JEFFERSON CITY, Mo. - Gov. Matt Blunt calls it an innovative way to finance the buildings where the college students of the future will be taught. Skeptics fear it could make it more difficult for those future students to find affordable loans.

But there seems to be agreement on this: Blunt's plan to siphon $350 million from Missouri's student loan agency for campus projects hasn't been done before. And the nation's student loan industry is watching closely as Missouri lawmakers decide whether to ratify it...

The Missouri Higher Education Loan Authority was created a generation ago as a way to make student loans more available and affordable in a marketplace where there was greater demand than the private sector could supply...

As private-sector lenders like Sallie Mae and Nelnet are gobbling up other student loan holders, the Missouri plan could allow a way for quasi-governmental loan agencies to satisfy the demands of politicians eager to tap into their cash while still allowing the agencies to survive.

Others, while concurring in the novelty, aren't so sure of the merits.

"I think the MOHELA deal is a harbinger for other states," agreed Michael Dannenberg, director of education policy at the New America Foundation think tank in Washington, D.C.

"But the big problem with the MOHELA deal is it shows governors how student loan assets can be perverted into pet college construction projects instead of programs that increase college affordability or access," Dannenberg said...

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