S.C. State University will not have to pay back $12 million in loans from the state that the school used to pay its overdue bills, state budget writers agreed Friday.
The move helps clear the way for the state’s only public historically black university to save its accreditation, which has been on probation for two years.
S.C. State’s accreditors – the Southern Association of Colleges and Schools – will decide next month whether to remove the school from probation.
Saving that accreditation is vital to the Orangeburg school.
Students at colleges without accreditation cannot receive federal financial aid. Loss of that aid would be a death knell to S.C. State, where most students rely on federal loans.
The loan forgiveness was approved by a six-member panel of House and Senate members. Those legislators were working Friday to iron out differences between House and Senate budget proposals for the state’s next fiscal year.
The debt will be forgiven over a three-year period if S.C. State meets certain benchmarks, including keeping its budget balanced and growing its enrollment.
The largest amount – $8 million – will be forgiven in the state’s fiscal year that starts July 1. Each of the following two years, $2 million will be forgiven.
State Rep. Gilda Cobb-Hunter, D-Orangeburg, said forgiving the loans was “critical” to S.C. State’s accreditation.
“The General Assembly is demonstrating through that action that we want to do our part to ensure that S.C. State meets the accreditation requirements,” said Cobb-Hunter.
“This compromise, I believe, puts S.C. State on a continued path to successful accreditation that gives confidence to students and future students,” said Sen. Vincent Sheheen, D-Camden, a member of the budget conference committee.
S.C. State board chairman Charles Way said erasing $12 million in debt helps tremendously.
“That $12 million on the balance sheet knocked it completely out of whack,” he said. “We have cut and cut and cut. We’ve furloughed people, terminated people. We’ve just done as much as humanly possible without damaging the school itself.”
S.C. State University still will have to repay a $6 million loan from the state. But the budget panel gave the school 16 years to repay that loan.
In addition, the state budget that legislators are expected to approve next week includes $4.6 million for the university’s debt payments.
S.C. State got into financial trouble after its previous leaders failed to cut the school’s budget to match the school’s falling enrollment, once more than 4,000. Last year, lawmakers fired the school’s board, replacing it with a board headed by Way.
Under its interim president, S.C. State has frozen hiring, laid off staff and closed some dorms, balancing its budget this year.
In December, Way told legislators the board had cut $19 million from S.C. State’s budget and eliminated about 200 jobs.
S.C. State enrolled about 2,800 students in the fall – 200 more than budgeted.
Cobb-Hunter said Friday that S.C. State’s enrollment seems to be stabilizing and increasing, adding alumni giving to the school also has increased.
But, she added, “We still have quite a bit of work to do before the university is where it needs to be.”