00 HOUSE BILL NO. 485 01 "An Act relating to the powers and duties of the Alaska Commission on 02 Postsecondary Education; relating to terms and conditions of education loans; and 03 providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 14.42.030(b) is repealed and reenacted to read: 06 (b) The commission shall 07 (1) administer the loan and grant programs under AS 14.43.090 - 08 14.43.790; 09 (2) administer the provisions of AS 14.48 (regulation of postsecondary 10 educational institutions); and 11 (3) resolve disputes that exist or arise under a consortium or other 12 cooperative agreement between institutions of public and private higher education in 13 the state. 14 * Sec. 2. AS 14.42.030(c) is amended to read: 01 (c) The commission may 02 (1) adopt regulations under AS 44.62 (Administrative Procedure 03 Act) to carry out the purposes of AS 14.43.090 - 14.43.790 and AS 14.48, and 04 AS 14.43.910 and 14.43.920 as they relate to the purposes of AS 14.43.090 - 05 14.43.790; 06 (2) delegate to the staff or a subcommittee of the commission any 07 duty imposed or power granted to the commission by AS 14.43 or AS 14.48 except 08 its power to adopt regulations and its duty to consider appeals under 09 AS 14.43.100(b) and AS 14.48.120; 10 (3) establish task forces, committees, or subcommittees, not necessarily 11 consisting of commission members, to advise and assist the commission in carrying 12 out its functions ; 13 (4) [ASSIGNED BY STATE OR FEDERAL STATUTE. THE 14 COMMISSION MAY] contract with [,] or use [,] existing institutions of higher 15 education or other individuals or organizations to make studies, conduct surveys, 16 submit recommendations, or otherwise contribute to the work of the commission ; 17 (5) enter into agreements with government or postsecondary 18 education officials of this state or another state to provide postsecondary 19 educational services and programs to Alaska residents pursuing a medical 20 education; an agreement with government or postsecondary education officials of 21 another state must be limited to services and programs that are unavailable in 22 Alaska; and 23 (6) establish fees for the review of an out-of-state institution that 24 is requesting approval for participation in the Alaska student loan program or the 25 Alaska family education loan program and that is not accredited by a national or 26 regional accreditation association recognized by the Council on Recognition of 27 Postsecondary Accreditation [. THE COMMISSION MAY APPOINT A 28 COMMITTEE TO BE RESPONSIBLE FOR THE AREA OF STUDENT FINANCIAL 29 AID]. 30 * Sec. 3. AS 14.42.055 is amended to read: 31 Sec. 14.42.055. Consortia. All parties that are signatory to a consortium 01 agreement between the University of Alaska and a private university or college must 02 abide by a decision rendered by the commission when disagreements arise or exist 03 between the parties. For purposes of this section and AS 14.42.030(b)(3) 04 [AS 14.42.030(b)(6)], "consortium" means a cooperative arrangement between two or 05 more public or private institutions of higher education specified in agreements or 06 memoranda of understanding to permit sharing of facilities, instructional opportunities, 07 and other educational services in such a way that the integrity of each institution party 08 to the consortium is preserved while at the same time the institutions cooperatively 09 plan the academic calendar, scheduling, use of personnel and facilities, and educational 10 programs and offerings to the maximum advantage of the students and faculties of the 11 institutions that are parties to a consortium. 12 * Sec. 4. AS 14.42.200 is amended to read: 13 Sec. 14.42.200. General powers. In addition to other powers granted in this 14 chapter, the corporation may 15 (1) sue and be sued in its own name; 16 (2) adopt an official seal; 17 (3) adopt regulations under AS 44.62 (Administrative Procedure Act) 18 to carry out the purposes of this chapter; 19 (4) make and execute agreements, contracts, and other instruments 20 necessary or convenient in the exercise of the powers and functions of the corporation, 21 including contracts with a person or governmental entity; 22 (5) receive, administer, and comply with the conditions and 23 requirements respecting any appropriation, gift, grant, or donation of property or 24 money; 25 (6) borrow money as provided in this chapter to carry out its corporate 26 purposes and issue its obligations as evidence of the borrowing; 27 (7) include in a borrowing the amounts to pay financing charges, 28 interest on the obligations for a period not exceeding one year after the date on which 29 the corporation estimates funds will otherwise be available to pay the interest, 30 consultant, advisory, and legal fees, and other expenses necessary or incident to the 31 borrowing; 01 (8) invest or reinvest, subject to its contracts with noteholders and 02 bondholders, money held by the corporation as set out in AS 37.10.071; 03 (9) collect from a borrower amounts owed with respect to a 04 [STUDENT] loan held by the corporation [HAS PURCHASED]; 05 (10) gather information on postsecondary education