MOHELA faces audit
Nebraska agency similar to MOHELA was just audited.
Published Jan. 26, 2007
One of the hottest issues facing the Missouri General Assembly just took a surprise turn as Missouri's student loan portfolio prepares to be audited.
State Auditor Susan Montee has decided to conduct an audit of the Missouri Higher Education Loan Authority.
Samantha Brewer, public affairs coordinator for Montee, said when the auditor was running for office, the MOHELA situation began to unfold.
"She's very interested in what's going on with MOHELA and the severance package that was given to the director when he left," Brewer said. "MOHELA caught her attention and various factors brought it to the forefront."
After being fired, MOHELA Executive Director Michael Cummins was given a large severance package.
Gov. Matt Blunt endorsed the audit but was unavailable for comment.
A similar student loan authority in Nebraska also faced an audit, which led to a lawsuit against the company.
According to a news release by Insidehighered.com, the Nebraska Education Loan Network, a company similar to MOHELA, exploited a loophole in federal rules and is now being forced to pay back millions of dollars. The article stated that Nelnet is allowed to keep as much as $278 million that it has already received through the loophole, and it is refusing to pay $882 million in additional reimbursement requests.
According to a release by Nelnet — as of Dec. 31 — the company had $3.1 billion in loans.
Those loans were eligible for 9.5 percent special allowance payments "based on its interpretation of applicable laws, regulations, and the Department's (of Education) previous guidance," the release stated.
This included an outstanding portfolio of $2.5 billion that was the subject of the audit.
The new agreement will eliminate all 9.5 percent special allowance payments. Brewer said the choice to audit MOHELA had nothing to do with the recent audit of Nelnet.
Right now, the auditor's office is conducting a survey to see where it wants to go with the audit.
"The auditor's office is surveying the agency, both the financial and management, and deciding what they want to do with MOHELA," Brewer said. "They do field work, write and deliver the report."
To this point, there have been no objections to the audit.
"We have started fieldwork and everything is going smoothly," Brewer said.