FCCS SB 123: "An Act relating to student loan programs and fees for review of postsecondary education institutions; relating to a postsecondary student exchange program administered by the Western Interstate Commission on Higher Education; and providing for an effective date."
00FREE CONFERENCE COMMITTEE SUBSTITUTE 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 AS 14.43.110 is repealed and reenacted to read: 07 Sec. 14.43.110.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 may 08 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 student 14 is otherwise eligible under AS 14.43.125;
01 (3) $5,500 to a full-time student or $2,000 to a half-time student if the 02 full- or half-time student is attending a career education program that is at least six 03 weeks in length and is otherwise eligible under AS 14.43.125. 04 (b) The commission may make a loan for a summer term, even if the total loan 05 for the school year exceeds the limit imposed under (a) of this section if the loan for the 06 summer term is counted against the limit imposed under (a) of this section for the 07 following school year. 08 (c) The commission shall adopt regulations establishing a minimum amount for 09 which a loan may be made. 10 * Sec. 2. AS 14.43.120(a) is amended to read: 11 (a) Proceeds from a scholarship loan to a full-time student may only be used for 12 books, tuition and required fees, loan origination [GUARANTEE] fees, and room and 13 board. Proceeds from a scholarship loan to a half-time student may only be used for 14 books, tuition and required fees, and loan origination [GUARANTEE] fees. 15 * Sec. 3. AS 14.43.120(b) is amended to read: 16 (b) Scholarship loans may only be used to attend a 17 (1) career education program operating on a sound fiscal basis that has 18 [BEEN] 19 (A) operated [APPROVED BY THE COMMISSION BEFORE 20 JULY 1, 1986; 21 (B) OPERATING] for two years before the borrower attends; and 22 (B) submitted an executed program participation agreement 23 as required by the commission; [OR 24 (C) OPERATING FOR ONE YEAR BEFORE THE 25 BORROWER ATTENDS AND THE COMMISSION DETERMINES THE 26 PROGRAM IS OPERATING ON A FISCALLY SOUND BASIS;] or 27 (2) a college or university that 28 (A) has operated [BEEN APPROVED BY THE COMMISSION 29 BEFORE JULY 1, 1986, OR HAS BEEN OPERATING] for at least two years 30 before the borrower attends; 31 (B) is accredited by a national or regional accreditation
01 association recognized by the Council on Postsecondary Accreditation or is 02 approved by the commission; [AND] 03 (C) if the loans are federally insured, is approved by the United 04 States Secretary of Education; 05 (D) is a degree granting institution; and 06 (E) has submitted an executed program participation 07 agreement as required by the commission. 08 * Sec. 4. AS 14.43.120(d) is amended to read: 09 (d) Scholarship loans may not be made to a student 10 (1) for more than a total of $42,500 for [FIVE YEARS OF] 11 undergraduate study; 12 (2) for more than a total of $47,500 for [FIVE YEARS OF] graduate 13 study; 14 (3) for more than a combined total of $60,000 for [EIGHT YEARS OF] 15 undergraduate and graduate study; 16 (4) to attend an institution, [OTHER THAN A NONPROFIT 17 INSTITUTION,] if the total amount of scholarship loans made to students to attend that 18 institution exceeds $100,000 and the default rate on those loans is (A) greater than 20 19 percent but less than 25 percent, and the institution is unable to reduce its default 20 rate within 24 months after the rate determination; or (B) equal to or greater than 21 25 percent for two consecutive calendar years; for purposes of this paragraph, the 22 default rate shall annually be determined by the commission from loans required 23 to be repaid under (g) of this section on or after July 1, 1996; if a scholarship loan 24 is refused based on the provisions of this paragraph and, under a subsequent 25 default rate determination, an institution's default rate does not exceed the limits 26 established under this paragraph, the commission may not refuse to issue a 27 scholarship loan to attend that institution based on the provisions of this paragraph 28 [EXCEEDS THE PROGRAM DEFAULT RATE BY MORE THAN 150 PERCENT 29 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 