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HB 257: "An Act relating to student loan programs, interstate compacts for postsecondary education, and fees for review of postsecondary education institutions; and providing for an effective date."

00 HOUSE BILL NO. 257                                                                                                      
01 "An Act relating to student loan programs, interstate compacts for postsecondary                                        
02 education, and fees for review of postsecondary education institutions; and                                             
03 providing for an effective date."                                                                                       
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1.  AS 14.43.110 is repealed and reenacted to read:                                                        
06  Sec. 14.43.110.  STUDENT LOANS.  (a)  In a school year, the commission                                                
07 may make a loan not to exceed                                                                                           
08   (1)  $8,500 to a full-time undergraduate student or $5,000 to a half-time                                            
09 undergraduate student attending a college or university if the full- or half-time student                               
10 is otherwise eligible under AS 14.43.125;                                                                               
11   (2)  $9,500 to a full-time graduate student or $4,500 to a half-time                                                 
12 graduate student attending a college or university if the full- or half-time graduate                                   
13 student is otherwise eligible under AS 14.43.125;                                                                       
14   (3)  $5,500 to a full-time student or $2,000 to a half-time student if the                                           
01 full- or half-time student is attending a career education program that is nine or more                                 
02 months in length and is otherwise eligible under AS 14.43.125;                                                          
03   (4)  $3,000 to a full-time student or $1,000 to a half-time student if the                                           
04 full- or half-time student is attending a career education program that is less than nine                               
05 months in length and is otherwise eligible under AS 14.43.125.                                                          
06  (b)  The commission may make a loan for a summer term, even if the total                                              
07 loan for the school year exceeds the limit imposed under (a) of this section if the loan                                
08 for the summer term is counted against the limit imposed under (a) of this section for                                  
09 the following school year.                                                                                              
10  (c)  The commission shall adopt regulations establishing a minimum amount                                             
11 for which a loan may be made.                                                                                           
12    * Sec. 2.  AS 14.43.120(a) is amended to read:                                                                       
13  (a)  Proceeds from a scholarship loan to a full-time student may only be used                                         
14 for books, tuition and required fees, loan origination [GUARANTEE] fees, and room                                     
15 and board. Proceeds from a scholarship loan to a half-time student may only be used                                     
16 for books, tuition and required fees, and loan origination [GUARANTEE] fees.                                          
17    * Sec. 3.  AS 14.43.120(b) is amended to read:                                                                       
18  (b)  Scholarship loans may only be used to attend a                                                                   
19   (1)  career education program operating on a sound fiscal basis that                                               
20 has [BEEN]                                                                                                              
21   (A)  operated [APPROVED BY THE COMMISSION BEFORE                                                                  
22 JULY 1, 1986;                                                                                                           
23   (B)  OPERATING] for two years before the borrower attends;                                                         
24 and                                                                                                                    
25   (B)  submitted an executed program participation agreement                                                         
26 as required by the commission; [OR                                                                                     
27   (C)  OPERATING FOR ONE YEAR BEFORE THE                                                                              
28 BORROWER ATTENDS AND THE COMMISSION DETERMINES THE                                                                      
29 PROGRAM IS OPERATING ON A FISCALLY SOUND BASIS;] or                                                                     
30   (2)  a college or university that                                                                                    
31   (A)  has operated [BEEN APPROVED BY THE                                                                           
01 COMMISSION BEFORE JULY 1, 1986, OR HAS BEEN OPERATING] for                                                              
02 at least two years before the borrower attends;                                                                         
03   (B)  is accredited by a national or regional accreditation                                                          
04 association recognized by the Council on Postsecondary Accreditation or is                                              
