COLUMBIA — A panel of Statehouse lawmakers has approved a preliminary proposal to forgive the repayment of South Carolina State University’s $12 million bailout loan.

The S.C. House’s budget-writing Higher Education and Technical Colleges Subcommittee approved a proposal that calls for forgiving the loan given to the state’s only historically black public university in 2014. Forgiving the loan still has to be approved by another House panel, the members of the entire chamber and later be addressed by the Senate.

Subcommittee Chairman Rep. Jim Merrill, R-Charleston, warned S.C. State Board of Trustees Chairman Charles Way that smooth sailing of the proposal could be difficult because there are legislators who oppose it. Merrill added that it was important the university’s staff show continued progress for the proposal to succeed.

“At any point, we can yank this funding right out of here if it looks like it’s a waste of money,” Merrill said. “But we also recognize that it might take forgiveness of $12 million to save a lot more money and the institution.”

The proposal imposes requirements on S.C. State before the loan can be forgiven over the next three years. They include that the school maintain a balanced budget, achieve 1 percent student enrollment growth during the 2017-18 school year and 2 percent during 2018-19, and provide quarterly reports about school finances and enrollment.

It also requires that the school remain accredited by the Southern Association of Colleges and Schools, which has kept S.C. State on probation for the last two years. The school’s officials have said they expect to receive a positive visit in March from the organization.

Way said he felt it was critical the state forgive the loan to show SACS the school’s finances are in order.

“It is a tremendous amount of money, but South Carolina State is worth it,” Way said. “It’s truly not easily replaced. If we’re successful in keeping S.C. State’s doors open, then we’ve saved a great institution.”

The state agreed in 2014 to tap into a contingency fund to bail out the financially troubled school, which was led by a different board and president at the time. Gov. Nikki Haley vehemently opposed the bailout then as a member of the Budget and Control Board. She argued that the state was just giving “the money away because they know it can’t be paid back.”

Just a few weeks after members of the Budget and Control Board approved the bailout, the higher education subcommittee moved to temporarily close the university for at least three semesters to stem the school’s red ink. The move prompted outcry from lawmakers and ultimately lead to the firing of the school’s then-president, Thomas Elzey, and the ouster of its board of trustees. Since then, the school’s former interim provost, Franklin Evans, has been serving as acting president.

Reach Cynthia Roldan at 843-708-5891.