the 05 principal and interest on the loan begins six months [NOT LATER THAN ONE YEAR] 06 after the borrower is no longer enrolled under (c) of this section. The borrower 07 shall repay [BORROWER'S STUDIES ARE TERMINATED. THE LOAN SHALL 08 PROVIDE FOR REPAYMENT OF] the total amount owed in periodic installments of 09 at least $50 a month over a period of [IN] not more than 15  years from the 10 commencement of the repayment obligation [IF THE LOAN IS TO A FULL-TIME 11 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 shall 15 repay the loan in accordance with the agreement. A borrower may make payments 16 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 [CHARGED] 20 at the time that the loan is disbursed [AWARDED]. Additionally, the borrower shall 21 pay [PROVISION SHALL BE MADE FOR PAYMENT OF] all fees and costs incurred 22 in collection [OF THE AMOUNT OWED] on the loan if it becomes delinquent or in 23 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 that 28 repayment of the remaining balance is accelerated and due by mailing [SENDING] the 29 borrower a notice at the most recent address provided to the commission by the 30 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 pay 07 interest shall continue unless the state pays the interest by appropriation under (t) 08 [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, return 16 to at least half-time student status in good standing in 17 (A) a career education program, college, or university in the state 18 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 present 21 in the state while attending the career education program, college, or university; 22 a borrower is not eligible for deferral under this paragraph for a period longer 23 than eight years; 24 (3) serving an initial period of up to three [SIX] years on active duty as 25 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 Peace 27 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 Service 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 enrolled 10 under (c) of this section [IS A FULL-TIME OR HALF-TIME STUDENT]; and 11 (2) deferments under (k) of this section. 12 * Sec. 11. AS 14.43.120(m) is amended to read: 13 (m) In case of hardship, the commission may extend repayment of a loan for an 14 additional period of up to five years [IN INCREMENTS NO LONGER THAN 12 15 MONTHS EACH]. 16 * Sec. 12. AS 14.43.120(q) is amended to read: 17 (q) For the purposes of this section, a loan is in default if a loan payment is 180 18  or more days past due. 19 * Sec. 13. AS 14.43.120(t) is amended to read: 20 (t) Payment of interest under (l) of this section and forgiveness 21 [FORGIVENESS] under (s) of this section are [IS] subject to appropriation by the 22 legislature. Money obtained from the sale of bonds by the Student Loan Corporation 23 under AS 14.42.220 may not be appropriated for the payment of interest or the 24 forgiveness of loans. 25 * Sec. 14. AS 14.43.120(u) is amended to read: 26 (u) The commission by regulation shall set a [A] loan origination 27 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total scholarship loan 28 amount, to [SHALL] be assessed upon a scholarship loan that is funded from the student 29 loan fund of the Alaska Student Loan Corporation. The loan origination 30 [GUARANTEE] fee shall be deducted at the time [ADDED AS A FINANCE 31 CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT AWARDED,
01 NOTWITHSTANDING THE LOAN LIMITS SET OUT AT AS 14.43.110 AND 02 14.43.115]. Subject to appropriation, the loan origination [GUARANTEE] fees shall 03 be deposited into an origination [A GUARANTEE] fee account within the student loan 04 fund of the Alaska Student Loan Corporation, and subsequently used [TRANSFERRED] 05 by the corporation [COMMISSION TO LOAN ACCOUNTS WITHIN THE STUDENT 06 LOAN FUND] to offset losses incurred [DUE TO STUDENT LOAN DEBT 07 CANCELLATION] as a result of death, disability, default, or bankruptcy of the 08 borrower [STUDENT]. 