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Ivey signs distressed college loan program bill into law, rescuing Birmingham Southern

MONTGOMERY, Ala. – Long-time colleges in Alabama can now secure state loans thanks to a new bill that was signed into law by Gov. Kay Ivey. It was an effort championed by Birmingham Southern College, which has struggled financially for years.

Signed by Ivey last week, Senate Bill 278, sponsored by Sens. Jabo Waggoner, R-Vestavia Hills, and Rodger Smitherman, D-Birmingham, creates the Distressed Institutions of Higher Education Revolving Loan Program. The program will allow the Alabama State Treasurer to grant loans to eligible colleges that meet certain criteria, including being in operation in Alabama for more than 50 years.

Colleges must also be experiencing a financial hardship that could lead to its closure, and have sufficient assets to pledge as a collateral. A total of $30 million was allocated for the program in the state’s supplemental Education Trust Fund budget, which was approved in early June.

In December of 2022, Birmingham Southern sought a $37.5 million government bailout, warning it was under risk of closure after years of declining enrollment and financial troubles. Ivey and legislative leadership largely rejected the request back in March, though House Speaker Nathanial Ledbetter said he wouldn’t be completely opposed to helping the school with a loan, rather than a bailout.

A Birmingham Southern spokesperson said that the next step for the school will be to work with the state treasurer to form a loan agreement, including the loan amount and what the school will have to put up as collateral.

In a statement, Birmingham Southern President Daniel Coleman praised Ivey for signing the bill, and noted that its passage, at least in part, was thanks to the “record amount of resources” in the state’s Education Trust Fund this year.

“This program is an important part of the college’s financial package, and we look forward to continuing to work with the state treasurer and others to ensure that it has maximum impact for BSC while protecting Alabama taxpayers,” Coleman said. “The record amount of resources in the ETF this year was a key factor in making this kind of investment possible for public and private colleges that qualify,”

That record amount in the ETF also helped the Alabama Legislature to approve $393 million in one-time rebates, as well as the reduction in state taxes on groceries, which would amount to a $300 million tax cut when fully implemented.

In February, an economic impact study published by Economic Research Services found that Birmingham Southern has a direct economic impact of $97.2 million in 2022, $70.5 million of which was in Jefferson County where the school is located. The study also found that spending by school facility and students amounted to $52.9 million that same year.

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