financial 06 resources [STUDENT LOANS] available to residents of Alaska and disseminate the 07 information to reasonably assure that qualified residents are aware of those financial 08 resources [AVAILABLE TO THOSE ATTENDING OR DESIRING TO ATTEND 09 INSTITUTIONS FOR WHICH LOANS MAY BE MADE UNDER AS 14.43.090 - 10 14.43.325, 14.43.600 - 14.43.700, OR 14.43.710 - 14.43.750]; 11 (11) service [STUDENT] loans held by the corporation; 12 (12) purchase or participate in the purchase of education [STUDENT] 13 loans; 14 (13) contract in advance for the purchase or sale of education 15 [STUDENT] loans; 16 (14) sell or participate in the sale, either public or private and on terms 17 authorized by the board, of education [STUDENT] loans to the Student Loan 18 Marketing Association or to other purchasers; 19 (15) collect and pay reasonable fees and charges in connection with 20 loan [THE] purchase, sale, and servicing [OF STUDENT LOANS]; 21 (16) enter into agreements with the federal government, including 22 guaranty agreements and supplemental guaranty agreements as described in the United 23 States Higher Education Act of 1965, as necessary to provide for the receipt by the 24 corporation of administrative allowances and other benefits available under the United 25 States Higher Education Act of 1965; 26 (17) administer federal money allotted to the state involving insured 27 education [STUDENT] loans and related administrative costs and other matters; 28 (18) enter into agreements with the commission [ALASKA 29 COMMISSION ON POSTSECONDARY EDUCATION] relating to education 30 [STUDENT] loans, the administration of the education [STUDENT] loan fund created 31 under AS 14.42.210, and the payment of and security for bonds of the corporation; 01 (19) to the extent permitted under contracts with bondholders [BOND 02 HOLDERS], consent to the modification of the rate of interest, time of payment of an 03 installment of principal or interest, or other terms of a [STUDENT] loan held 04 [PURCHASED] by the corporation; 05 (20) procure insurance against any loss in connection with the operation 06 of its programs; 07 (21) provide advisory services to borrowers and other participants in 08 the corporation's programs; 09 (22) enter into credit facility agreements and make pledges, covenants, 10 and agreements with respect to the repayment of borrowings under the credit facility 11 agreements; 12 (23) do all acts necessary, convenient, or desirable to carry out the 13 powers expressly granted or necessarily implied in AS 14.42.100 - 14.42.390. 14 * Sec. 5. AS 14.42.210 is amended to read: 15 Sec. 14.42.210. Education [STUDENT] loan fund. (a) The education 16 [STUDENT] loan fund is established in the corporation. The education [STUDENT] 17 loan fund is a trust fund to be used to carry out the purposes of AS 14.42.100 - 18 14.42.390, AS 14.43.090 - 14.43.160 [AS 14.43.090 - 14.43.325], 14.43.600 - 19 14.43.700, and 14.43.710 - 14.43.750. The fund consists of money or assets 20 appropriated or transferred to the corporation for the fund and money or assets 21 deposited in it by the corporation. The corporation may establish separate accounts 22 in the fund. 23 (b) Money and other assets of the education [STUDENT] loan fund may be 24 used to secure bonds of the corporation, pay the costs of administration of the fund, 25 invest [INVESTED] in education [STUDENT] loans and investments under 26 AS 37.10.071 , fund [AND USED TO PURCHASE] loans approved under 27 AS 14.43.090 - 14.43.160 [AS 14.43.090 - 14.43.325], 14.43.600 - 14.43.700, or 28 14.43.710 - 14.43.750 , and pay the costs of administering the loans and collecting 29 delinquent loans if those costs are not recovered from the borrower . 30 (c) The education [STUDENT] loan fund shall be administered by the 31 commission [ALASKA COMMISSION ON POSTSECONDARY EDUCATION]. The 01 corporation and the commission may enter into agreements relating to the 02 administration of the fund. The corporation may assign its rights under the agreements 03 for the benefit and security of holders of its bonds. 04 * Sec. 6. AS 14.42.230 is amended to read: 05 Sec. 14.42.230. Trust indentures and trust agreements. An issue of bonds 06 by the corporation may be secured by a trust indenture or trust agreement between the 07 corporation and a corporate trustee, which may be a trust company, bank, or national 08 banking association, with corporate trust powers, located inside or outside the state, or 09 by a secured loan agreement or other instrument or under a resolution giving powers 10 to a corporate trustee by means of which the corporation may 11 (1) enter into agreements with the trustee or the bondholders that the 12 board determines to be necessary or desirable, including covenants, provisions, 13 limitations, and other agreements as to the 14 (A) application, investment, deposit, use, and disposition of the 15 proceeds of bonds of the corporation or of money or other property of the 16 corporation or in which it has an interest; 17 (B) fixing and collecting loan payments and other consideration 18 for an education [A STUDENT] loan; 19 (C) assignment by the corporation