The Missouri Higher Education Loan Authority board

The Missouri Higher Education Loan Authority board authorized its management yesterday to take advantage of a newly announced federal Department of Education program that would allow the Missouri agency to borrow money from the U.S. Treasury to lend directly to students or to use in purchasing student loans.

MOHELA Executive Director Ray Bayer said the federal program could help MOHELA meet demand for loans during this fall’s student borrowing season.

Bayer said that without the federal program, MOHELA had about $450 million in cash available for loans, although the demand volume from borrowers as well as lenders who want to sell loans to the agency might be between $800 million and $1 billion.

Bayer said presumably MOHELA would borrow "hundreds of millions" of dollars from the federal government under the program. One condition of the loans, however, is that student borrower benefits would not be permitted. The excluded benefits include, for example, lower interest rates for certain student groups such as teachers and social workers. Bayer said loans funded with education department moneys cannot include such borrower benefits.

The U.S. Department of Education made an announcement Wednesday that it would make money available to lenders of student loans who had been adversely affected by disruptions in credit markets.

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