From a news item on the KOMU.com (Columbia, MO) web site, dated August 10, 2007:

“A lawsuit by student loan holders seeks to block Governor Matt Blunt’s plan to take money from the state’s student loan authority to finance college construction projects.”

The story goes on to say that the lawsuit also names the Missouri Higher Education Loan Authority for allowing its money to fund building construction instead of student loans for Missouri’s college-bound students. This story beautifully illustrates the real danger in having the government manage student loan lending.

“Show-Me” a state that doesn’t care about investing in its students’ futures and I’ll show you the Missouri State Legislature and its Governor, who feel perfectly comfortable redirecting student loan money to fund the state’s other priorities. Unless a court intervenes by August 28, 2007, the politicians will rip off Missouri’s sons and daughters to the tune of millions because their student loan money will be hard at work constructing buildings on the very college campuses that these kids can no longer afford to attend.

While you’re at it, “Show-Me” where the proposed Kennedy legislation prohibits the Federal government from redirecting funds in exactly the same way that the Show-Me State has done. Students have no guarantees that the Feds won’t rip the rug out from under their feet. When priorities change in Washington, honey-pots like a richly funded Student Loan program start looking like a good source of ready cash for something else. If nothing prevents the good men and women on the Hill from helping themselves to it, you can bet that dollars earmarked for funding student loans will be funding something else instead.

The travesty in Missouri should serve as a clear warning to those of you who think that having the Federal government manage loan programs is a good idea. It’s the Feds’ money, and Congress can apportion it as they see fit. Under the current program, the money allocated to fund student loans actually funds student loans. FFELP lenders don’t redirect this money to other loan programs. It isn’t available to other borrowers. The money is available only to student borrowers for the express purpose of funding college educations. FFELP lenders manage Federal student loan funds, and they take their fiduciary responsibilities seriously.

Under the new Federal regulations, you can kiss that brand of responsibility goodbye. As long as the government is in charge of the money, you won’t ever be certain that the money will be there when you need it. If you don’t believe me, ask any college student from Missouri.

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Call your Senators
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Tell your friends the truth about the proposed student loan legislation