00 CONFERENCE CS FOR SENATE BILL NO. 123 01 "An Act relating to student loan programs and fees for review of postsecondary 02 education institutions; relating to a postsecondary student exchange program 03 administered by the Western Interstate Commission on Higher Education; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 14.43.110 is repealed and reenacted to read: 07  Sec. 14.43.110. STUDENT LOANS. (a) In a school year, the commission 08 may make a loan not to exceed 09  (1) $8,500 to a full-time undergraduate student or $5,000 to a half-time 10 undergraduate student attending a college or university if the full- or half-time student 11 is otherwise eligible under AS 14.43.125; 12  (2) $9,500 to a full-time graduate student or $4,500 to a half-time 13 graduate student attending a college or university if the full- or half-time graduate 14 student is otherwise eligible under AS 14.43.125; 01  (3) $6,500 to a full-time student or $3,000 to a half-time student if the 02 full- or half-time student is attending a career education program that is 30 or more 03 weeks in length and is otherwise eligible under AS 14.43.125; 04  (4) $4,500 to a full-time student or $2,000 to a half-time student if the 05 full- or half-time student is attending a career education program that is less than 30, 06 but at least 20 weeks in length and is otherwise eligible under AS 14.43.125; 07  (5) $3,500 to a full-time student or $1,500 to a half-time student if the 08 full- or half-time student is attending a career education program that is less than 20 09 but more than 10 weeks in length and is otherwise eligible under AS 14.43.125; 10  (6) $1,000 to a full-time student if the student is attending a career 11 education program that is at least six weeks but not more than 10 weeks in length and 12 is otherwise eligible under AS 14.43.125. 13  (b) The commission may make a loan for a summer term, even if the total 14 loan for the school year exceeds the limit imposed under (a) of this section if the loan 15 for the summer term is counted against the limit imposed under (a) of this section for 16 the following school year. 17  (c) The commission shall adopt regulations establishing a minimum amount 18 for which a loan may be made. 19 * Sec. 2. AS 14.43.120(a) is amended to read: 20  (a) Proceeds from a scholarship loan to a full-time student may only be used 21 for books, tuition and required fees, loan origination [GUARANTEE] fees, and room 22 and board. Proceeds from a scholarship loan to a half-time student may only be used 23 for books, tuition and required fees, and loan origination [GUARANTEE] fees. 24 * Sec. 3. AS 14.43.120(b) is amended to read: 25  (b) Scholarship loans may only be used to attend a 26  (1) career education program operating on a sound fiscal basis that 27 has [BEEN] 28  (A)  operated [APPROVED BY THE COMMISSION BEFORE 29 JULY 1, 1986; 30  (B) OPERATING] for two years before the borrower attends; 31 and 01   (B) submitted an executed program participation agreement 02 as required by the commission; [OR 03  (C) OPERATING FOR ONE YEAR BEFORE THE 04 BORROWER ATTENDS AND THE COMMISSION DETERMINES THE 05 PROGRAM IS OPERATING ON A FISCALLY SOUND BASIS;] or 06  (2) a college or university that 07  (A) has operated [BEEN APPROVED BY THE 08 COMMISSION BEFORE JULY 1, 1986, OR HAS BEEN OPERATING] for 09 at least two years before the borrower attends; 10  (B) is accredited by a national or regional accreditation 11 association recognized by the Council on Postsecondary Accreditation or is 12 approved by the commission; [AND] 13  (C) if the loans are federally insured, is approved by the United 14 States Secretary of Education; 15  (D) is a degree granting institution; and 16  (E) has submitted an executed program participation 17 agreement as required by the commission. 