Loan agency lawsuit to be refiled with more allegations

JEFFERSON CITY, Mo. -- A lawsuit seeking to stop Missouri's student loan agency from supplying money to Gov. Matt Blunt's college construction plan has been dropped. But it may come back with more allegations and more clients.

Rather than giving up, attorneys challenging Blunt's building initiative are regrouping.

When the case gets refiled, "it will be a stronger lawsuit," attorney John Lichtenegger said Tuesday.

A Cole County judge had denied a request in September to temporarily bar the Missouri Higher Education Loan Authority from paying the first installment of Blunt's $350 million plan. Although the initial request failed, the lawsuit had continued.

But court records show the lawsuit was dismissed last week at the request of those who had sued.

Lichtenegger said the lawsuit seeking class-action status will be refiled within the next couple of months, likely in St. Louis city or county. Several more plaintiffs will be added. And new claims will incorporate details of an October state audit that chastised the loan agency for amassing large amounts of money and wasting it on luxury perks for its employees, he said.

By refiling the lawsuit, opponents of Blunt's plan essentially will get to start from scratch.

But Lichtenegger said attorneys weren't maneuvering to try to find a more favorable judge. Rather, he said it was inconvenient for the attorneys to try the case in Jefferson City, since they live and work in the St. Louis and Cape Girardeau areas.

Lichtenegger said the attorneys aren't being paid for their work but could collect money if a judge certifies the case as a class-action and they later win a judgment.

Earlier Tuesday, Blunt had praised the dismissal as a victory for students, whom he said will benefit from state-of-the-art buildings funded under his plan.

After learning the lawsuit would be refiled, Blunt spokesman Rich Chrismer said Tuesday night that the loan agency money distributed by the state already was benefiting students at places such as Harris-Stowe State University and St. Louis Community College.

"It's unfortunate that he would consider filing another bogus lawsuit in these students' backyard," Chrismer said.

The nonprofit loan authority was created under a 1981 state law to help ensure college students have access to loans. Blunt first proposed in January 2006 to sell off loan agency as a way to finance college buildings, scholarships and professors.

His plan underwent numerous revisions before legislators this May passed a bill that requires the loan authority to pay $350 million to the state over the next six years, the vast majority of which is to go to college buildings. The new law specifically expanded the mission of the loan authority to include financing the building projects.