of its rights in a student loan 20 or in a mortgage or other security interest created with respect to an education 21 [A STUDENT] loan to a trustee for the benefit of bondholders; 22 (D) terms and conditions upon which additional bonds of the 23 corporation may be issued; 24 (E) vesting in a trustee of rights, powers, duties, funds, or 25 property in trust for the benefit of bondholders, including the right to enforce 26 payment, performance, and other rights of the corporation or of the 27 bondholders, under an education [A STUDENT] loan or a security interest 28 created with respect to an education [A STUDENT] loan; 29 (2) pledge, mortgage, or assign money, agreements, property, or other 30 assets of the corporation either presently in hand or to be received in the future, or 31 both; and 01 (3) provide for other matters that in any way affect the security or 02 protection of the bonds. 03 * Sec. 7. As 14.42 is amended by adding a new section to read: 04 Article 3. General Provisions. 05 Sec. 14.42.990. Definitions. In this chapter, 06 (1) "commission" means the Alaska Commission on Postsecondary 07 Education; 08 (2) "corporation" means the Alaska Student Loan Corporation; 09 (3) "education loan" means a loan that may be financed under 10 AS 14.42.210 from the education loan fund. 11 * Sec. 8. AS 14.43.090 is repealed and reenacted to read: 12 Sec. 14.43.090. Alaska student loan program. (a) The Alaska student loan 13 program is established to provide loans to students to assist in paying the costs of 14 postsecondary education. The provisions of AS 14.43.090 - 14.43.160 and 14.43.910 - 15 14.43.990 apply to Alaska student loans. 16 (b) Upon approval by the commission of a loan, a loan disbursement shall be 17 financed by the corporation, and the loan becomes an asset of the corporation. 18 (c) Repayments of principal and interest on a loan shall be paid into the 19 education loan fund created under AS 14.42.210. If money made available by the 20 corporation is inadequate to fully fund eligible loan applications for academic year, 21 additional financing from the general fund may be requested and appropriated for that 22 year. 23 * Sec. 9. AS 14.43.110(a) is amended to read: 24 (a) In a school year, the commission may make a loan not to exceed 25 (1) $8,500 to a full-time undergraduate student or $4,500 [$5,000] to 26 a half-time undergraduate student attending a college or university if the full- or half- 27 time student is otherwise eligible under AS 14.43.125; 28 (2) $9,500 to a full-time graduate student or $5,000 [$4,500] to a half- 29 time graduate student attending a college or university if the full- or half-time graduate student 30 is otherwise eligible under AS 14.43.125; or 31 (3) $5,500 to a full-time student or $2,800 [$2,000] to a half-time 01 student if the full- or half-time student is attending a career education program that is 02 [AT LEAST SIX WEEKS IN LENGTH AND IS] otherwise eligible under 03 AS 14.43.125. 04 * Sec. 10. AS 14.43.120 is repealed and reenacted to read: 05 Sec. 14.43.120. Conditions on award and use of a loan. (a) The 06 commission may not award loans to a student for more than 07 (1) a total of $42,500 for undergraduate study; 08 (2) a total of $47,500 for graduate study; or 09 (3) a combined total of $60,000 for undergraduate and graduate study. 10 (b) A student may only use a loan to attend 11 (1) a career education institution operating on a sound fiscal basis that 12 (A) is accredited by a national or regional accreditation 13 association recognized by the Council on Recognition of Postsecondary 14 Accreditation or that has been authorized by the commission and has operated 15 for at least two years before the borrower attends; and 16 (B) has submitted an executed program participation agreement 17 as required by the commission; or 18 (2) a degree-granting college or university that 19 (A) has operated for at least two years before the borrower 20 attends; 21 (B) is accredited by a national or regional accreditation 22 association recognized by the Council of Recognition of Postsecondary 23 Accreditation; 24 (C) is approved by the United States Secretary of Education if 25 the loans are federally insured; and 26 (D) has submitted an executed program participation agreement 27 as required by the commission. 28 (c) The commission may not award a loan to attend an institution if the total 29 amount of loans made to students to attend that institution exceeds $100,000 annually 30 and the default rate on those loans is (1) greater than 20 percent but less than 25 31 percent and the institution is unable to reduce its default rate within 24 months after 01 the rate determination; or (2) equal to or greater than 25 percent for two consecutive 02 calendar years. For purposes of this subsection, the default rate shall be determined 03 by the commission for each annual group of loans required to be repaid under 04 AS 14.43.121 or the former provisions of AS 14.43.120 on or after July 1, 1996. If 05 a loan is refused based on the provisions of this subsection and, under a subsequent 06 default rate determination, an institution's default rate does not exceed the limits 07 established under this subsection, the commission may not refuse to issue a scholarship 08 loan to attend that institution based on the provisions of this subsection. 