09 * Sec. 15. AS 14.43.125(a) is amended to read: 10 (a) A person may apply for and obtain a scholarship loan if the person 11 (1) is 12 (A) enrolled as a full-time student in a career education, associate, 13 baccalaureate, or graduate degree program; 14 (B) enrolled as a half-time student in a career education, 15 associate, baccalaureate, or graduate degree program [IN] 16 (i) in the state; or 17 (ii) out of the state [A CAREER EDUCATION, 18 ASSOCIATE, BACCALAUREATE, OR GRADUATE DEGREE 19 PROGRAM] and is physically present in this [THE] state while attending 20 that [THE CAREER EDUCATION, ASSOCIATE, BACCALAUREATE, 21 OR GRADUATE DEGREE] program; or 22 (C) a graduate of a high school or the equivalent, or scheduled 23 for graduation from a high school within six months, with sufficient credits to be 24 admitted to a career education program or to an accredited college or university; 25 (2) is not delinquent or in default on a previously awarded scholarship 26 loan; and 27 (3) is a resident of the state at the time of application for the loan; for 28 purposes of this section, a person qualifies as a resident of the state if at the time of 29 application for the loan the person 30 (A) has been physically present in the state for at least one year 31 [TWO YEARS] immediately before the time of application for the loan;
01 (B) is dependent on a parent or guardian for care, the parent or 02 guardian has been present in the state for at least one year [TWO YEARS] 03 immediately before the time of application for the loan, and the person has been 04 present in the state for at least one year of the immediately preceding five years 05 except that the commission may by a two-thirds vote, acting upon a written 06 appeal by the person, grant an exemption to the requirement that the person has 07 been present in the state for one year of the immediately preceding five years; 08 (C) has been physically present in the state [, OR IS A 09 DEPENDENT OF A PARENT OR GUARDIAN WHO HAS BEEN 10 PHYSICALLY PRESENT IN THE STATE,] for at least one year [TWO 11 YEARS] immediately before the applicant was absent from the state and the 12 absence is due solely to 13 (i) serving an initial period of up to three [SIX] years on 14 active duty as a member of the armed forces of the United States; 15 (ii) serving for up to three years as a full-time volunteer 16 under the Peace Corps Act; 17 (iii) serving for up to three years as a full-time volunteer 18 under the Domestic Volunteer Service Act of 1973; 19 (iv) required medical care for the applicant or the 20 applicant's immediate family; 21 (v) being a person who otherwise qualifies as a resident 22 and is accompanying a spouse who qualifies as a resident under (i) - (iv) 23 of this paragraph; [OR] 24 (vi) an absence allowed under (D)(i) - (iv) of this 25 paragraph; or 26 (D) [HAS BEEN PHYSICALLY PRESENT IN THE STATE, 27 OR] is a dependent of a parent or guardian who has been physically present in 28 the state [,] for at least one year [TWO YEARS] immediately before [THE 29 APPLICANT OR] the parent or guardian was absent from the state and the 30 absence is due solely to 31 (i) participating in a foreign exchange student program
01 recognized by the commission; 02 (ii) attending a school as a full-time student; 03 (iii) full-time employment by the state; 04 (iv) being a member of or employed full-time by the 05 state's congressional delegation; 06 (v) being a person who otherwise qualifies as a resident 07 and is accompanying a spouse who qualifies as a resident under (i) - (iv) 08 of this paragraph; 09 (4) does not have a past due child support obligation established by court 10 order or by the child support enforcement division under AS 25.27.160 - 25.27.220 at 11 the time of application; and 12 (5) has not, within the previous five years, had a scholarship loan 13 discharged or written off by the commission for any reason. 14 * Sec. 16. AS 14.43.125(c) is amended to read: 15 (c) A person may not be awarded a scholarship loan under AS 14.43.090 - 16 14.43.160 [IF A FAMILY EDUCATION LOAN IS MADE ON BEHALF OF THAT 17 PERSON UNDER AS 14.43.710 - 14.43.790 OR] if that person receives a teacher 18 scholarship loan under AS 14.43.600 - 14.43.700 for the same period of attendance 19 [SCHOOL YEAR]. 20 * Sec. 17. AS 14.43.150 is amended by adding a new subsection to read: 21 (d) An assignment of wages authorized under this section that is made under 22 court order has priority as against an attachment, execution, or other assignment, except 23 for an assignment for payment of child support under AS 25.27.070, restitution to a 24 crime victim authorized under AS 12.55.045, or as otherwise ordered by the court. 25 * Sec. 18. AS 14.43.300(g) is amended to read: 26 (g) The commission by regulation shall set a [A] loan origination 27 [GUARANTEE] fee, not to exceed five [OF ONE] percent of the total memorial 28 scholarship loan amount, to [SHALL] be assessed upon a memorial scholarship loan. 29 The loan origination [GUARANTEE] fee shall be deducted at the time [ADDED 30 AS A FINANCE CHARGE TO] the [TOTAL] loan is disbursed [AMOUNT 31 AWARDED]. Subject to appropriation, the loan origination [GUARANTEE] fee shall
