ST. LOUIS, MO -- (MARKET WIRE) -- January 24, 2007 -- The Higher Education Loan Authority of the State of Missouri (MOHELA) today announced that its Lewis and Clark Initiative Fund now contains $175,234,105.48 in funds, exceeding the $170 million balance expected by March 31, 2007. "I'm pleased that, in anticipation of upcoming legislative consideration, MOHELA completed the loan sales and other transactions necessary to generate the fund balance as called for under the Cooperation Agreement," said Dr. John Smith, MOHELA's board chair. Smith further clarified that while the plan only calls for $170 million by March 31, 2007, "we also expect to have the full $210 million required by September 30, 2007 in the reserve account late in February. Meeting these targets ahead of schedule demonstrates MOHELA's financial stability and commitment to fund the Governor's Lewis and Clark Discovery Initiative."
In response to recent inquiries regarding the independence of the analysis conducted by Liscarnan Solutions, Randy Etter, who serves on the MOHELA Board, explained that, "MOHELA selected Liscarnan Solutions based on their qualifications and independence." Etter further stated that, "MOHELA did not previously have a relationship with Liscarnan and the $247,500 contract with Liscarnan prohibits the company from receiving additional compensation for transactions related to the Lewis and Clark Initiative. We have a great deal of confidence in their final report."
In addition to the Liscarnan Solutions' independent analysis, three of the nation's most respected rating agencies, Standard & Poor's, Moody's and Fitch, have independently reviewed and provided rating confirmations on transactions related to the Funding Plan. "These rating agency 'confirms' by three additional independent sources will preserve MOHELA's AAA bond rating, keeping its borrowing costs low," said Raymond H. Bayer Jr., MOHELA's Executive Director. "We have spent many months seeking and gaining rating agency, bond insurer and bondholder consent on the transactions related to the Funding Plan and we have received independent approvals every step of the way," Bayer explained.
Scott Giles, MOHELA's Chief Financial Officer, expressed optimism in MOHELA's continued ability to offer low interest rates and loan forgiveness programs for many years to come. Giles explained that the plan provides MOHELA with the authority to issue a guaranteed minimum of $100 million in tax-exempt bonds each year for the next ten years. These tax-exempt bonds will provide a guaranteed stream of low cost funding for MOHELA for the next 40 years. This lower cost funding results in approximately 1.36% higher net yield for the Authority on loans financed with tax-exempt debt versus taxable debt. Recent and proposed changes in federal law are creating a need for more tax-exempt financing to create similar amounts of income. Additional income from tax-exempt financed loans will strengthen MOHELA's ability to offer borrower benefits.
MOHELA also released the results of their first six months of the 2007 fiscal year, reporting a profit of $44.2 million including extraordinary gains of $26 million related to the sale of consolidation loans made to out of state borrowers. Tom Reeves, a board Member and MOHELA's Board Treasurer, stated, "The record results of the first six months of this fiscal year demonstrate MOHELA's continued financial health."
MOHELA is one of the largest student loan companies participating in the nonprofit secondary market sector in America and is a leading holder and servicer of student loans with more than $5.8 billion in assets and loan purchase activity in excess of $1.5 billion per year. MOHELA advances its benevolent mission of eliminating barriers for students so they can access higher education through local, regional and national partnerships with a variety of educational and national partnerships with a variety of educational and financial institutions.
Contact Information: For additional information, contact: Will Shaffner Office: 636-532-0600 x3430