09 (d) A loan origination fee shall be deducted at the time a loan is disbursed. 10 The commission by regulation shall set the fee not to exceed five percent of the total 11 loan amount. The loan origination fees shall be deposited into an origination fee 12 account within the education loan fund created under AS 14.42.210 for use, subject to 13 appropriation, by the corporation to offset losses incurred as a result of death, 14 disability, default, or bankruptcy of a borrower. 15 (e) Proceeds from a loan to a full-time student may only be used for tuition 16 and required fees, loan origination fees, required books and educational supplies, and 17 room and board. Proceeds from a loan to a half-time student may only be used for 18 tuition and required fees, loan origination fees, and required books and educational 19 supplies. 20 (f) To maintain a loan awarded for full-time attendance, the student must 21 continue to be enrolled full-time in good standing in an institution that meets the 22 requirements under (b) of this section. To maintain a loan awarded for half-time 23 attendance, the student must continue to be enrolled half-time in good standing in an 24 institution (1) in the state that meets the requirements under (b) of this section; or (2) 25 outside the state that meets the requirements under (b) of this section and the student 26 must be physically present in the state while attending the institution. 27 * Sec. 11. AS 14.43 is amended by adding a new section to read: 28 Sec. 14.43.121. Repayment of loans. (a) A borrower's obligation to 29 commence repayment of the principal and interest on a loan begins six months after 30 the borrower is no longer enrolled as described in AS 14.43.120(f). The borrower 31 shall repay the total amount owed in periodic installments of at least $50 a month over 01 a period of not more than 15 years from the commencement of the repayment 02 obligation. 03 (b) If the commission and the borrower agree to a different repayment 04 schedule, the borrower shall repay the loan as required by the agreement. The 05 commission may extend the period of repayment of a loan only in cases of economic 06 hardship for an additional period of up to five years. A borrower may make payments 07 without penalty earlier than required by this section or by the agreement. 08 (c) Interest accrues from the first loan disbursement; however, the state shall 09 pay the interest while the borrower continues to be enrolled as described in 10 AS 14.43.120(f). At the end of the six-month grace period under (a) of this section 11 or at the beginning and end of a deferment under (g) of this section, the commission 12 may add accrued unpaid interest to the principal balance of the loan. While a loan is 13 due to be repaid, the commission may add accrued interest not paid when due to the 14 principal balance of the loan. 15 (d) The commission shall set interest rates annually for loans awarded in the 16 following school year. The commission shall base the interest rate on 17 (1) the interest rate paid by the corporation on bonds issued by the 18 corporation under AS 14.42.220; and 19 (2) the amount necessary to pay the administrative cost of the loan 20 program. 21 (e) In determining a rate of interest under (d) of this section, 22 (1) the total amount charged for the administrative cost of the loan 23 program under (d)(2) of this section may not exceed three percent above the amount 24 determined under (d)(1) of this section; and 25 (2) the rate may not cause the loan program to generate a profit that 26 would jeopardize the tax-exempt status of the corporation or the interest on the 27 corporation's bonds under 26 U.S.C. 103 (Internal Revenue Code of 1986). 28 (f) Notwithstanding any other provision of this chapter, the commission or 29 corporation may prospectively modify loan terms if required to maintain the tax- 30 exempt status of the corporation and the interest on the corporation's bonds under 26 U.S.C. 31 103 (Internal Revenue Code of 1986). 01 (g) On application, a borrower's obligation to make periodic payments of 02 principal and interest shall be deferred, but interest shall continue to accrue, during any 03 of the following: 04 (1) if the borrower returns to full-time student status in good standing 05 in an institution that meets the requirements under AS 14.43.120(b); 06 (2) if the borrower, who received a loan to attend as a half-time 07 student, returns to 08 (A) half-time student status in good standing in an institution 09 in the state that meets the requirements under AS 14.43.120(b); 10 (B) at least half-time student status in good standing in an 11 institution that meets the requirements under AS 14.43.120(b) and the borrower 12 is physically present in the state while attending the institution; or 13 (C) full-time student status in good standing in an institution 14 that meets the requirements under AS 14.43.120(b); 15 (3) service of an initial period of up to