Plan for $300M scholarship endowment on track after Utah’s exit from student loan processing

A statue of Utah Valley College’s Wolverine mascot wears a masks on the campus in Orem on Sept. 23, 2020. A invoice into consideration by the Utah Legislature would create a state endowment to fund school scholarships and different applications.

Kristin Murphy, Deseret Information

Utah’s exit from the coed mortgage processing enterprise would imply creation of a state endowment estimated between $260 million and $300 million that will fund school scholarships and different applications, underneath laws endorsed Wednesday by the Senate Training Committee.

The invoice, SB172, sponsored by Sen. Evan Vickers, R-Cedar Metropolis, would create a everlasting endowment that will be managed by the state treasurer. Curiosity earnings can be used to fund scholarships and different initiatives of the Utah System of Larger Training, which might require approval of the Utah Legislature yearly.

Final fall, the Utah Board of Larger Training approved the sale of the Federal Household Training Mortgage Program portfolio administered by the Utah Larger Training Help Authority. The authority is a subsidiary of the Utah System of Larger Training.

Monetary advisers estimate the online proceeds of the sale of the $1.2 billion federal scholar mortgage portfolio managed by the authority may yield $260 million to $300 million, mentioned Utah Commissioner of Larger Training David Woolstenhulme.

Requested if the fund can be used to assemble buildings on school campuses, Woolstenhulme mentioned emphatically, “It is not going to fund buildings.”

The intent is to fund initiatives that help the Board of Larger Training’s priorities, which embrace school entry, affordability, completion and workforce connections, he mentioned.

Woolstenhulme mentioned one such initiative is the Utah Faculty Advisor Corps, which helps highschool college students make profitable transitions to school underneath the steering of “close to peer” school entry advisers who work of their excessive faculties.

The Utah Larger Training Help Authority has agreed to fund that program for the following three years, however sooner or later it might be one thing that the Board of Larger Training may think about funding with the curiosity earnings from the endowment.

This system’s early work has produced constructive outcomes as school advisors give attention to college students who “actually, most likely wouldn’t be in our system as we speak if it wasn’t for the school entry advisors speaking about scholarships, speaking about monetary support, speaking about tips on how to fill out an utility for admissions,” Woolstenhulme mentioned.

The sale of the $1.2 billion scholar mortgage portfolio needs to be accomplished by the tip of February, he mentioned.

The invoice additionally directs the board to organize suggestions for discontinuing the Utah Larger Training Help Authority.

Since its creation in 1977, the authority has issued and supplied mortgage ensures to college students in extra of $6.8 billion. It acquired greater than $10.2 billion in Federal Household Training Mortgage Program loans from different distributors.

The authority has additionally supplied greater than $263.5 million of mortgage forgiveness and rate of interest discount advantages. It additionally supplied greater than $12 million in grants to 13,100 college students to pay for school.

Federal scholar mortgage servicers are the middleman between debtors and the federal authorities that lent them cash for school. Servicers gather scholar mortgage payments and observe whether or not they're paid on time. In recent times, a rising variety of personal, on-line corporations that service scholar loans have entered the world.

“Since 2010, UHEAA has been a servicer for the federal mortgage program, however latest contracts with the federal authorities have confirmed unprofitable. So what we’re proposing on this invoice is that we unwind that mortgage program and take the proceeds which can be left over and create an endowment that can be utilized for a scholarship program,” Vickers mentioned.

The invoice, unanimously accepted by the committee, strikes to the Utah Senate for additional consideration.