A bill introduced in the Alabama Senate would change the administration of higher education lending programs and is a response to a bitter battle between Birmingham Southern University and Alabama Treasurer Young Boozer.
SB31Sponsored by U.S. Sen. Jabo Wagoner (R-Vestavia Hills), the state Treasurer has been given control of the revolving loan program for distressed higher education institutions, which is meant to help universities in financial distress. It is scheduled to be removed and delegated to the Secretary-General of the Ministry of Finance. Alabama Commission on Higher Education (ACHE).
A message was left for Wagoner Friday morning The bill has 20 co-sponsors, most of them Republican senators from outside of Jefferson County.
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The program was created under legislation introduced last year by Wagoner and Sen. Roger Smitherman (D-Birmingham) to provide loans to eligible colleges facing financial hardship. has been operating for more than 50 years and has had a “significant impact” on the community.
The bill is widely understood as a response to BSC's financial woes, which administrators say has pushed the liberal arts school of about 1,300 students to the brink of closure. al.com articles in 2023 He said the school's problems stem from a variety of factors, including declining enrollment and expensive capital projects.
“We are honored to have the support of Senator Jabo Wagoner in sponsoring SB31, which seeks to amend the 2023 Act to carry out the will of Congress,” Birmingham-Southern University said in a statement Friday. said. “We are also deeply grateful to the 21 Alabama senators who have signed on as co-sponsors.”
The law puts the state treasurer in charge of the program, which the state treasurer “may approve” for loans under the program. Mr. Boozer denied a loan to BSC last year.
Boozer said in an interview Friday that he rejected BSC's loan application “because there is not sufficient collateral under current law.” “We need to be able to secure a loan,” he said, adding that the new bill would require Birmingham-Southern University's main lender, Birmingham-based Service First, to determine whether there is sufficient collateral. He said it was a “pretense” to allow it.
“The treasurer who was supposed to conduct credit checks and make credit decisions about Birmingham Southern Bank's creditworthiness was replaced by an unauthorized straw man,” Boozer said.
A message was left at ServiceFirst Friday afternoon.
This bill would change the requirement to have sufficient assets to pledge as collateral to have sufficient assets to pledge as collateral to secure a loan, which would change the requirement to have sufficient assets to pledge as collateral to secure a loan. Determined by letter from a bank that is “registered to conduct and federally regulated.” The State Banking Department says the collateral provided by the university is sufficient to secure the requested amount of the loan provided by the university.
Banks will also decide on financial restructuring plans that indicate a financial institution's ability to repay loans.
The bill also states that the interest rate will be the rate posted at the time the loan is disbursed. The bill also adds a 30-day deadline to make loans to qualifying institutions.
Wagoner's bill also changes the word “may” that the administrator approves the loan to “shall.”
ACHE Executive Director Jim Purcell said in an emailed statement Friday morning that the standards in the original bill were found to be too stringent for failing institutions to qualify, so this bill would align those standards with administrative He said that it would be corrected.
“Birmingham Southern College is a historic university that has provided a quality education to thousands of students while making significant contributions to Alabama's economic development and growth,” he wrote. “BSC is recognized by U.S. News and World Report as one of the nation's leading national liberal arts colleges. BSC faculty are respected among their colleagues.”
Purcell wrote that the school has received financial commitments and donations to stabilize its finances.
BSC sued Boozer last fall over the refusal, accusing him of trying. “To clear a grudge” together with the bank. State attorneys representing Mr. Boozer said the BSC made a “factual error.” Judge Montgomery dismissed the lawsuit.
Boozer said Friday that he is responsible for determining whether a school deserves credit. The new bill removes language requiring applicants to “provide any information relevant to determining their ability to repay,” leaving it up to banks to determine their ability to repay. Mr. Boozer said it is likely that banks that determine that the collateral is sufficient will argue that the restructuring plan is sufficient.
“And that bank is very likely to be ServisFirst Bank, and that bank is going to tell me: [bill] It’s a bit of a sham,” he said.
Boozer said another university, Selma College, was also denied a loan because it didn't have enough collateral.
“We've treated both exactly the same, and we've treated both as the law is set out and written,” he said.
