JACKSON, Miss. (AP) _ Mississippi let a debt of more than $10 billion build up during the past 148 years, but the state treasurer says he has an idea that could turn all the red ink into a gold mine for college students.

Back in 1841, Mississippi defaulted on $7 million in bonds issued to purchase stock in two state-created banks. While that antebellum debt was ballooning to more than $10 billion, state officials fended off repeated efforts by the British bondholders to get repaid.

Now, a London collection agency finally has given up the quest. And state Treasurer Marshall Bennett has cooked up a plan for the state to profit off the deal by selling the bonds as antiques.

''They've been an obscure part of Mississippi's history that has sort of been stored away in a vault,'' Bennett said, outlining the events that led to his proposal to fund scholarships with proceeds from the bonds.

Bennett said the seed for his idea was planted two weeks after he took office in January 1988, when the director of the Council of the Corporation of Foreign Bondholders called him from London seeking payment on many of the old bond certificates.

The debt collection agency had been hounding Mississippi treasurers ever since its founding in 1868. Most of the old Mississippi bonds are held by British investors.

But Bennett repeated that Mississippi wouldn't pay a penny on the bonds. He had no choice - an article in the 1890 Mississippi Constitution specifically prohibited repayment.

Last week, the bondholders' organization announced that it was going into liquidation.

''We are withdrawing from the fray and we shan't be pursuing the matter any longer,'' Council Manager Eric French said in a telephone interview from London.

In recent years, the only debts remaining on the council's books involved East Germany and Mississippi, French said. It didn't appear likely that either would ever pay off their debts.

French said it is theoretically possible individual bondholders might continue trying to get their money from Mississippi, but he wasn't aware of any such plans.

Bennett, meanwhile, explained that a small portion of the old bonds fell into the state's hands years ago. The bonds will never be redeemed, but he said the state could sell them to antique bond collectors.

He said $450,000 worth of the $7 million in bonds - 450 documents with a face value of $1,000 each - were donated in 1914 to Mississippi's institutions of higher learning by the Peabody Trust Fund, established by the late Massachusetts philanthropist George Peabody. The Mississippi treasurer holds the bonds in trust.

Bennett said most state College Board members and legislators over the years were never aware of the bonds. But he said he has had inquiries about them from a few auction and bond brokerage houses in New York and London.

He said the state should retain some of the bonds for historical purposes, but he hopes the others will be sold, possibly for as much as $500 each.

A broker for a New York auction house agreed that the old bonds could be marketed.

''We want them for collectors. It's like anything else people collect - postage stamps, famous signatures - it just appeals to a certain group of collectors,'' said Diana Herzog of R.M. Smythe & Co., which specializes in the research, appraisal and auction of antique documents.

She said interest in collecting antique bonds has increased greatly during recent years, and the fact that the Mississippi bonds were repudiated may even add to their value.

''They have a history to them, and there's a story there,'' she said. ''The story mirrors historical events.''