Legislature(2001 - 2002)
02/14/2001 08:04 AM House EDU
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 54 - STUDENT LOAN FORGIVENESS CHAIR BUNDE announced the next order of business as HOUSE BILL NO. 54, "An Act relating to reimbursement of student loans; and providing for an effective date." [The committee previously adopted the proposed CSHB 54, version 22-LS0174\C, Ford, 1/30/01, as the work draft.] Number 0779 REPRESENTATIVE DAVIES, sponsor of HB 54, came forward to explain the changes in the bill. In response to Chair Bunde's concern on the fiscal note, he understands that any fiscal impact essentially would come out of the general fund or be subject to appropriation by the legislature. He said he assumes that the cost of this would be paid out of the dividend [from the Alaska Student Loan Corporation]. He presented an amendment that would add another line in existing subsection (t) that would make it clear that the new interest reduction would be subject to appropriation. Number 0857 REPRESENTATIVE GREEN made a motion to adopt Amendment 1, 22- LS0174\C.1, Ford, 2/13/01, which read: Page 1, following line 11: Insert a new bill section to read: "* Sec. 2. AS 14.43.120(t) is amended to read: (t) Payment of interest under (l) of this section, [AND] forgiveness under (s) of this section, and a reduction of interest under (w) of this section are subject to appropriation by the legislature. Money obtained from the sale of bonds by the Student Loan Corporation under AS 14.42.220 may not be appropriated for the payment of interest or the forgiveness of loans." Renumber the following bill sections accordingly. CHAIR BUNDE asked Representative Davies to contrast HB 54 with the other loan forgiveness bills. REPRESENTATIVE DAVIES explained that HB 54 is trying to address situations where students take a student loan and travel outside of the state and to encourage them to return to the state. He expressed that he thinks people are concerned about the effects on their families when children attend school and then relocate outside of the state. The contrast is that the other bills being considered apply just to people engaged in teaching. House Bill 54 would have a much smaller fiscal note but affect a broader class of citizens that come back and actually gain employment in the state. REPRESENTATIVE DAVIES stated that his intent under HB 54 is to encourage people to think about relocating to Alaska. Even though HB 54 applies to both those who stay and who leave, he said his real focus is to get people who are taking classes outside the state to return. One option to consider is whether to restrict the student loan program to people who attend schools in the state of Alaska. One reason he thinks that idea might be rejected is that young people benefit from experiences outside the state. He said students should try to capture that experience and bring it back to Alaska. A second reason is that the university system has a limited class offering. The university has about half the offerings of the average Western U.S. institution. The vast majority of students, when asked why they either leave the University of Alaska to go Outside or go straight from high school to an institution outside the state, say it is because the university doesn't offer the courses that they want. That needs to be recognized in the public policy. He said he thinks that is done in the student loan arena, but HB 54 would try to then fix an unintended consequence of that policy in a limited way and encourage people to think about coming back. Number 1074 DIANE BARRANS, Executive Director, Alaska Commission on Postsecondary Education (ACPE), Department of Education and Early Development (EED), came forward on behalf of the Alaska Student Loan Corporation (ASLC). She thanked the sponsor for eliminating any ambiguity over the funding source for HB 54. She stated that whether it's a reappropriation of the ASLC return to the state or straight general funds, this clarifies and removes the concerns. CHAIR BUNDE asked if Ms. Barrans had a view as to the potential fiscal note. MS. BARRANS answered yes. Using the old forgiveness rate as a basis, the ASLC has created a range of what the cost in year one would be with a half percent reduction up to the full 1 percent reduction. In year one, that would range between $90,000 and $177,000. In year 15 of that repayment schedule it would be between $1.4 [million] on the low end and $2.9 [million] on the high end. CHAIR BUNDE asked whether, if this were entered into a contract for forgiveness, it would reduce the IRS (Internal Revenue Service) potential. MS. BARRANS replied it would. Because there is a required service associated with this benefit, she understands - with the disclaimer that she is not an attorney, much less a tax attorney - it could be excludable. Number 1188 REPRESENTATIVE PORTER made a motion to move proposed CSHB 54, version 22-LS0174\C, Ford, 1/30/01, as amended, from the committee with individual recommendations and attached fiscal notes. There being no objection, CSHB 54(EDU) moved from the House Special Committee on Education.
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