18 * Sec. 4. AS 14.43.120(d) is amended to read: 19  (d) Scholarship loans may not be made to a student 20  (1) for more than a total of $42,500 for [FIVE YEARS OF] 21 undergraduate study; 22  (2) for more than a total of $47,500 for [FIVE YEARS OF] graduate 23 study; 24  (3) for more than a combined total of $60,000 for [EIGHT YEARS 25 OF] undergraduate and graduate study; 26  (4) to attend an institution, other than a nonprofit institution, if the total 27 amount of scholarship loans made to students to attend that institution exceeds 28 $100,000 and the default rate on those loans exceeds the program default rate by more 29 than 150 percent as defined by regulation. 30 * Sec. 5. AS 14.43.120(e) is repealed and reenacted to read: 31  (e) Interest on a scholarship loan accrues from the time the loan is disbursed; 01 however, the state shall pay the interest while the borrower continues to be enrolled 02 under (c) of this section. 03 * Sec. 6. AS 14.43.120(g) is amended to read: 04  (g)  A borrower's obligation to commence repayment [REPAYMENT] of 05 the principal and interest on the loan begins six months [NOT LATER THAN ONE 06 YEAR] after the borrower is no longer enrolled under (c) of this section. The 07 borrower shall repay [BORROWER'S STUDIES ARE TERMINATED. THE LOAN 08 SHALL PROVIDE FOR REPAYMENT OF] the total amount owed in periodic 09 installments of at least $50 a month over a period of [IN] not more than 15 [10] 10 years from the commencement of the repayment obligation [IF THE LOAN IS TO 11 A FULL-TIME STUDENT, OR IN NOT MORE THAN FIVE YEARS FROM THE 12 COMMENCEMENT OF REPAYMENT IF THE LOAN IS TO A HALF-TIME 13 STUDENT, EXCEPT AS PROVIDED IN (k) AND (m) OF THIS SECTION]. If the 14 commission and the borrower agree to a different repayment schedule, the borrower 15 shall repay the loan in accordance with the agreement. A borrower may make 16 payments earlier than required by this subsection or the agreement. 17 * Sec. 7. AS 14.43.120(h) is amended to read: 18  (h) Security may not be required for a loan; however, a loan origination 19 [GUARANTEE] fee, as specified in (u) of this section, shall be deducted 20 [CHARGED] at the time that the loan is disbursed [AWARDED]. Additionally, the 21 borrower shall pay [PROVISION SHALL BE MADE FOR PAYMENT OF] all fees 22 and costs incurred in collection [OF THE AMOUNT OWED] on the loan if it becomes 23 delinquent or in default. 24 * Sec. 8. AS 14.43.120(i) is amended to read: 25  (i) If a loan is in default, the commission 26  (1) shall notify the borrower that, if the borrower has an occupational 27 license issued under AS 08, the license may not be renewed under AS 08.02.025 and 28 that repayment of the remaining balance is accelerated and due by mailing 29 [SENDING] the borrower a notice at the most recent address provided to the 30 commission by the borrower [BY REGISTERED OR CERTIFIED MAIL]; 31  (2) may take the borrower's permanent fund dividend under 01 AS 43.23.065(b)(3) to satisfy the balance due on a [THE] defaulted loan; and 02  (3) shall provide notice of the default to the Department of Commerce 03 and Economic Development, if the loan recipient is licensed under AS 08. 04 * Sec. 9. AS 14.43.120(k) is amended to read: 05  (k)  A borrower's obligation to make periodic payments [PERIODIC 06 INSTALLMENTS] of principal shall be deferred, but the borrower's obligation to 07 pay interest shall continue unless the state pays the interest by appropriation 08 under (t) [ACCRUE AND BE PAID UNLESS THE BORROWER IS ELIGIBLE FOR 09 INTEREST PAYMENT BENEFITS UNDER (l)] of this section, during any of the 10 following periods: 11  (1) [IF THE BORROWER RECEIVED A LOAN TO ATTEND AS A 12 FULL-TIME STUDENT,] return to full-time student status in good standing in a career 13 education program, college, or university that meets the requirements under (b) of this 14 section; 15  (2) if the borrower received a loan to attend as a half-time student, 16 return to at least half-time student status in good standing in 17  (A) a career education program, college, or university in the 18 state that meets the requirements under (b) of this section, or 19  (B) a career education program, college, or university that meets 20 the requirements under (b) of this section, and the borrower is physically 21 present in the state while attending the career education program, college, or 22 university; a borrower is