three years on active duty as a 16 member of the armed forces of the United States; 17 (4) service for up to three years as a full-time volunteer under the 18 Peace Corps Act or the Domestic Volunteer Service Act of 1973; 19 (5) service for up to two years as a full-time volunteer under the 20 National and Community Service Trust Act of 1993 (Americorps); 21 (6) a one-time period up to 12 months in which the borrower is seeking 22 and unable to find employment in the United States; or 23 (7) the period of disability if, after the loan is disbursed, the borrower 24 becomes totally disabled as certified by a competent medical authority and is 25 financially unable to repay the loan. 26 (h) The total of periods of deferment under (g)(1) - (6) of this section may not 27 exceed eight years. A borrower is not eligible for a deferment if the loan is not paid 28 current through the month before the deferment period. 29 (i) The borrower shall pay all fees and costs incurred in collection of a loan 30 that becomes delinquent or is in default. 31 (j) A portion of a loan shall be forgiven by the state if, after being enrolled in 01 the course of study for which the loan was granted, the borrower is a student who is 02 unable to complete the school term as a result of serving on active duty as a member 03 of the armed forces of the United States. The portion of the loan that shall be forgiven 04 is equal to the amount borrowed by the student for the school term in which the 05 borrower's studies are terminated. Forgiveness under this subsection is subject to 06 appropriation by the legislature. Money obtained from the sale of bonds by the 07 corporation under AS 14.42.220 may not be appropriated for the forgiveness of loans. 08 * Sec. 12. AS 14.43.121(c) is amended to read: 09 (c) Interest accrues from the first loan disbursement [; HOWEVER, THE 10 STATE SHALL PAY THE INTEREST WHILE THE BORROWER CONTINUES TO 11 BE ENROLLED AS DESCRIBED IN AS 14.43.120(f)]. At the end of the six-month 12 grace period under (a) of this section or at the beginning and end of a deferment under 13 (g) of this section, the commission may add accrued unpaid interest to the principal 14 balance of the loan. While a loan is due to be repaid, the commission may add 15 accrued interest not paid when due to the principal balance of the loan. 16 * Sec. 13. AS 14.43.121(d) is amended to read: 17 (d) The commission shall set interest rates annually for loans awarded in the 18 following school year. The commission shall base the interest rate 19 (1) for those students who continue to be enrolled under 20 AS 14.43.120(f), on an amount that is no more than the interest rate paid by the 21 corporation on bonds issued by the corporation under AS 14.42.220; and 22 (2) for those students no longer enrolled under AS 14.43.120(f), on 23 (A) the interest rate paid by the corporation on bonds issued by 24 the corporation under AS 14.42.220; and 25 (B) [(2)] the amount necessary to pay the administrative cost of 26 the loan program. 27 * Sec. 14. AS 14.43.121(e) is amended to read: 28 (e) In determining a rate of interest under (d) of this section, 29 (1) the total amount charged for the administrative cost of the loan 30 program under (d)(2)(B) [(d)(2)] of this section may not exceed three percent above 31 the amount determined under (d)(2)(A) [(d)(1)] of this section; and 01 (2) the rate may not cause the loan program to generate a profit that 02 would jeopardize the tax-exempt status of the corporation or the interest on the 03 corporation's bonds under 26 U.S.C. 103 (Internal Revenue Code of 1986). 04 * Sec. 15. AS 14.43.122(b) is amended to read: 05 (b) Notwithstanding AS 14.43.121(d) [AS 14.43.120(f)], if loans are 06 consolidated under (a) of this section, the consolidated loan shall bear annual interest 07 equal to the weighted average of the interest rates on the loans being consolidated, 08 rounded to the nearest 1/10 of a percent. 09 * Sec. 16. AS 14.43.125(c) is amended to read: 10 (c) A person may not be awarded an Alaska student [A SCHOLARSHIP] 11 loan under AS 14.43.090 - 14.43.160 if that person receives a teacher scholarship loan 12 under AS 14.43.600 - 14.43.700 for the same period of attendance. 13 * Sec. 17. AS 14.43.125(d) is amended to read: 14 (d) Notwithstanding (a)(2) and (6) - (8) [(a)(6) - (8)] of this section, the 15 commission may issue a loan to a person if all principal, interest, and collection 16 costs due on a loan previously disbursed by the commission to the person have 17 been paid and another person who satisfies the requirements of (a)(2) and (4) - (8) 18 [(a)(4) - (8)] of this section cosigns the loan. 19 * Sec. 18. AS 14.43.135 is amended to read: 20 Sec. 14.43.135. Discrimination prohibited. The education [STUDENT] loan 21 program shall be carried out without regard to the race, creed, sex, color, ancestry, 22 national origin, or membership in fraternal or political organizations of the student 23 applying for the loan. 24 * Sec. 19. AS 14.43.145(a) is amended to read: 25 (a) For the purposes of this chapter, a loan is in default after [IF] a loan 26 payment has become 180 or more days past due. Upon default, 27 (1) repayment of the remaining balance is accelerated and due; 28 (2) the commission may take the borrower's permanent fund dividend 29 under AS 43.23.067; 30 (3) the commission may issue an order to withhold and deliver under 31 AS 14.43.147; [AND] 01 (4) the commission may provide notice of the default to a licensing 02 entity for nonrenewal of the license under AS 14.43.148 ; and 03 (5) the commission may record the lien created under AS 14.43.149 . 