SC State wants $12 million loan forgiven

S.C. State University, still struggling with its debt, needs the state to forgive a $12 million loan, a move that could help the college remain open, school officials told a S.C. House budget panel Tuesday.

New trustees, who started work in May, have begun turning around the state’s only public black college. But administrators are up against a June deadline.

S.C. State’s accreditation has been on probation for the past 18 months because of its financial problems. In June, the Southern Association of Colleges and Schools Commission on Colleges will vote on whether to allow S.C. State to keep that key certification.

Students at unaccredited colleges cannot get federal financial aid. At S.C. State, where nine out of 10 students get aid, loss of that assistance would be a death knell for the school.

Because the state granted S.C. State a $12 million loan that did not include a repayment schedule, accreditors count that loan as short-term debt, raising questions about S.C. State’s ability to survive financially. Coming up with a loan-repayment plan could help ease accreditors’ concerns.

But, S.C. interim president Franklin Evans added, “If we could get it forgiven, that would be ideal.”

The House budget panel that oversees college funding did not make any decision Tuesday.

State Rep. Gilda Cobb-Hunter, an Orangeburg Democrat on the budget panel, said S.C. State is making progress but needs help. She said she would want strings attached to any loan-forgiveness deal. Cobb-Hunter did not offer specifics, though she asked S.C. State’s trustees to start looking to hire a permanent president.

S.C. State asked the panel Tuesday for $30.6 million for special projects in the fiscal year that starts July 1, including $14.3 million for maintenance and construction work on dorms and heating systems as well as the $12 million to pay off state loans.

A separate legislative panel agreed in 2014 to loan S.C. State $12 million over three years to help keep open the 120-year-old college. The school fell into financial trouble after its previous leaders failed to cut its budget to match its falling enrollment.

S.C. State has received $16 million in loans and additional state funding since 2014 to help pay its bills. Today, S.C. State owes $6.5 million to vendors, down from $12 million, Evans told the panel.

S.C. State has made strides since last year, when the House budget panel for colleges recommended closing the school for two years to get its finances in order. That proposal did not pass, but it led more lawmakers to pay more attention to the school’s problems.

Legislators voted to replace the school’s trustees last spring.

The proposal to temporarily close the school “showed the deep concern we had in the severity of the situation,” said state Rep. Jim Merrill, R-Berkeley, who chairs the House’s higher education budget panel. “Sometimes, the only time things move is through crisis.”

S.C. State trustee vice chairman James Clark told the panel, “Thank you for the tough love you have been giving us.”

S.C. State’s new trustees approved a balanced budget this summer after cutting $19 million in spending, including declaring a financial emergency, a move that allowed the school to cut veteran staff and renegotiate contracts with vendors. The school cut about 14 percent of its courses, Clark said.

S.C. State enrolled about 2,800 students in the fall — 200 more than budgeted. Still, its student body is the smallest in recent years.

The school wants to build on its niche majors and is requesting $1.3 million next year to expand its engineering and environmental science programs.

“We are not here just to survive,” Clark said. “We are here to thrive.”

This story was originally published January 26, 2016 at 5:45 PM with the headline "SC State wants $$12 million loan forgiven."