University of Arkansas System eVersity will soon begin paying principal on its $5 million loan from other system schools, two years after needing an extension on the timeline.
The online school's enrollment now tops 700, making it one of the smallest, although newest, online-only institutions in the state.
Under the loan agreement approved by system trustees in 2014, eVersity needs to begin paying principal after only two years of paying 1.75% interest rate back to the institutions it borrowed from.
In 2018, the board changed the terms of the loan at the system's request to help its bottom line. It remained a 10-year loan, but eVersity would have four years of only paying interest before it began paying principal.
The loan has six years remaining, and eVersity must begin repayments this upcoming fiscal year.
System Vice President of Finance and Administration Michael Moore said the school's growth was enough to make the higher payments, although the loan contains no benchmarks for growth in calculating when it must be paid back.
The school anticipates breaking even for the current fiscal year.
In their one-page budget introduction to trustees last week, eVersity leaders wrote: "In FY21, it is expected that eVersity will generate enough revenue to pay the first debt payment to the campuses for the loans with them."
In the past year, the school started offering financial aid in-house, rather than using the University of Arkansas at Monticello. The school has also decreased salary and benefit expenditures by training personnel and through higher-paid employees leaving, leaders noted in their message to trustees.
The system still provides some supporting functions to eVersity for free, they added.
eVersity borrowed money from every system campus, including about $1.5 million from the University of Arkansas, Fayetteville. The University of Arkansas for Medical Sciences gave $1.2 million, and the Division of Agriculture gave about $650,000. The smallest contribution came from the Archaeological Survey, about $5,700.
Enrollment at eVersity was up 3% this term, which began in April, compared to the last term. Moore said that he, unlike other campus leaders, isn't as worried about the impact of covid-19 on enrollment because of the increased role online learning is playing in delivering education now.
"I think ultimately once this pandemic starts to settle down a bit, I think it will be good for online learning," Moore said.
Metro on 05/26/2020