04 * Sec. 20. AS 14.43.148(a) is amended to read: 05 (a) Notwithstanding any other provision of law, a licensing entity may not 06 renew a license issued to a borrower if the licensing entity has received notice from 07 the commission that the licensee is in default on a loan made by the commission. If 08 the licensee has appealed the determination of default status, the commission shall 09 notify the licensing entity , and renewal may not be denied under this section unless 10 and until the appeal has been concluded and the default status affirmed. [UNLESS A 11 TEMPORARY LICENSE IS ISSUED UNDER (c) OF THIS SECTION, THE 12 DENIAL OF RENEWAL IS EFFECTIVE AT THE BEGINNING OF THAT 13 RENEWAL PERIOD.] Denial of renewal of a license shall continue until the 14 licensing entity receives notice of a release under (f) of this section from the 15 commission. If a license is denied under this section, the licensing entity shall refund 16 the renewal fee less the temporary license fee, if any. 17 * Sec. 21. AS 14.43.148(b) is amended to read: 18 (b) The licensing entity shall provide written notice of the intent to deny 19 [DENIAL OF] renewal of the license by giving written notice to the licensee or 20 sending the notice to the licensee's last known mailing address on file with the 21 licensing entity. The licensing agency shall include with the notice a form to request 22 review under (d) of this section; the form must include the commission's address and 23 telephone number. The notice must inform the licensee of the temporary license 24 granted under (c) of this section if the applicant is otherwise eligible and that, when 25 the temporary license expires, the licensee may no longer practice the occupation 26 [UPON EXPIRATION OF THAT TIME PERIOD, RENEWAL OF THE LICENSE 27 WILL BE DENIED] unless the licensing entity receives a notice of release under (f) 28 of this section from the commission. 29 * Sec. 22. AS 14.43.148(f) is amended to read: 30 (f) On receipt of a written notice of release from the commission, the 31 licensing entity may renew the license if the applicant is otherwise qualified. The 01 commission shall provide a notice of release to the licensing entity if the licensee 02 (1) pays all costs of collection and the interest and principal that would 03 have been due if the loan had not been accelerated; or 04 (2) has negotiated a payment schedule with the commission after the 05 loan is in default and has made complete and timely payments under the negotiated 06 agreement for the four most recent and consecutive months. 07 * Sec. 23. AS 14.43 is amended by adding a new section to read: 08 Sec. 14.43.149. Lien. (a) The amount owing on the loan that is in default 09 under AS 14.43.145(a), including principal, interest, and collection costs, is a lien on 10 all property and right to property, real or personal, belonging to the borrower. The 11 lien arises at the time the commission mails or otherwise delivers a notice of default 12 under AS 14.43.145(b) and continues until the balance of the loan, including principal, 13 interest, and collection costs, is paid in full. 14 (b) A lien created under (a) of this section is not valid against a mortgage or 15 other lienholder, pledgee, purchaser, or judgment creditor until notice of the lien is 16 recorded in the records of the recording district where the property subject to the lien 17 is situated. 18 (c) AS 40.19.040 applies to a notice of a student loan lien and documents 19 relating to a student loan lien. 20 * Sec. 24. AS 14.43.160(1) is amended to read: 21 (1) "career education" means a course or program in vocational- 22 technical training or education approved by the commission that is a half-time program at 23 least 12 weeks in length or a full-time program at least six weeks in length ; 24 * Sec. 25. AS 14.43.160(3) is amended to read: 25 (3) "full-time student" means (A) an undergraduate [OR CAREER 26 EDUCATION] student who is enrolled and is in regular attendance at classes for at 27 least 12 semester hours of credit or the equivalent during the semester , (B) [OR] a 28 graduate student who is enrolled and is in regular attendance at classes for at least nine 29 semester hours of credit or the equivalent , or (C) a career education student enrolled 30 and in regular attendance in classes for at least 30 hours a week ; any combination 31 of semester hours of credit, or the equivalent, aggregating to the requisite number of 01 semester hours and undertaken during a semester at two or more public or private 02 institutions of higher education constitutes full-time student status; 03 * Sec. 26. AS 14.43.300(g) is amended to read: 04 (g) The commission by regulation shall set a loan origination fee, not to 05 exceed five percent of the total memorial scholarship loan amount, to be assessed upon 06 a memorial scholarship loan. The loan origination fee shall be deducted at the time 07 the loan is disbursed. Subject to appropriation, the loan origination fee shall be 08 deposited into an origination fee account within the memorial scholarship revolving 09 loan fund [,] and subsequently transferred by the commission to the appropriate 10 memorial scholarship accounts within the memorial scholarship revolving loan fund 11 to offset losses incurred due to loan debt cancellation as a result of death, disability, 12 default, or bankruptcy of the borrower [STUDENT]. 