not eligible for deferral under this paragraph for a 23 period longer than eight years; 24  (3) serving an initial period of up to three [SIX] years on active duty 25 as a member of the armed forces of the United States; 26  (4) serving, for up to three years, as a full-time volunteer under the 27 Peace Corps Act; 28  (5) serving, for up to three years, as a full-time volunteer under the 29 Domestic Volunteer Service Act of 1973; 30   (6) serving, for up to two years, as a full-time volunteer under the 31 National and Community Services Trust Act of 1993 (Americorps); 01   (7) [(6)] for a one-time period up to 12 months in which the borrower 02 is seeking and unable to find employment in the United States; or 03   (8) [(7)] during the period of disability if, after the loan is disbursed, 04 the borrower becomes totally [50 PERCENT OR MORE] disabled as certified by 05 competent medical authority. 06 * Sec. 10. AS 14.43.120(l) is amended to read: 07  (l) The state shall pay the interest on that portion of a loan that is not federally 08 insured during 09  (1) the period while [IN WHICH] the borrower continues to be 10 enrolled under (c) of this section [IS A FULL-TIME OR HALF-TIME STUDENT]; 11 and 12  (2) deferments under (k) of this section. 13 * Sec. 11. AS 14.43.120(m) is amended to read: 14  (m) In case of hardship, the commission may extend repayment of a loan for 15 an additional period of up to five years [IN INCREMENTS NO LONGER THAN 12 16 MONTHS EACH]. 17 * Sec. 12. AS 14.43.120(q) is amended to read: 18  (q) For the purposes of this section, a loan is in default if a loan payment is 19 180 [120] or more days past due. 20 * Sec. 13. AS 14.43.120(t) is amended to read: 21  (t)  Payment of interest under (l) of this section and forgiveness 22 [FORGIVENESS] under (s) of this section are [IS] subject to appropriation by the 23 legislature. Money obtained from the sale of bonds by the Student Loan Corporation 24 under AS 14.42.220 may not be appropriated for the payment of interest or the 25 forgiveness of loans. 26 * Sec. 14. AS 14.43.120(u) is amended to read: 27  (u)  The commission by regulation shall set a [A] loan origination 28 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total scholarship 29 loan amount, to [SHALL] be assessed upon a scholarship loan that is funded from the 30 student loan fund of the Alaska Student Loan Corporation. The loan origination 31 [GUARANTEE] fee shall be deducted at the time [ADDED AS A FINANCE 01 CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT AWARDED, 02 NOTWITHSTANDING THE LOAN LIMITS SET OUT AT AS 14.43.110 AND 03 14.43.115]. Subject to appropriation, the loan origination [GUARANTEE] fees shall 04 be deposited into an origination [A GUARANTEE] fee account within the student 05 loan fund of the Alaska Student Loan Corporation, and subsequently used 06 [TRANSFERRED] by the corporation [COMMISSION TO LOAN ACCOUNTS 07 WITHIN THE STUDENT LOAN FUND] to offset losses incurred [DUE TO 08 STUDENT LOAN DEBT CANCELLATION] as a result of death, disability, default, 09 or bankruptcy of the borrower [STUDENT]. 10 * Sec. 15. AS 14.43.125(a) is amended to read: 11  (a) A person may apply for and obtain a scholarship loan if the person 12  (1) is 13  (A) enrolled as a full-time student in a career education, 14 associate, baccalaureate, or graduate degree program; 15  (B) enrolled as a half-time student in a career education, 16 associate, baccalaureate, or graduate degree program [IN] 17  (i)  in the state; or 18  (ii)  out of the state [A CAREER EDUCATION, 19 ASSOCIATE, BACCALAUREATE, OR GRADUATE DEGREE 20 PROGRAM] and is physically present in this [THE] state while 21 attending that [THE CAREER EDUCATION, ASSOCIATE, 22 BACCALAUREATE, OR GRADUATE DEGREE] program; or 23  (C) a graduate of a high school or the equivalent, or scheduled 24 for graduation from a high school within six months, with sufficient credits to 25 be admitted to a career education program or to an accredited college or 26 university; 27  (2) is not delinquent or in default on a previously awarded scholarship 28 loan; and 29  (3) is a