By Linda Jarrett
Walking across the stage, receiving the sheepskin, and bidding
adieu to your college days is one of those experiences that
should not be dampened by the specter of unpaid student loans.
Thanks to two new Missouri Higher Education Loan Authority (MOHELA)
programs, math and science teachers, and pre-engineering and
engineering students will find their post-college days much
easier, financially speaking.
The MOHELA loan forgiveness program for math and science teachers
will forgive up to $2,500 in loans, lessening their debt burden
early in their careers when they most need it.
The Prospective Engineering Student Loan Forgiveness Award Program
will reduce Stafford student loan balances by up to $3,500 for
college freshmen completing two years of pre-engineering or
engineering programs beginning in the 2007-08 school year. MOHELA
has committed up to $5 million in loan forgiveness for this
effort.
Formed through Missouri legislation passed in 1982, MOHELA is
the state’s biggest college access program.
“We have helped over 500,000 borrowers achieve their educational
dreams,” says Quentin Wilson, associate director for MOHELA.
“But we have discovered that, while just providing student loans
overcomes one barrier to higher education, eliminating that
barrier was not enough.”
Finding ways to eliminate other barriers to higher education
provides benefits to both students and the general population.
Wilson cited research suggesting that a four-year degree generates
extra income for the average graduate of more than $900,000.
But the benefits do not stop there. Wilson says that the Department
of Economics at the University of Missouri estimates that every
one percent increase in the percentage of Missourians getting
a four-year degree is associated with a $2.5 billion increase
in the gross state product. “So,” he says. “It’s the best economic
development program that the state can have.”
Giving the Teachers a Break
Loan forgiveness for teachers will reduce their debt burden
by up to $2,500 early in their career thus encouraging them
to continue in their careers in science and math, both areas
in which Missouri faces serious teacher shortages.
“We focused on the teachers in shortage areas,” Wilson says.
Schools need help attracting and retaining quality math and
science teachers, and we hope this incentive helps.”
“We wanted to send a message that we have an exceptional need
for quality teachers in these areas, based on evidence that
math and science achievement in high school is closely related
to being able to persevere and succeed in college.”
With this program, 531 math and science teachers from school
districts throughout Missouri will receive approximately $1.3
million in loan forgiveness.
“We need to keep our higher quality math and science certified
teachers early in their career,” Wilson says. “For some of these
people, this program will wipe out their entire student loan
and, hopefully, allow them to pursue the career that they have
the passion to pursue.”
Encouragement for Greater Higher Education
Opportunity
In addition to the loan forgiveness focused on math, science
and engineering, MOHELA has also invested over $12 million in
recent years to forgive student loans for college freshman Pell
recipients who also took out student loans. Will Shaffner, director
of business development, says that the reason MOHELA targeted
freshmen was because that year is historically a weak time in
their academic career. “The dropout rate is the highest between
the freshman and sophomore years.
“The Pell loan forgiveness program was targeted for freshmen
students to encourage them to continue through their sophomore
year and beyond,” Shaffner says.
“Knowing that these were riskier students, we were able to forgive
part of the loan debt depending on how much they had in order
to encourage them to continue in their studies.”
Wilson says that with tuition rates increasing, students have
to borrow more than they did in the past. “We’d like to help
them make wise decisions to stay in school, and the loan forgiveness
program was the first component.
“We did a survey for the first round of the loan forgiveness
program and we asked people to tell us what impact it had on
them,” Wilson says. “It was not just the financial relief. It
was the sense that someone was committed to their success, that
someone was aware of their struggle and the challenge.”
Capping Concern?
Sen. Jeff Smith (D-04) says that while capping of tuition increases
was not the focus of the legislative debate on the MOHELA programs,
he was concerned about the possibility.
“While no one likes the fact that college tuition has risen
about three times the rate of inflation over the last decade
or so, we also understand that if we want to continue to have
top-flight universities in Missouri that attract people from
all over the country, we want to keep our options open. Attracting
top-flight faculty, and top-flight students means spending some
money.”
Smith was able to get two amendments into the MOHELA legislation.
One, the Missouri Teaching Fellows Program, forgives loans for
200 students who graduate in the top ten percent of their class,
and who agree to teach in non-accredited school districts. The
other was an increase in Bright Flight Scholarships.
MOHELA’S Purpose
MOHELA is a self-supporting enterprise and its earnings are
used to pay its operating costs and support its mission. With
the aid of Lender and School Partners, and the reinvestment
of capital into tangible benefits, MOHELA supports the community
of students and families who rely on it for financial assistance
in higher education.
One of MOHELA’s aims is to address state needs and partner with
state initiatives. In terms of loan forgiveness, their goals
include improving education in areas that have the greatest
direct economic benefit.
“We pursued actions that we thought the state needed,” Wilson
says. “State leaders and research identified math, engineering
and science initiatives as the key drivers of regional and state
development. But we also broadened our efforts to help all students,
because we understand the impact of greater educational opportunity
for all on individuals, the economy and society.”
“A key part of MOHELA legislation we advocated for, beyond the
resources provided for one-time capital projects, was to increase
the amount of need-based aid in the state,” Wilson says. “We
advocated for that change during the legislative process, and
the resulting program was a major addition to the final legislation.”
He says a $45 million increase in need-based aid will occur
next year because of these efforts. “We’re proud that our investment
in one aspect of high education has leveraged a state commitment
that more than doubled the amount of need-based aid that the
state was putting into it.”
“MOHELA has long provided benefits to address the specific needs
of Missouri students and families,” says MOHELA Executive Director
and CEO Raymond H. Bayer Jr., “from our rate relief, offered
to all Missouri borrowers, to these new benefits that respond
to the critical role of technology industries in providing career
opportunities. We fully expect these targeted incentives to
provide a positive return on investment benefiting the entire
state’s economy.”
MOHELA Funding
MOHELA, while a state-chartered entity, has never received state
funding. MOHELA generates resources from “very effective business
operations” Wilson says. MOHELA participates in the Federal
Family Education Loan Program and services student loans for
and purchases from Lender Partners. Families and students using
MOHELA loan programs have access to some of the lowest student
loan interest rates available, below the current federal rate.
Chesterfield, Mo.-based MOHELA is one of the largest and most
successful nonprofit student-loan secondary markets in the country
with more than $5.5 billion in assets. This year, MOHELA has
forgiven about $6 million in student loan balances.
