An audit of the Missouri Department of Higher Education takes issue with a now-defunct loan program it still oversees.
The Advantage Missouri program paid out a total of $8 million in student loans from 1998 to 2005. The audit finds that $5.2 million of those $8 million have still not been repaid.
Auditor Nicole Galloway said there are no procedures to monitor and resolve amounts due on defaulted loans, and that higher ed officials do not know the current status of each outstanding loan or whether it’s collectible.
"Advantage Missouri was designed to help students get necessary financial assistance and commit to staying in Missouri as they began their careers," she said in a written statement. "The state should be the ideal lender, not one that creates credit problems for students down the road.
"My audit found mismanagement at every step, beginning with not putting clear rules in place to guide the loan process. This led to borrowers not receiving proper notification, and a system that was not set up to monitor loan statuses or keep records up to date."
In its official response, the Department of Higher Education did not dispute the findings, but said that it lacked the resources to put together a system capable of managing "complex loan maintenance and collections."
"In addition, over the last five years the department's program administration duties have expanded significantly, while staff resources have not. The department focused its limited resources on those borrowers who were in active employment or repayment. However, now that loan servicing is almost complete for those borrowers, it will be necessary to adjust staff and other resources to address this issue. That adjustment will require the establishment of collection and monitoring procedures to service as many of the outstanding loans as possible and the department will explore the feasibility of including wage garnishment, state tax offset, and use of a collection agency in those procedures."
Advantage Missouri's purpose was to provide forgivable loans to students seeking high-demand jobs in high-tech, science and medical fields.
The entire audit can be found here.
Follow Marshall Griffin on Twitter: @MarshallGReport