A revised loan bill that would provide a lifeline to the financially troubled Birmingham-Southern College has passed the Alabama Senate and will make its way to the House.

SB31 by Sen. Jabo Waggoner, R-Vestavia Hills, makes changes to the Distressed Institutions of Higher Education Revolving Loan Program, which the Legislature created last year in response to the request for public assistance from Birmingham-Southern.

A Senate committee approved the bill last week and offered some additional amendments. The full Senate passed the revised bill on a 22-5 vote Tuesday evening. The bill will await review from a House committee before it can go up for a final vote in the House.

“If we don’t get this done and get it done in a timely manner, then the school will close,” said Sen. Rodger Smitherman, D-Birmingham.

Birmingham-Southern officials announced the extent of the school’s financial troubles in 2022, saying it would need at least $30 million from the legislature to keep its doors open. Now lawmakers, for a second time, are working against the clock to keep the college afloat.

In June 2023, the Alabama Legislature created the Distressed Institutions of Higher Education Loan Revolving Program, which would allow qualifying colleges to apply for up to $30 million in state funds.

But the state treasurer, Young Boozer III, denied Birmingham-Southern’s application last fall, claiming it did not meet the qualifications established by the law, including adequate collateral and a financial plan that showed it would be able to repay the debt.

Birmingham-Southern disputed Boozer’s conclusions and challenged his authority to deny the application in a lawsuit, but the case was dismissed.

SB31 would replace Boozer as administrator of the loan program with Jim Purcell, the executive director of the Alabama Commission on Higher Education. The bill would make other changes to the loan program that appear to make it more likely for Birmingham-Southern to receive a loan.

“We are grateful to the Senate for recognizing the importance of this amendment to the 2023 Act that established the Distressed Institutions of Higher Learning Revolving Loan Fund,” BSC President Daniel B. Coleman said in a statement Tuesday evening. “Thanks to the leadership of Sen. Waggoner and the steadfast support of Sen. Smitherman and 19 other Senate co-sponsors, we are encouraged that SB31 will find support in the House of Representatives.

“BSC’s trustees, alumni, parents, students, faculty, staff, and friends have worked tirelessly over the last year to ensure that this college remains an economic asset to the state of Alabama and continues to be a top choice for students seeking a small, residential, rigorous, and highly personalized college education,” he added. “The City of Birmingham and the North Alabama Conference of the United Methodist Church have stepped up to help, as have some generous private donors.

“Our plan for financial stability focuses on our endowment campaign. The loan we seek from the state will provide us time to complete that campaign.”

The legislation is not limited to Birmingham-Southern. Other colleges can apply for loans from the Distressed Institutions program.

Sen. Bobby Singleton, D-Demopolis, said he would support the bill, but he hopes lawmakers can treat financial issues facing predominantly Black institutions with the same level of urgency. He noted a recent federal report that found some of the state’s HBCUs were underfunded by millions of dollars.

“What we do for one, we should be willing to do for others,” he said.

“I want them to get an education,” he added. “I want their doors to open, but let’s be fair about it.”

Waggoner proposed a substitute to the bill that incorporated earlier suggestions from Sen. Arthur Orr, R-Decatur, who opposed the bill in committee last week.

The substitute would ensure that colleges provide an opinion letter from a bank that is not a current creditor of the applicant, and would require a decision to be made no later than 30 days after an institution submits its application.

Orr said he still couldn’t support the legislation because he believes it would put the legislature on a path to financing other struggling private colleges, among other concerns around repayments and low interest rates.

“It’s certainly something that, in my humble opinion, does not make good fiscal policy for our state,” he said.