When serious questions arose last spring about the extent to which Maine students benefit from taxpayer-backed bonds for college loans, the Legislature did well in forming a special commission of education and finance experts to get the answers.

The Commission on the Ceiling on Tax Exempt Bonds also did well. The package of recommendations the panel unanimously endorsed Monday, if enacted by the Legislature, should do much to improve public oversight and to ensure that Maine college students are getting the best deals possible.

The commission also was uniformly disturbed by the unwillingness or inability of the three intertwined organizations that dominate the state’s bond-backed student loan market to provide clear and timely information on where the money goes. The failure of Maine Educational Services (MES), the private non-profit that administers the state-chartered Maine Educational Loan Authority and the Maine Education Loan Marketing Corp. (MELA and MELMAC), to provide information as basic to a fiscal review as a 1998 tax return is simply unacceptable and the commission was right to say so.

This reluctance of MES to divulge is not new. Commercial banks that make student loans without access to the bonds have long observed that MES’s tax-exempt status and lower cost of capital apparently were not being passed along to students, but they lacked the data needed to back up the observation.

After years of looking the other way, the Legislature was forced to peer closely early this year in a review of the six state-chartered agencies that have access to tax-exempt bonds and the degree to which the discounts are passed along to the public. After both the Finance Authority of Maine and the state treasurer were straight-armed in their quest for information, about all lawmakers learned about MES was that administrators of publicly backed student loans can make handsome salaries and that MES’s strict repayment policies virtually guaranteed that students would not keep the discounts that justify the tax-exempt status in the first place.

The smokescreen continues. An accountant engaged by the attorney for the commercial banks reported earlier this month that, other than being able to ascertain that MES, MELA and MELMAC are highly profitable, his inquiry was hampered by a lack of information beyond 1997. An accountant engaged by MES fired back that the report was based upon outdated information and thus flawed. That is, at best, disingenuous.

At Monday’s meeting, MES finally turned over financial documents the commission had been requesting for months. It is too late — this issue has gone from one of mere disclosure to one of trust. The commission’s proposal, that MELA and MELMAC be merged into one entity with staff, with an executive director appointed by the governor and the Legislature and with open books, is sound and should be supported by lawmakers.

MES spinoff

While lawmakers are untangling the MES knot, they should sort out another related matter in the hopper — approving degree-granting authority for Portland College. This proposed on-line college is, to an extent not at all clear, a spin-off of MES. The key to Portland College’s success, its officers say, is the proprietary software developed to take distance learning to a new level. Several legislators have said they intend to find out where the money came from for this high-tech advance and their colleagues should support them. The University of Maine has a good distance-learning program and other on-line universities elsewhere can meet any other immediate unmet needs. There is nothing so urgent about the Portland College project that requires its approval before all the blanks are filled in.

These are complex issues, but for lawmakers the central issue is simple. The new economy requires education beyond high school. Maine produces good high-school graduates but too few continue their educations due to high tuition and low incomes. Making higher education available at the lowest possible cost is the key to the state’s survival. MES’s bottom line may be murky; the Legislature’s should be crystal clear.