03/20/1997 03:45 PM House HES

 HB 157 - REPEAL DENIAL OF OCC LIC FOR DEBTS                                   
                                                                               
 Number 1926                                                                   
                                                                               
 CHAIRMAN BUNDE announced the next item on the agenda was HB 157,              
 "An Act repealing statutes that condition receipt of certain                  
 occupational licenses on compliance with student loan repayment               
 provisions and compliance with support orders or payment schedules            
 related to support orders."  He said this is the second time the              
 committee has heard this bill and noted that the sponsor was here.            
                                                                               
 Number 1941                                                                   
                                                                               
 REPRESENTATIVE JEANNETTE JAMES, Sponsor of HB 157, referred to the            
 committee substitute, CSHB 157(HES).  She referred to testimony               
 about the individual's case which prompted this legislation and               
 presented new information about it.  This person was given two                
 options; to pay the $5,900 or $539 a month.  The commission would             
 not give him his occupational license until after he had made                 
 several monthly payments in a row.  This person paid a total of               
 $3,234 in a lump sum in order to get his license renewed.  He owed            
 $30,000 total, but paid $3,234 in monthly payments to get his                 
 license renewed.                                                              
                                                                               
 REPRESENTATIVE JAMES stated her philosophy that a deal is a deal on           
 both sides of the issue.  If a person has an obligation, they ought           
 to pay it.  If they don't pay it, they need to face the                       
 consequences.  Changing the consequences after the deal has been              
 made is what she objected to.  Even before this provision regarding           
 license renewal was entered into law, she believed that sufficient            
 amount of tools were available for the commission to collect money.           
 She referred to her experiences in this business and reiterated               
 that the ability to collect this money was there.  She objected to            
 the fact that this was such an easy method to get someone's                   
 attention.                                                                    
                                                                               
 REPRESENTATIVE JAMES explained that she did not know this person,             
 who prompted the bill, but was told of some of his extenuating                
 circumstances over the phone.  She restated her philosophy that               
 only people who received their student loans after the time the law           
 was put into effect should be subject to license renewal.                     
                                                                               
 TAPE 97-21, SIDE B                                                            
 Number 0000                                                                   
                                                                               
 MIKE MAHER, Director, Student Financial Aid, Postsecondary                    
 Education Commission, Department of Education, prefaced his                   
 comments by saying that when people sign a promissory note the                
 financial aid advisors indicate that the agency or its                        
 representatives, "may institute legal action to force repayment of            
 the loan."  This indicates to any borrowers that the commission               
 would try to utilize any mechanism or tool that the legislature               
 would authorize them to use.  A person could default on their                 
 mortgage, their credit cards, get divorced, default on their car              
 and truck and then turn around and ask for a $9,500 loan and                  
 receive it.  The commission has no authority to withhold that loan,           
 there is no credit assessment up-front.  Essentially it is an open            
 door policy.  This up-front credit assessment is another tool which           
 the commission is in the process of seeking from the legislature              
 this year.                                                                    
                                                                               
 Number 0100                                                                   
                                                                               
 MR. MAHER mentioned that each of these borrowers has been contacted           
 repeatedly about their loan through automated letters and personal            
 contacts, it has not been easy for them to default on their loans.            
 He suggested that they have been contacted eight to ten times.  The           
 commission has tried to help the borrowers work out some resolution           
 prior to the license renewal.  There are contingency plans for a              
 number of emergencies; medical write-offs, a variety of deferments.           
 The commission tries to work with the borrowers.  They understand             
 that there are extenuating circumstances.  When all is said and               
 done, he felt this tool worked.  The person, whose case was                   
 mentioned, did come up with some money and is now on a repayment              
 schedule.                                                                     
                                                                               
 Number 0176                                                                   
                                                                               
 MR. MAHER stated that there have been 61 individuals who have                 
 fallen into this default category, 48 of them have reached some               
 sort of payment arrangement with the commission.  The amount                  
 defaulted on, for the 61 individuals over the course of a 10 to 15            
 year repayment period, would be about $850,000.  This amount of               
 money would be lost in their repayment stream to the loan fund over           
 the next 10 or 15 years, depending on the length of payment                   
 schedule.  The fiscal note showed that the commission benefited               
 from instituting the occupational licensing intervention program.             
 Roughly $63,000 was made in payments over that one year period.               
 Given the fact that licensing is on a two year renewal, the                   
 commission estimated that half of the people have been impacted.              
 The other half would be impacted in the next year.  The 61 person             
 figure would be doubled.  The fiscal note says $126,000 would be              
 potentially lost yearly from the revenue stream over the next ten             
 or fifteen years.                                                             
                                                                               
 Number 0261                                                                   
                                                                               
 REPRESENTATIVE JAMES did not agree that the money was lost, she               
 felt it was collectable with other tools available to the                     
 commission.  She referred to Chairman Bunde's previous testimony              
 that in the past these loans were seen as a gift.  She felt this              
 new program was severe, particularly when the letter to this                  
 borrower indicated the terms and gave him an opportunity to appeal,           
 but the only thing he was allowed to appeal was the claim that he             
 was in default.  She expressed concern that there is no appeal.               
 She honestly believed that there were other ways to collect that              
 money if it is aggressively pursued.                                          
                                                                               
 Number 0366                                                                   
                                                                               
 REPRESENTATIVE GREEN suggested that if CSHB 157(HES) were to pass,            
 the agreements reached from three-fourths of those affected would             
 be nullified.                                                                 
                                                                               
 Number 0397                                                                   
                                                                               
 MR. MAHER assumed that the commission would not be in a situation             
 where they would refund money, but would potentially be in a                  
 situation where the payment schedule would stop for those                     
 individuals currently on a payment schedule.                                  
                                                                               
 Number 0411                                                                   
                                                                               
 REPRESENTATIVE GREEN clarified on a 15 year note, or even on a 10             
 year note, the majority of outstanding debt would then be lost.               
                                                                               
 Number 0430                                                                   
                                                                               
 CHAIRMAN BUNDE closed public testimony.                                       
                                                                               
 Number 0437                                                                   
                                                                               
 REPRESENTATIVE DYSON made a motion to move CSHB 157(HES) with                 
 individual recommendations.                                                   
                                                                               
 Number 0448                                                                   
                                                                               
 REPRESENTATIVE KEMPLEN objected to the motion.                                
                                                                               
 A roll call vote was taken on CSHB 157(HES).  Representatives                 
 Green, Vezey and Dyson voted yea.  Representatives Brice, Kemplen             
 and Bunde voted nay.  Representative Porter was absent for the                
 vote.  CHAIRMAN BUNDE announced that the vote was three to three              
 and CSHB 157(HES) did not advance.