05 approved by the commission; [AND]                                                                                       
06   (C)  if the loans are federally insured, is approved by the United                                                  
07 States Secretary of Education;                                                                                         
08   (D)  is a degree granting institution; and                                                                          
09   (E)  has submitted an executed program participation                                                                
10 agreement as required by the commission.                                                                               
11    * Sec. 4.  AS 14.43.120(d) is amended to read:                                                                       
12  (d)  Scholarship loans may not be made to a student                                                                   
13   (1)  for more than a total of $42,500 for [FIVE YEARS OF]                                                          
14 undergraduate study;                                                                                                    
15   (2)  for more than a total of $47,500 for [FIVE YEARS OF] graduate                                                 
16 study;                                                                                                                  
17   (3)  for more than a combined total of $79,000 for [EIGHT YEARS                                                  
18 OF] undergraduate and graduate study;                                                                                   
19   (4)  to attend an institution, other than a nonprofit institution, if the total                                      
20 amount of scholarship loans made to students to attend that institution exceeds                                         
21 $100,000 and the default rate on those loans exceeds the program default rate by more                                   
22 than 150 percent as defined by regulation.                                                                              
23    * Sec. 5.  AS 14.43.120(e) is repealed and reenacted to read:                                                        
24  (e)  Interest on a scholarship loan accrues from the time the loan is disbursed;                                      
25 however, the state shall pay the interest while the borrower continues to be enrolled                                   
26 under (c) of this section.                                                                                              
27    * Sec. 6.  AS 14.43.120(g) is amended to read:                                                                       
28  (g)  A borrower's obligation to commence repayment [REPAYMENT] of                                                   
29 the principal and interest on the loan begins six months [NOT LATER THAN ONE                                          
30 YEAR] after the borrower is no longer enrolled under (c) of this section.  The                                         
31 borrower shall repay [BORROWER'S STUDIES ARE TERMINATED.  THE LOAN                                                     
01 SHALL PROVIDE FOR REPAYMENT OF] the total amount owed in periodic                                                       
02 installments of at least $50 a month over a period of [IN] not more than 15 [10]                                    
03 years from the commencement of the repayment obligation [IF THE LOAN IS TO                                          
04 A FULL-TIME STUDENT, OR IN NOT MORE THAN FIVE YEARS FROM THE                                                            
05 COMMENCEMENT OF REPAYMENT IF THE LOAN IS TO A HALF-TIME                                                                 
06 STUDENT, EXCEPT AS PROVIDED IN (k) AND (m) OF THIS SECTION].  If the                                                    
07 commission and the borrower agree to a different repayment schedule, the borrower                                       
08 shall repay the loan in accordance with the agreement.  A borrower may make                                             
09 payments earlier than required by this subsection or the agreement.                                                   
10    * Sec. 7.  AS 14.43.120(h) is amended to read:                                                                       
11  (h)  Security may not be required for a loan; however, a loan origination                                           
12 [GUARANTEE] fee, as specified in (u) of this section, shall be deducted                                               
13 [CHARGED] at the time that the loan is disbursed [AWARDED].  Additionally, the                                       
14 borrower shall pay [PROVISION SHALL BE MADE FOR PAYMENT OF] all fees                                                   
15 and costs incurred in collection [OF THE AMOUNT OWED] on the loan if it becomes                                         
16 delinquent or in default.                                                                                               
17    * Sec. 8.  AS 14.43.120(i) is amended to read:                                                                       
18  (i)  If a loan is in default, the commission                                                                          
19   (1)  shall notify the borrower that, if the borrower has an occupational                                             
20 license issued under AS 08, the license may not be renewed under AS 08.02.025 and                                       
21 that repayment of the remaining balance is accelerated and due by mailing                                             
22 [SENDING] the borrower a notice at the most recent address provided to the                                             
23 commission by the borrower [BY REGISTERED OR CERTIFIED MAIL];                                                          
24   (2)  may take the borrower's permanent fund dividend under                                                           
25 AS 43.23.065(b)(3) to satisfy the balance due on a [THE] defaulted loan; and                                          