13 * Sec. 27. AS 14.43.305(i) is repealed and reenacted to read: 14 (i) The interest rate on a loan made under AS 14.43.250(b)(5) is five percent 15 a year. 16 * Sec. 28. AS 14.43.320 is repealed and reenacted to read: 17 Sec. 14.43.320. Terms and conditions of loan. To the extent that they are 18 not in conflict with the provisions of AS 14.43.250 - 14.43.325, the provisions of 19 AS 14.43.100 - 14.43.160 are applicable to a loan made under AS 14.43.250 - 20 14.43.325. 21 * Sec. 29. AS 14.43.410 is amended to read: 22 Sec. 14.43.410. Distribution of money [FUNDS]. The money [FUNDS] 23 appropriated for the educational incentive grant program shall be allocated to eligible 24 students in accordance with the provisions of the federal state student incentive grant 25 program and regulations adopted under AS 14.42.030(c) [AS 14.43.105 AND 26 14.43.405]. 27 * Sec. 30. AS 14.43.620 is repealed and reenacted to read: 28 Sec. 14.43.620. Financing for teacher scholarship loan program. (a) On 29 approval by the commission of a teacher scholarship loan, a loan disbursement shall 30 be financed by the corporation, and the loan becomes an asset of the corporation. 31 (b) Repayment of principal and interest on a teacher scholarship loan shall be 01 paid into the education loan fund created under AS 14.42.210. If money made 02 available by the corporation is inadequate to fully finance eligible loan applications for 03 an academic year, additional financing from the general fund may be requested and 04 appropriated for that year. 05 * Sec. 31. AS 14.43.630(a) is repealed and reenacted to read: 06 (a) The commission shall 07 (1) annually allocate the available teacher scholarship loan awards to 08 local school boards, giving a preference to rural school districts; and 09 (2) distribute to local school boards a form for nomination of 10 candidates and applications for a nominated candidate. 11 * Sec. 32. AS 14.43.640(b) is amended to read: 12 (b) If a borrower meets the conditions provided in (a) of this section and is 13 employed as a teacher in a rural elementary or secondary school within four years 14 after graduating from the teacher education program , the portion of the loan that 15 shall be paid by the state is the following percent [PERCENTAGES] of the total loan 16 received plus interest up to a total of 100 percent of the total loan: 17 (1) one year employment, 15 percent; 18 (2) two years employment, an additional 15 percent; 19 (3) three years employment, an additional 15 percent; 20 (4) four years employment, an additional 25 percent; 21 (5) over four years employment, an additional 30 percent. 22 * Sec. 33. AS 14.43.650(a) is amended to read: 23 (a) To be eligible for an award and disbursement of a teacher scholarship 24 loan, a student must 25 (1) be a graduate of a public or private high school in the state or be 26 scheduled for graduation from a high school within six months [, WITH 27 SUFFICIENT CREDITS TO BE ADMITTED TO AN ACCREDITED COLLEGE OR 28 UNIVERSITY]; 29 (2) be enrolled at the time of loan disbursement in an accredited [IN 30 OR SHOW EVIDENCE OF INTENT TO ENROLL IN A] degree program directed 31 at a teaching career at the elementary or secondary school level; 01 (3) meet the conditions set by the student's local school board with 02 respect to the district's requirements for teachers in particular subject areas; 03 (4) submit to the local school board an application on a form provided 04 by the commission under AS 14.43.630(a)(2); the applicant shall also supply a high 05 school transcript and a statement of intent to enter a teaching career at the 06 elementary or secondary school level in the state [AN APPLICATION MAY BE 07 SUBMITTED SIX MONTHS BEFORE GRADUATION FROM HIGH SCHOOL]; and 08 (5) not have a past due child support obligation established by court 09 order or by the child support enforcement division under AS 25.27.160 - 25.27.220 at 10 the time of application or loan disbursement . 11 * Sec. 34. AS 14.43.650(c) is amended to read: 12 (c) A student may not be awarded a teacher scholarship loan under 13 AS 14.43.600 - 14.43.700 if the student receives an Alaska student [A 14 SCHOLARSHIP] loan under AS 14.43.090 - 14.43.160 for the same period of 15 attendance. 16 * Sec. 35. AS 14.43.720 is repealed and reenacted to read: 17 Sec. 14.43.720. Financing for family education loan program. (a) on 18 approval by the commission of a family education loan, a loan disbursement shall be 19 financed by the corporation, and the loan becomes an asset of the corporation. 