resident of the state at the time of application for the loan; for 30 purposes of this section, a person qualifies as a resident of the state if at the time of 31 application for the loan the person 01  (A) has been physically present in the state for at least one year 02 [TWO YEARS] immediately before the time of application for the loan; 03  (B) is dependent on a parent or guardian for care, the parent or 04 guardian has been present in the state for at least one year [TWO YEARS] 05 immediately before the time of application for the loan, and the person has 06 been present in the state for at least one year of the immediately preceding five 07 years except that the commission may by a two-thirds vote, acting upon a 08 written appeal by the person, grant an exemption to the requirement that the 09 person has been present in the state for one year of the immediately preceding 10 five years; 11  (C) has been physically present in the state [, OR IS A 12 DEPENDENT OF A PARENT OR GUARDIAN WHO HAS BEEN 13 PHYSICALLY PRESENT IN THE STATE,] for at least one year [TWO 14 YEARS] immediately before the applicant was absent from the state and the 15 absence is due solely to 16  (i) serving an initial period of up to three [SIX] years 17 on active duty as a member of the armed forces of the United States; 18  (ii) serving for up to three years as a full-time volunteer 19 under the Peace Corps Act; 20  (iii) serving for up to three years as a full-time volunteer 21 under the Domestic Volunteer Service Act of 1973; 22  (iv) required medical care for the applicant or the 23 applicant's immediate family; 24  (v) being a person who otherwise qualifies as a resident 25 and is accompanying a spouse who qualifies as a resident under (i) - 26 (iv) of this paragraph; [OR] 27   (vi) an absence allowed under (D)(i) - (iv) of this 28 paragraph; or 29  (D) [HAS BEEN PHYSICALLY PRESENT IN THE STATE, 30 OR] is a dependent of a parent or guardian who has been physically present in 31 the state [,] for at least one year [TWO YEARS] immediately before [THE 01 APPLICANT OR] the parent or guardian was absent from the state and the 02 absence is due solely to 03  (i) participating in a foreign exchange student program 04 recognized by the commission; 05  (ii) attending a school as a full-time student; 06  (iii) full-time employment by the state; 07  (iv) being a member of or employed full-time by the 08 state's congressional delegation; 09  (v) being a person who otherwise qualifies as a resident 10 and is accompanying a spouse who qualifies as a resident under (i) - 11 (iv) of this paragraph; 12  (4) does not have a past due child support obligation established by 13 court order or by the child support enforcement division under AS 25.27.160 - 14 25.27.220 at the time of application; and 15  (5) has not, within the previous five years, had a scholarship loan 16 discharged or written off by the commission for any reason. 17 * Sec. 16. AS 14.43.125(c) is amended to read: 18  (c) A person may not be awarded a scholarship loan under AS 14.43.090 - 19 14.43.160 [IF A FAMILY EDUCATION LOAN IS MADE ON BEHALF OF THAT 20 PERSON UNDER AS 14.43.710 - 14.43.790 OR] if that person receives a teacher 21 scholarship loan under AS 14.43.600 - 14.43.700 for the same period of attendance 22 [SCHOOL YEAR]. 23 * Sec. 17. AS 14.43.125 is amended by adding a new subsection to read: 24  (d) A person incarcerated full-time in a correctional facility may not be 25 awarded a scholarship loan under AS 14.43.090 - 14.43.160. In this subsection, 26 "correctional facility" has the meaning given in AS 33.30.901. 27 * Sec. 18. AS 14.43.150 is amended by adding a new subsection to read: 28  (d) An assignment of wages authorized under this section that is made under 29 court order has priority as against an attachment, execution, or other assignment, 30 except for an assignment for payment of child support under AS 25.27.070, restitution 31 to a crime victim authorized under AS 12.55.045, or as otherwise ordered by the court. 