The S.C. Senate’s budget panel agreed Thursday to consolidate and help repay nearly $19 million in state loans given to financially troubled S.C. State University.
The Senate plan helps the state’s only historically black public university repay all of its state loans rather than just one, as proposed in the House’s budget plan. S.C. State received the loans after amassing $20 million in debt, in large part due to failing to pay money owed vendors.
That debt has threatened the college’s accreditation, which has been on probation for two years.
Plans to relieve the loans should help end S.C. State’s probation in June, said Franklin Evans, the university’s interim president. “It sends a very strong message that the state is behind us.”
The school cannot remain on probation for a third straight year. Students at colleges without accreditation cannot receive federal financial aid. Loss of that financial aid would be a death-knell to S.C. State, where most students rely on loans.
University leaders hope to end the school year with about $4 million in unpaid bills, down from $13 million a year earlier.
S.C. State lowered that debt after receiving two state loans: $6 million from a budget board and $12 million from a legislative commission.
The 120-year-old school agreed last year to an escalating payment plan on the $6 million loan. No payment plan is in place for the $12 million loan. S.C. State also owes the state another $742,000 for costs associated with federal grants or contracts.
Under the Senate proposal, S.C. State would repay $355,036 a year to the state. The state would forgive $1 million a year of S.C. State’s loan balance if the school avoids a budget deficit.
The loans would be repaid by 2031.
Senate budget leaders said their proposal provides a steady repayment plan, while helping pay down the loans if the school keeps its finances in order.
The House proposal forgives the $12 million loan if S.C. State keeps its accreditation, balances its budget and grows its enrollment. S.C. State would have to repay the $6 million loan under the House plan.
The Orangeburg school got into financial trouble after its previous leaders failed to cut the school’s budget as its enrollment dropped. The General Assembly fired and replaced trustees last year. Under its interim president, S.C. State froze hiring, laid off staff and closed some dorms to balance its budget this year.
S.C. State enrolled about 2,800 students in the fall — 200 more than budgeted. But its student body is, by far, the smallest in recent years.