26   (3)  shall provide notice of the default to the Department of Commerce                                               
27 and Economic Development, if the loan recipient is licensed under AS 08.                                                
28    * Sec. 9.  AS 14.43.120(k) is amended to read:                                                                       
29  (k)  A borrower's obligation to make periodic payments [PERIODIC                                                    
30 INSTALLMENTS] of principal shall be deferred, but the borrower's obligation to                                         
31 pay interest shall continue unless the state pays the interest by appropriation                                       
01 under (t) [ACCRUE AND BE PAID UNLESS THE BORROWER IS ELIGIBLE FOR                                                      
02 INTEREST PAYMENT BENEFITS UNDER (l)] of this section, during any of the                                                 
03 following periods:                                                                                                      
04   (1)  [IF THE BORROWER RECEIVED A LOAN TO ATTEND AS A                                                                 
05 FULL-TIME STUDENT,] return to full-time student status in good standing in a career                                     
06 education program, college, or university that meets the requirements under (b) of this                                 
07 section;                                                                                                                
08   (2)  if the borrower received a loan to attend as a half-time student,                                               
09 return to at least half-time student status in good standing in                                                         
10   (A)  a career education program, college, or university in the                                                      
11 state that meets the requirements under (b) of this section, or                                                         
12   (B)  a career education program, college, or university that meets                                                  
13 the requirements under (b) of this section, and the borrower is physically                                              
14 present in the state while attending the career education program, college, or                                          
15 university; a borrower is not eligible for deferral under this paragraph for a                                          
16 period longer than eight years;                                                                                         
17   (3)  serving an initial period of up to three [SIX] years on active duty                                           
18 as a member of the armed forces of the United States;                                                                   
19   (4)  serving, for up to three years, as a full-time volunteer under the                                              
20 Peace Corps Act;                                                                                                        
21   (5)  serving, for up to three years, as a full-time volunteer under the                                              
22 Domestic Volunteer Service Act of 1973;                                                                                 
23   (6)  for a one-time period up to 12 months in which the borrower is                                                  
24 seeking and unable to find employment in the United States; or                                                          
25   (7)  during the period of disability if, after the loan is disbursed, the                                          
26 borrower becomes totally [50 PERCENT OR MORE] disabled as certified by                                                
27 competent medical authority.                                                                                            
28    * Sec. 10.  AS 14.43.120(l) is amended to read:                                                                      
29  (l)  The state shall pay the interest on that portion of a loan that is not federally                                 
30 insured during                                                                                                          
31   (1)  the period while [IN WHICH] the borrower continues to be                                                     
01 enrolled under (c) of this section [IS A FULL-TIME OR HALF-TIME STUDENT];                                             
02 and                                                                                                                    
03   (2)  deferments under (k) of this section.                                                                           
04    * Sec. 11.  AS 14.43.120(m) is amended to read:                                                                      
05  (m)  In case of hardship, the commission may extend repayment of a loan for                                           
06 an additional period of up to five years [IN INCREMENTS NO LONGER THAN 12                                               
07 MONTHS EACH].                                                                                                           
08    * Sec. 12.  AS 14.43.120(q) is amended to read:                                                                      
09  (q)  For the purposes of this section, a loan is in default if a loan payment is                                   
10 180 [120] or more days past due.                                                                                       
11    * Sec. 13.  AS 14.43.120(t) is amended to read:                                                                      
12  (t)  Payment of interest under (l) of this section and forgiveness                                                  
13 [FORGIVENESS] under (s) of this section are [IS] subject to appropriation by the                                      
14 legislature.  Money obtained from the sale of bonds by the Student Loan Corporation                                     
15 under AS 14.42.220 may not be appropriated for the payment of interest or the                                         
