Wall Street auctions failed again this week for the auction-rate bonds previously issued by the Montana Higher Education Student Assistance Corp. that were up for resale to finance student loans.

Auctions of $155.9 million of MHESAC's outstanding bonds failed this week, said Jim Stipcich, chief executive officer of MHESAC's business manager, Student Assistance Foundation. These were tax-exempt bonds.

That brings the total failures to $1.1 billion since mid-February, he said. Only $30 million of MHESAC's bonds have been resold since then, and that occurred the week of Feb. 25.

The Montana nonprofit corporation is not alone in getting caught up in the Wall Street credit and liquidity squeeze. Student loan organizations in other states, hospitals and museums are facing the same problem with billions of dollars of auction bonds that were not resold.

Slightly more than $1.1 billion of MHESAC's $2 billion portfolio is invested in auction-rate bonds. Of that, some $969.7 million have been invested in tax-exempt bonds, with $139 million in taxable bonds.

These bonds, issued in $100,000 units and sold to institutional investors, are considered long-term debt, but they roll over every 35 days, with interest rates reset to match the current rate.

The same institutional investors who have bought the bonds usually repurchase them, with the interest rates adjusted. However, if they choose not to buy these auction bonds again, the institutional investors have the option to sell the bonds to another investor at an interest rate determined by a preset formula based on market indices.

The problem on Wall Street is that no one is stepping forward to buy billions of dollars worth of auction rate bonds issued by nonprofit groups. So the current bond holders are forced to keep them, even if they don't want them. In some cases, they have been paid a higher interest rate because of the failed auctions, although that has dropped in recent weeks.

"The most important message is that MHESAC has financing in place for Montana students for next fall -- $175 million for the 2008-09 academic years," Stipcich said, "and we do not anticipate any impact on the availability of such MHESAC funds for providing student loans to Montanans."

Stipcich has said MHESAC officials are working hard to come up with ways to refinance a significant part of the outstanding auction bond securities.

Of the remaining $900 million in MHESAC debt not invested in auction rate bonds, $725 million is in fixed-rate bonds or bonds financed at a fixed spread over a given index. The remaining $175 million is invested in variable-rate demand notes issued in December 2007 that require a third party to buy them if sellers want to sell them and other buyers don't surface.