Controversial loan program benefits Michigan colleges 

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Capital News Service

LANSING – Some universities have trouble finding funds to keep their doors open and suffer from declining enrollment. 

Especially in rural areas, finding prospective students is challenging for some institutions. 

The U.S. Department of Agriculture’s Community Facilities Direct Loan and Grant Program has helped several Michigan colleges pay for new buildings and facilities. 

The federal program allows community-based nonprofit organizations such as colleges to apply for loans, mainly focusing on rural and agricultural areas.

Five Michigan schools have accepted such loans, according to the USDA: Alma College, Adrian College, University of Olivet, Glen Oaks Community College and Bay Mills Community College. 

These schools eventually must repay the money and must find ways to increase revenue to do so, the USDA says. Loans are to be repaid by the time the college closes or in 40 years, whichever comes first.

For some schools across the country, however, the USDA loans haven’t contributed to their survival and enrollment growth as expected, according to the Chronicle of Higher Education. 

Robert LeFevre, the president of Michigan Independent Colleges and Universities, said the positive impact of the loans can be seen in changes to participating campuses. 

“One of the things we’re always looking for is the most efficient way to raise capital, and the subsidized loan program for small and rural schools has been very effective in our members being able to raise capital and build buildings,” LeFevre said.

This program was designed to build essential community facilities in rural areas, but even with these new facilities, there’s no guarantee that their enrollment will increase. 

“It’s always tough to say whether there’s a direct connection or not. As you have more up-to-date facilities and the ability to have new science labs, new dormitories, those kinds of things, it will be a draw for students,” said LeFevre. 

In 2017, Alma received four USDA loans to build facilities on its campus. The goal was to increase enrollment so the college can repay the money, and fund future initiatives itself.

These four loans total $39,445,000, according to USDA data.

Despite the large amount, Alma has been better off financially since the funding came through, according to college president Jeff Abernathy. 

“We offered collateral if we can’t pay back these loans, but the terms are so generous. Our debt payments have actually been down because we amortized this over 40 years,” said Abernathy. 

Alma has renovated all its dormitories with the funding, and the school has been able to pay off prior debts, he said. 

“We now have buildings that are new and ready for the next 50 to 60 years. We now have students enrolling because they can see that this is a college investing in its campus,” said Abernathy.

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