02/11/2009 08:00 AM House EDUCATION

HB 109-EDUC. LOANS: SUPPLEMENTAL & FAMILY                                                                                     
                                                                                                                                
8:59:05 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON announced  that the next order of  business would be                                                               
HOUSE  BILL NO.  109, "An  Act  relating to  eligibility for  the                                                               
Alaska supplemental  education loan  program and to  the interest                                                               
rate  for a  loan made  under  the Alaska  family education  loan                                                               
program; and providing for an effective date."                                                                                  
                                                                                                                                
8:59:46 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON pointed  out  a zero  fiscal  note accompanies  the                                                               
legislation.   He highlighted  the analysis  of the  fiscal note,                                                               
which read as follows:                                                                                                          
                                                                                                                                
     This  bill  is  intended  to  improve  the  quality  of                                                                    
     education  loans sufficiently  to  maintain the  Alaska                                                                    
     Student  Loan Corporation's  (ASLC)  capacity to  issue                                                                    
     revenue  bonds,  backed  by  loan  assets,  to  finance                                                                    
     future  lending  activities.    Implementation  of  the                                                                    
     proposed changes is not  expected to require additional                                                                    
     appropriations.   It  is  feasible  that these  changes                                                                    
     will positively  impact ASLC revenues  through improved                                                                    
     collections on  the loans,  but it  is not  possible to                                                                    
     estimate  that   impact  at  this   time  due   to  the                                                                    
     complexity of factors impacting loan collections.                                                                          
                                                                                                                                
CHAIR  SEATON explained  that the  problem is  not being  able to                                                               
issue the  bonds to be  able to give  student loans.   The change                                                               
proposed in HB 109 will rectify the aforementioned.                                                                             
                                                                                                                                
9:01:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  inquired as  to  how  many applicants  are                                                               
involved in the supplemental loan program.                                                                                      
                                                                                                                                
9:01:18 AM                                                                                                                    
                                                                                                                                
DIANNE   BARRANS,  Executive   Director,  Alaska   Commission  on                                                               
Postsecondary  Education  (ACPE),  Department  of  Education  and                                                               
Early Development (EED);, Executive  Officer, Alaska Student Loan                                                               
Corporation,  answered  that in  the  2008-2009  year, there  are                                                               
approximately   5,100  borrowers.     In   further  response   to                                                               
Representative Munoz, Ms. Barrans  said that she couldn't specify                                                               
the percentage of those who  aren't meeting the credit standards.                                                               
She explained  that currently  the criteria  treats no  credit as                                                               
good  credit  and only  looks  for  adverse  events on  a  credit                                                               
history.  A credit criterion hasn't  been applied to that pool of                                                               
borrowers  in order  to know  who would  or would  not require  a                                                               
credit worthy  co-signer.  Ms.  Barrans did inform  the committee                                                               
that 24  percent of those  5,100 borrowers  are under the  age of                                                               
21, which raises the question  as to whether they have sufficient                                                               
credit activity  to produce  a credit  score.   She said  for the                                                               
other 75  percent who  are 21  years of age  or older  would have                                                               
some credit criteria.  She noted  that she has a project underway                                                               
to sample the  5,100 borrowers, but the results  haven't yet been                                                               
received.                                                                                                                       
                                                                                                                                
9:02:47 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON, upon  determining no one wished  to testify, closed                                                               
public testimony.                                                                                                               
                                                                                                                                
9:03:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH pledged support for HB 109.                                                                                 
                                                                                                                                
9:04:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ moved  to report  HB 109  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection, it was so ordered.                                                                            
                                                                                                                                
9:05:05 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:05 a.m. to 9:11 a.m.