16 forgiveness of loans.                                                                                                   
17    * Sec. 14.  AS 14.43.120(u) is amended to read:                                                                      
18  (u)  The commission by regulation shall set a [A] loan origination                                                
19 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total scholarship                                         
20 loan amount, to [SHALL] be assessed upon a scholarship loan that is funded from the                                   
21 student loan fund of the Alaska Student Loan Corporation.  The loan origination                                       
22 [GUARANTEE] fee shall be deducted at the time [ADDED AS A FINANCE                                                     
23 CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT AWARDED,                                                             
24 NOTWITHSTANDING THE LOAN LIMITS SET OUT AT AS 14.43.110 AND                                                             
25 14.43.115].  Subject to appropriation, the loan origination [GUARANTEE] fees shall                                    
26 be deposited into an origination [A GUARANTEE] fee account within the student                                         
27 loan fund of the Alaska Student Loan Corporation, and subsequently used                                               
28 [TRANSFERRED] by the corporation [COMMISSION TO LOAN ACCOUNTS                                                         
29 WITHIN THE STUDENT LOAN FUND] to offset losses incurred [DUE TO                                                         
30 STUDENT LOAN DEBT CANCELLATION] as a result of death, disability, default,                                            
31 or  bankruptcy of the borrower [STUDENT].                                                                             
01    * Sec. 15.  AS 14.43.125(a) is amended to read:                                                                      
02  (a)  A person may apply for and obtain a scholarship loan if the person                                               
03   (1)  is                                                                                                              
04   (A)  enrolled as a full-time student in a career education,                                                         
05 associate, baccalaureate, or graduate degree program;                                                                   
06   (B)  enrolled as a half-time student in a career education,                                                         
07 associate, baccalaureate, or graduate degree program [IN]                                                               
08   (i)  in the state; or                                                                                            
09   (ii)  out of the state [A CAREER EDUCATION,                                                                      
10 ASSOCIATE, BACCALAUREATE, OR GRADUATE DEGREE                                                                            
11 PROGRAM] and is physically present in this [THE] state while                                                          
12 attending that [THE CAREER EDUCATION, ASSOCIATE,                                                                      
13 BACCALAUREATE, OR GRADUATE DEGREE] program; or                                                                          
14   (C)  a graduate of a high school or the equivalent, or scheduled                                                    
15 for graduation from a high school within six months, with sufficient credits to                                         
16 be admitted to a career education program or to an accredited college or                                                
17 university;                                                                                                             
18   (2)  is not delinquent or in default on a previously awarded scholarship                                             
19 loan; and                                                                                                               
20   (3)  is a resident of the state at the time of application for the loan; for                                         
21 purposes of this section, a person qualifies as a resident of the state if at the time of                               
22 application for the loan the person                                                                                     
23   (A)  has been physically present in the state for at least one year                                               
24 [TWO YEARS] immediately before the time of application for the loan;                                                    
25   (B)  is dependent on a parent or guardian for care, the parent or                                                   
26 guardian has been present in the state for at least one year [TWO YEARS]                                              
27 immediately before the time of application for the loan, and the person has                                           
28 been present in the state for at least one year of the immediately preceding five                                       
29 years except that the commission may by a two-thirds vote, acting upon a                                                
30 written appeal by the person, grant an exemption to the requirement that the                                            
31 person has been present in the state for one year of the immediately preceding                                          
01 five years;                                                                                                             
02   (C)  has been physically present in the state [, OR IS A                                                            
03 DEPENDENT OF A PARENT OR GUARDIAN WHO HAS BEEN                                                                          
04 PHYSICALLY PRESENT IN THE STATE,] for at least one year [TWO                                                          
05 YEARS] immediately before the applicant was absent from the state and the                                               
