Matt Blunt pursued the sale of MOHELA at the urging of Sallie Mae and Goldman Sachs in exchange for promises of campaign cash.  In the last fundraising quarter, Blunt finally sealed the deal.

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Just how far did Matt Blunt miss the mark with his MoHELA sell-off in the name of advanced life sciences research?

According to the Associated Press, pretty damn far.

Instead of funding advanced lab space, Blunt is funding... meeting rooms and banquet halls.

Instead of funding cancer research,  Blunt is funding... nut and mulch research.

Senator Chuck Graham summed it up best:

"I think it's a stretch to say hosting wedding receptions is leading in the life sciences," said Democratic Sen. Chuck Graham, of Columbia, one of the more outspoken critics of Blunt's revamped plan. And "developing better nuts is great, but I'm more interested in finding a cure for cancer."

That's the cost of Blunt's emasculated sell-out to the anti-science base of his party.

Nuts.

Matt Blunt was right.  His MoHELA sell off bill truly is historic.  Its focus on gold plated buildings at the expense of higher education affordability is already producing historic results--- like the 19% tuition increase just announced by Lincoln University in Jefferson City.

Watch for other Missouri institutions to follow suit as they rely on big tuition increases to offset gubernatorial short-sightedness.   And the timing couldn't be worse for the most endangered incumbent Governor in the country.  Story Continued »

Yesterday, the federal government announced new rules outlawing kick-backs to universities from student loan organizations.  The new rules prohibit “offering, directly or indirectly, any points, premiums, payments or other benefits to any school or other party to secure” student loan volume.

Yet, that's the whole idea behind Blunt's MoHELA scheme--- requiring the University of Missouri to increase its use of MoHELA student loans in exchange of millions of dollars of construction money. 

And no doubt the weakened MoHELA will have less favorable loan terms for the students the University is required to line up for it.

With the Democratic Congress poised to pass even stricter rule, Blunt's MoHELA scheme may well fall victim to the rotten conflict of interest at its core.

At the same time last week that one of MOHELA's creators was submitting petition language to put the loan authority's sale before Missouri voters as a referendum next year, Matt Blunt was on a three day jaunt around the state celebrating his raid of student loan assets.

As usual, Blunt was ferried around the state from stop to stop via private jet.  But the governor's office hasn't said who or what organization provided the aircraft to the governor.  

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Gov. Blunt signed his MOHELA scheme into law last week, and then took a tour of the state to feed his bad idea to the local media. The sponsor of the bill, Senator Gary Nodler (R-Joplin), couldn't resist a chance to attack Jay Nixon for standing up against the Governor's plan.

Looks like Missouri Republicans are stealing a trick from Rove's playbook.  Story Continued »