01 * Sec. 19. AS 14.43.300(g) is amended to read: 02  (g)  The commission by regulation shall set a [A] loan origination 03 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total memorial 04 scholarship loan amount, to [SHALL] be assessed upon a memorial scholarship loan. 05 The loan origination [GUARANTEE] fee shall be deducted at the time [ADDED 06 AS A FINANCE CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT 07 AWARDED]. Subject to appropriation, the loan origination [GUARANTEE] fee shall 08 be deposited into an origination [A GUARANTEE] fee account within the memorial 09 scholarship revolving loan fund, and subsequently transferred by the commission to the 10 appropriate memorial scholarship accounts within the memorial scholarship revolving 11 loan fund to offset losses incurred due to loan debt cancellation as a result of death, 12 disability, or bankruptcy of the student. 13 * Sec. 20. AS 14.43.640 is amended by adding a new subsection to read: 14  (e) Teacher scholarship loans made to a student may not exceed a total of 15 $37,500. 16 * Sec. 21. AS 14.43.650(c) is amended to read: 17  (c) A student may not be awarded a teacher scholarship loan under 18 AS 14.43.600 - 14.43.700 [IF A FAMILY EDUCATION LOAN IS MADE ON 19 BEHALF OF THE STUDENT UNDER AS 14.43.710 - 14.43.790 OR] if the student 20 receives a scholarship loan under AS 14.43.090 - 14.43.160 for the same period of 21 attendance [SCHOOL YEAR]. 22 * Sec. 22. AS 14.43.740(a) is amended to read: 23  (a) The provisions of AS 14.43.100, 14.43.110, [14.43.115,] 14.43.120(a) - (d), 24 (i), (m), and (r) - (u), and 14.43.135 apply to a loan made under AS 14.43.710 - 25 14.43.790. 26 * Sec. 23. AS 14.43.790(a)(1) is amended to read: 27  (1) "default" means a loan that is 180 [120] days or more past due in 28 repayment; 29 * Sec. 24. AS 14.43 is amended by adding a new section to read: 30  Sec. 14.43.920. UNAUTHORIZED SCHOLARSHIPS, LOANS, AND 31 GRANTS. If a person receives a scholarship, loan, or grant under this title for which 01 the person is not eligible under the provisions of this title, the scholarship, loan, or 02 grant is void and the entire balance of money paid is immediately due to the 03 scholarship, loan, or grant fund. This section is in addition to any penalty that may 04 be imposed according to another provision of law. 05 * Sec. 25. AS 14.44.025 is amended to read: 06  Sec. 14.44.025. PROVISIONS OF SERVICES. State participation under 07 Articles VIII and XIII of the Western Regional Higher Education Compact shall be 08 limited to the provision of adequate services and facilities in the professional fields 09 of study available through the Professional Student Exchange Program 10 administered by the Western Interstate Commission on Higher Education. The 11 Alaska Commission on Postsecondary Education shall establish funding priorities 12 under AS 14.44.035 for the available fields of study by analyzing student access 13 and state labor needs [FIELDS OF LAW, DENTISTRY, MEDICINE, 14 OSTEOPATHY, PUBLIC HEALTH, VETERINARY MEDICINE, PHARMACY, 15 PHYSICAL THERAPY, OCCUPATIONAL THERAPY, OPTOMETRY, PODIATRY, 16 FORESTRY, ARCHITECTURE, GRADUATE NURSING, PETROLEUM 17 ENGINEERING, MARITIME TECHNOLOGY, AND GRADUATE LIBRARY 18 STUDIES]. 19 * Sec. 26. AS 14.48.050 is amended by adding a new paragraph to read: 20  (10) establish fees for the review of institutions requesting approval for 21 participation in the scholarship loan program under AS 14.43.120(b)(2)(B). 22 * Sec. 27. AS 14.42.032; AS 14.43.115, and 14.43.750(b) are repealed. 23 * Sec. 28. TRANSITION. The Alaska Commission on Postsecondary Education may 24 proceed to adopt regulations necessary to implement this Act. The regulations take effect 25 under AS 44.62 (Administrative Procedure Act), but not before July 1, 1995. 26 * Sec. 29. APPLICABILITY. A borrower's obligation to pay interest on a student loan, 27 as required by AS 14.43.120(k), amended in sec. 9 of this Act, applies to a scholarship loan 28 disbursed after June 30, 1995. 29 * Sec. 30. Section 28 of this Act takes effect immediately under AS 01.10.070(c). 30 * Sec. 31. Except as provided in sec. 30 of this Act, this Act takes effect July 1, 1995.