06 absence is due solely to                                                                                                
07   (i)  serving an initial period of up to three [SIX] years                                                        
08 on active duty as a member of the armed forces of the United States;                                                    
09   (ii)  serving for up to three years as a full-time volunteer                                                       
10 under the Peace Corps Act;                                                                                              
11   (iii)  serving for up to three years as a full-time volunteer                                                      
12 under the Domestic Volunteer Service Act of 1973;                                                                       
13   (iv)  required medical care for the applicant or the                                                               
14 applicant's immediate family;                                                                                           
15   (v)  being a person who otherwise qualifies as a resident                                                          
16 and is accompanying a spouse who qualifies as a resident under (i) -                                                    
17 (iv) of this paragraph; [OR]                                                                                            
18   (vi)  an absence allowed under (D)(i) - (iv) of this                                                              
19 paragraph; or                                                                                                          
20   (D)  [HAS BEEN PHYSICALLY PRESENT IN THE STATE,                                                                     
21 OR] is a dependent of a parent or guardian who has been physically present in                                           
22 the state [,] for at least one year [TWO YEARS] immediately before [THE                                               
23 APPLICANT OR] the parent or guardian was absent from the state and the                                                  
24 absence is due solely to                                                                                                
25   (i)  participating in a foreign exchange student program                                                           
26 recognized by the commission;                                                                                           
27   (ii)  attending a school as a full-time student;                                                                   
28   (iii)  full-time employment by the state;                                                                          
29   (iv)  being a member of or employed full-time by the                                                               
30 state's congressional delegation;                                                                                       
31   (v)  being a person who otherwise qualifies as a resident                                                          
01 ]and is accompanying a spouse who qualifies as a resident under (i) -                                                   
02 (iv) of this paragraph;                                                                                                 
03   (4)  does not have a past due child support obligation established by                                                
04 court order or by the child support enforcement division under AS 25.27.160 -                                           
05 25.27.220 at the time of application; and                                                                               
06   (5)  has not, within the previous five years, had a scholarship loan                                                 
07 discharged or written off by the commission for any reason.                                                             
08    * Sec. 16.  AS 14.43.125(c) is amended to read:                                                                      
09  (c)  A person may not be awarded a scholarship loan under AS 14.43.090 -                                              
10 14.43.160 [IF A FAMILY EDUCATION LOAN IS MADE ON BEHALF OF THAT                                                         
11 PERSON UNDER AS 14.43.710 - 14.43.790 OR] if that person receives a teacher                                             
12 scholarship loan under AS 14.43.600 - 14.43.700 for the same period of attendance                                     
13 [SCHOOL YEAR].                                                                                                          
14    * Sec. 17.  AS 14.43.125 is amended by adding a new subsection to read:                                              
15  (d)  A person incarcerated full-time in a correctional facility may not be                                            
16 awarded a scholarship loan under AS 14.43.090 - 14.43.160.  In this subsection,                                         
17 "correctional facility" has the meaning given in AS 33.30.901.                                                          
18    * Sec. 18.  AS 14.43.150 is amended by adding a new subsection to read:                                              
19  (d)  An assignment of wages authorized under this section that is made under                                          
20 court order has priority as against an attachment, execution, or other assignment,                                      
21 except for an assignment for payment of child support under AS 25.27.070 or as                                          
22 otherwise ordered by the court.                                                                                         
23    * Sec. 19.  AS 14.43.300(g) is amended to read:                                                                      
24  (g)  The commission by regulation shall set a [A] loan origination                                                
25 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total memorial                                            
26 scholarship loan amount, to [SHALL] be assessed upon a memorial scholarship loan.                                     
