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Four Chicago-Area Lutheran Schools Struggle To Remain Open,

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Repay Loan By Peter Schmidt

Four Chicago-area Lutheran schools are struggling to stay open less than two years after they jointly received the largest loan ever given by a national Lutheran Church school-funding program.

The consortium is trying to sell one of the schools and a retreat center in an effort to repay part of the $10.5 million it borrowed in June 1989 from the Lutheran Church Extension Fund of the Lutheran Church-Missouri Synod.

The Lutheran High School Association of the Greater Chicago Area earlier this month rejected three offers for Valley Lutheran High School of St. Charles, Ill., made by two developers and the school's own board.

All of the offers were well below the $5.2-million share of the debt assigned to Valley Lutheran, school officials said.

The high-school association this month made its own offer to keep the school open.

Terms were not disclosed, but Valley Lutheran's board issued a press release endorsing the proposal "in principle."

While the other three schools-- Luther North and Luther South of Chicago and Walther Lutheran of Melrose Park--were described as being financially viable at least through next year, Valley Lutheran is in danger of closing after June unless given additional help, officials there said.

Valley Lutheran's enrollment has dropped from 223 to 86 over the last two years. Teachers there have been put on "call lists" for other Lutheran schools that are hiring, officials there said.

A fifth school, Luther East High School in Lansing, was one of the original borrowers but closed in 1989, shifting its $7,000 loan share to the others then reopening that fall with no debts.

Victor W. Bryant, vice president of marketing for the Lutheran Church Extension Fund of St. Louis, Mo., said his organization gave the five schools the unprecedented loan because they were "desperate."

About 80 Lutheran high schools nationwide receive aid from the extension fund, and the vast majority "are making their payments and are financially viable," Mr. Bryant said.

The fund, which specializes in making low-interest loans to schools and churches for capital expenditures, has $500 million in assets, he added.

Allan C. Oesterreich, the principal of Valley South and the coordinator of the loan-repayment effort, said the schools have been hurt by unsound investments, deficit financing, and shifting Lutheran populations that undermined congregational support.

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