20 (b) Repayment of principal and interest on a family education loan shall be 21 paid into the education loan fund created under AS 14.42.210. If money made 22 available by the corporation is inadequate to fully finance eligible loan applications for 23 an academic year, additional financing from the general fund may be requested and 24 appropriated for that year. 25 * Sec. 36. AS 14.43.740(a) is amended to read: 26 (a) The provisions of AS 14.43.100, 14.43.110, 14.43.120, 14.43.121(b) and 27 (f) [14.43.120(a) - (d), (m), AND (r) - (u)], 14.43.135, 14.43.145 - 14.43.150, and 28 14.43.910 - 14.43.990 apply to a loan made under AS 14.43.710 - 14.43.750. 29 * Sec. 37. AS 14.43.740(c) is amended to read: 30 (c) Interest on a loan made under AS 14.43.710 - 14.43.755 is [AT A RATE 31 OF] five percent a year unless the loan is in default. Interest accrues from the first 01 loan disbursement and may be added to the principal balance of the loan if 02 unpaid at the time the loan is due to be repaid under (d) of this section. Interest 03 on a loan [THAT IS] in default is 10 percent a year. The commission may add 04 accrued interest not paid when due to the principal balance of the loan. 05 * Sec. 38. AS 14.43.740(d) is amended to read: 06 (d) A borrower's obligation to commence repayment [REPAYMENT] of 07 the principal and interest on a family education loan [MADE UNDER AS 14.43.710 - 08 14.43.750] begins on the first day of the next month that is at least 30 days after the 09 date of the last disbursement of the loan [IMMEDIATELY FOLLOWING LOAN 10 DISBURSEMENT]. The loan may be cancelled without prejudice at any time before 11 actual disbursement. The borrower shall repay [LOAN SHALL PROVIDE FOR 12 REPAYMENT OF] the total amount owed in periodic installments of at least $50 a 13 month over a period of [IN] not more than 15 [10] years from the commencement 14 of the repayment obligation . [IF THE COMMISSION AND THE BORROWER 15 AGREE TO A DIFFERENT REPAYMENT SCHEDULE, THE BORROWER SHALL 16 REPAY THE LOAN IN ACCORDANCE WITH THE AGREEMENT.] 17 * Sec. 39. AS 14.43.750 is amended by adding a new subsection to read: 18 (c) A person may not borrow more than a total of $68,000 from the family 19 education loan program. 20 * Sec. 40. AS 14.43.990 is amended to read: 21 Sec. 14.43.990. Definitions [DEFINITION]. In this chapter, unless the 22 context otherwise requires, 23 (1) "commission" means the Alaska Commission on Postsecondary 24 Education ; 25 (2) "corporation" means the Alaska Student Loan Corporation . 26 * Sec. 41. AS 14.48.160(c) is amended to read: 27 (c) A lending agency extending credit or loaning money to a person for tuition, 28 fees, or other charges of a postsecondary educational institution for educational or 29 other services or facilities to be rendered by the institution [,] shall conspicuously mark 30 "student loan" on the face of a note, instrument, or other evidence of indebtedness 31 taken in connection with the loan or extension of credit. If the lending agency fails 01 to do so, it is liable for loss or damage suffered by a subsequent assignee, transferee, 02 or holder of the evidence of indebtedness because of the absence of the notation. 03 Notwithstanding the presence or absence of the notation [,] and notwithstanding an 04 agreement to the contrary, the lending agency making the loan or extending the credit, 05 and a transferee, assignee, or holder of the evidence of indebtedness , is subject to all 06 defenses and claims that could be asserted against the postsecondary educational 07 institution that was to render the services or facilities, by any party to the evidence of 08 indebtedness or by the person to whom the services or facilities were to be rendered, 09 up to the amount remaining to be paid. For purposes of this subsection [SECTION], 10 "lending agency" means a postsecondary educational institution, or a person 11 controlling, controlled by, or held in common ownership with, a postsecondary 12 educational institution [, OR REGULARLY LOANING MONEY TO, OR TO 13 STUDENTS OF, A POSTSECONDARY EDUCATIONAL INSTITUTION]. 14 * Sec. 42. AS 14.42.030(d), 14.42.050(b), 14.42.390(2); AS 14.43.105, 14.43.255(c), 15 14.43.405(a), 14.43.730; and AS 14.48.050(10) are repealed. 16 * Sec. 43. TRANSITION: REGULATIONS. Notwithstanding sec. 47 of this Act, the 17 Alaska Commission on Postsecondary Education may immediately proceed to adopt 18 regulations necessary to implement the changes made in secs. 1 - 11 and 15 - 41 of this Act. 19 The regulations take effect under AS 44.62 (Administrative Procedure Act), but not before 20 July 1, 1998. 21 * Sec. 44. REVISOR'S CHANGES. The revisor of statutes shall change the heading of 22 art. 4 of AS 14.43 (AS 14.43.090 - 14.43.160) to "Article 4. Alaska Student Loan Program." 23 * Sec. 45. Sections 12 - 14 and 42 of this Act take effect July 1, 1999. 24 * Sec. 46. Section 43 of this Act takes effect immediately under AS 01.10.070(c). 25 * Sec. 47. Except as provided in secs. 45 and 46 of this Act, this Act takes effect July 1, 26 1998.