27 The loan origination [GUARANTEE] fee shall be deducted at the time [ADDED                                           
28 AS A FINANCE CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT                                                         
29 AWARDED]. Subject to appropriation, the loan guarantee fee shall be deposited into                                      
30 a guarantee fee account within the memorial scholarship revolving loan fund, and                                        
31 subsequently transferred by the commission to the appropriate memorial scholarship                                      
01 accounts within the memorial scholarship revolving loan fund to offset losses incurred                                  
02 due to loan debt cancellation as a result of death, disability, or bankruptcy of the                                    
03 student.                                                                                                                
04    * Sec. 20.  AS 14.43.640 is amended by adding a new subsection to read:                                              
05  (e)  Teacher scholarship loans made to a student may not exceed a total of                                            
06 $37,500.                                                                                                                
07    * Sec. 21.  AS 14.43.650(c) is amended to read:                                                                      
08  (c)  A student may not be awarded a teacher scholarship loan under                                                    
09 AS 14.43.600 - 14.43.700 [IF A FAMILY EDUCATION LOAN IS MADE ON                                                         
10 BEHALF OF THE STUDENT UNDER AS 14.43.710 - 14.43.790 OR] if the student                                                 
11 receives a scholarship loan under AS 14.43.090 - 14.43.160 for the same period of                                      
12 attendance [SCHOOL YEAR].                                                                                              
13    * Sec. 22.  AS 14.43.740(a) is amended to read:                                                                      
14  (a)  The provisions of AS 14.43.100, 14.43.110, [14.43.115,] 14.43.120(a) - (d),                                      
15 (i), (m), and (r) - (u), and 14.43.135 apply to a loan made under AS 14.43.710 -                                        
16 14.43.790.                                                                                                              
17    * Sec. 23.  AS 14.43.790(a)(1) is amended to read:                                                                   
18   (1)  "default" means a loan that is 180 [120] days or more past due in                                             
19 repayment;                                                                                                              
20    * Sec. 24.  AS 14.43 is amended by adding a new section to read:                                                     
21  Sec. 14.43.920.  UNAUTHORIZED SCHOLARSHIPS, LOANS, AND                                                                
22 GRANTS.  If a person receives a scholarship, loan, or grant under this title for which                                  
23 the person is not eligible under the provisions of this title, the scholarship, loan, or                                
24 grant is void and the entire balance of money paid is immediately due to the                                            
25 scholarship, loan, or grant fund.  This section is in addition to any penalty that may                                  
26 be imposed according to another provision of law.                                                                       
27    * Sec. 25.  AS 14.44.025 is amended to read:                                                                         
28  Sec. 14.44.025.  PROVISIONS OF SERVICES.  State participation under                                                   
29 Articles VIII and XIII of the Western Regional Higher Education Compact shall be                                        
30 limited to the provision of adequate services and facilities in the professional fields                                
31 of study available through the Professional Student Exchange Program                                                    
01 administered by the Western Interstate Commission on Higher Education.  The                                             
02 Alaska Commission on Postsecondary Education shall establish funding priorities                                         
03 under AS 14.44.035 for the available fields of study by analyzing student access                                        
04 and state labor needs [FIELDS OF LAW, DENTISTRY, MEDICINE,                                                             
05 OSTEOPATHY, PUBLIC HEALTH, VETERINARY MEDICINE, PHARMACY,                                                               
06 PHYSICAL THERAPY, OCCUPATIONAL THERAPY, OPTOMETRY, PODIATRY,                                                            
07 FORESTRY, ARCHITECTURE, GRADUATE NURSING, PETROLEUM                                                                     
08 ENGINEERING, MARITIME TECHNOLOGY, AND GRADUATE LIBRARY                                                                  
09 STUDIES].                                                                                                               
10    * Sec. 26.  AS 14.48.050 is amended by adding a new paragraph to read:                                               
11   (10)  establish fees for the review of institutions requesting approval for                                          
12 participation in the scholarship loan program under AS 14.43.120(b)(2)(B).                                              
13    * Sec. 27.  AS 14.42.032; AS 14.43.115, and 14.43.750(b) are repealed.                                               
14    * Sec. 28.  TRANSITION.  The Alaska Commission on Postsecondary Education may                                        
15 proceed to adopt regulations necessary to implement this Act.  The regulations take effect                              
16 under AS 44.62 (Administrative Procedure Act), but not before July 1, 1995.                                             
17    * Sec. 29.  APPLICABILITY.  A borrower's obligation to pay interest on a student loan,                               
18 as required by AS 14.43.120(k), amended in sec. 9 of this Act, applies to a scholarship loan                            
19 disbursed after June 30, 1995.                                                                                          
20    * Sec. 30.  Section 28 of this Act takes effect immediately under AS 01.10.070(c).                                   
21    * Sec. 31.  Except as provided in sec. 30 of this Act, this Act takes effect July 1, 1995.