01 be deposited into an origination [A GUARANTEE] fee account within the memorial 02 scholarship revolving loan fund, and subsequently transferred by the commission to the 03 appropriate memorial scholarship accounts within the memorial scholarship revolving 04 loan fund to offset losses incurred due to loan debt cancellation as a result of death, 05 disability, or bankruptcy of the student. 06 * Sec. 19. AS 14.43.640 is amended by adding a new subsection to read: 07 (e) Teacher scholarship loans made to a student may not exceed a total of 08 $37,500. 09 * Sec. 20. AS 14.43.650(c) is amended to read: 10 (c) A student may not be awarded a teacher scholarship loan under AS 14.43.600 11 - 14.43.700 [IF A FAMILY EDUCATION LOAN IS MADE ON BEHALF OF THE 12 STUDENT UNDER AS 14.43.710 - 14.43.790 OR] if the student receives a scholarship 13 loan under AS 14.43.090 - 14.43.160 for the same period of attendance [SCHOOL 14 YEAR]. 15 * Sec. 21. AS 14.43.740(a) is amended to read: 16 (a) The provisions of AS 14.43.100, 14.43.110, [14.43.115,] 14.43.120(a) - (d), 17 (i), (m), and (r) - (u), and 14.43.135 apply to a loan made under AS 14.43.710 - 18 14.43.790. 19 * Sec. 22. AS 14.43.790(a)(1) is amended to read: 20 (1) "default" means a loan that is 180  days or more past due in 21 repayment; 22 * Sec. 23. AS 14.43 is amended by adding a new section to read: 23 Sec. 14.43.920. UNAUTHORIZED SCHOLARSHIPS, LOANS, AND 24 GRANTS. If a person receives a scholarship, loan, or grant under this title for which 25 the person is not eligible under the provisions of this title, the scholarship, loan, or grant 26 is void and the entire balance of money paid is immediately due to the scholarship, loan, 27 or grant fund. This section is in addition to any penalty that may be imposed according 28 to another provision of law. 29 * Sec. 24. AS 14.44.025 is amended to read: 30 Sec. 14.44.025. PROVISIONS OF SERVICES. State participation under 31 Articles VIII and XIII of the Western Regional Higher Education Compact shall be
01 limited to the provision of adequate services and facilities in the professional fields of 02 study available through the Professional Student Exchange Program administered 03 by the Western Interstate Commission on Higher Education. The Alaska 04 Commission on Postsecondary Education shall establish funding priorities under 05 AS 14.44.035 for the available fields of study by analyzing student access and state 06 labor needs [FIELDS OF LAW, DENTISTRY, MEDICINE, OSTEOPATHY, PUBLIC 07 HEALTH, VETERINARY MEDICINE, PHARMACY, PHYSICAL THERAPY, 08 OCCUPATIONAL THERAPY, OPTOMETRY, PODIATRY, FORESTRY, 09 ARCHITECTURE, GRADUATE NURSING, PETROLEUM ENGINEERING, 10 MARITIME TECHNOLOGY, AND GRADUATE LIBRARY STUDIES]. 11 * Sec. 25. AS 14.48.050 is amended by adding a new paragraph to read: 12 (10) establish fees for the review of institutions requesting approval for 13 participation in the scholarship loan program under AS 14.43.120(b)(2)(B). 14 * Sec. 26. AS 14.42.032; AS 14.43.115, and 14.43.750(b) are repealed. 15 * Sec. 27. TRANSITION. The Alaska Commission on Postsecondary Education may 16 proceed to adopt regulations necessary to implement this Act. The regulations take effect under 17 AS 44.62 (Administrative Procedure Act), but not before July 1, 1996. 18 * Sec. 28. APPLICABILITY. A borrower's obligation to pay interest on a student loan, as 19 required by AS 14.43.120(k), amended in sec. 9 of this Act, applies to a scholarship loan 20 disbursed after June 30, 1996. 21 * Sec. 29. Section 27 of this Act takes effect immediately under AS 01.10.070(c). 22 * Sec. 30. Except as provided in sec. 29 of this Act, this Act takes effect July 1, 1996.