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CSHB 535(HES): "An Act relating to postsecondary education; and providing for an effective date."

00CS FOR HOUSE BILL NO. 535(HES) 01 "An Act relating to postsecondary education; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 08.02.025(a) is amended to read: 05 (a) A person licensed under this title shall comply with the student loan 06 repayment provisions under AS 14.43 that are applicable to the person. 07 Notwithstanding another provision of law, a license issued to a person under this title 08 may not be renewed if the licensee [BORROWER] and the department 09 [DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT] have 10 received notice from the Alaska Student Loan Corporation [COMMISSION ON 11 POSTSECONDARY EDUCATION] that the licensee is in default on a student loan 12 provided to the licensee. This action may be taken no sooner than 60 days after the 13 Alaska Student Loan Corporation [COMMISSION ON POSTSECONDARY 14 EDUCATION] has notified the licensee [BORROWER] of the default status of the

01 loan as provided under AS 14.43.120(i). If a licensee's [AN] appeal of a 02 determination of default status is pending [ON BEHALF OF THE LICENSEE], the 03 Alaska Student Loan Corporation [COMMISSION ON POSTSECONDARY 04 EDUCATION] shall notify the department and the department [RENEWAL] may not 05 deny renewal [BE DENIED] under this section until and unless the [APPEAL HAS 06 BEEN CONCLUDED AND THE] default status has been affirmed on appeal. The 07 denial [DENIAL] of renewal of a license shall continue until the department 08 [DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT] receives 09 notice from the Alaska Student Loan Corporation [COMMISSION ON 10 POSTSECONDARY EDUCATION] that the licensee is no longer in default on the 11 student loan. 12 * Sec. 2. AS 14.40.170(b) is amended to read: 13 (b) The Board of Regents may 14 (1) adopt reasonable rules, orders, and plans with reasonable penalties for 15 the good government of the university and for the regulation of the Board of Regents; 16 (2) determine and regulate the course of instruction in the university with 17 the advice of the president; 18 (3) set student tuition and fees; 19 (4) receive and spend university receipts in accordance with AS 37.07 20 ( [THE] Executive Budget Act); 21 (5) enter into agreements with government or postsecondary 22 education officials of this state or other states to provide postsecondary educational 23 services and programs to residents of this state pursuing a medical education; an 24 agreement with another state must be limited to services and programs that are 25 unavailable in this state [(AS 37.07)]. 26 * Sec. 3. AS 14.42.100 is amended to read: 27 Sec. 14.42.100. CREATION OF ALASKA STUDENT LOAN 28 CORPORATION. The [THERE IS CREATED THE] Alaska Student Loan 29 Corporation is created as [. THE CORPORATION IS] a public corporation and 30 government instrumentality within the Department of Revenue [EDUCATION] but 31 having a legal existence independent of and separate from the state. The corporation

01 may not be terminated as long as it has outstanding bonds, notes, or other obligations 02 [OUTSTANDING]. Upon termination of the corporation, its rights and property pass 03 to the state. 04 * Sec. 4. AS 14.42.120 is repealed and reenacted to read: 05 Sec. 14.42.120. CORPORATION GOVERNING BODY. (a) The corporation 06 shall be governed by a board of directors consisting of the commissioner of revenue, 07 the commissioner of administration, a person representing the department appointed 08 by the governor, and four members of the public appointed by the governor. The 09 governor's appointees shall serve at the pleasure of the governor for four-year 10 staggered terms. 11 (b) Two members of the legislature shall serve as ex officio nonvoting 12 members of the board of directors. The two ex officio nonvoting members shall 13 include one member of the senate appointed by the president of the senate and one 14 member of the house appointed by the speaker of the house of representatives. 15 (c) A full-time postsecondary student shall serve as a nonvoting member of the 16 board of directors. The governor shall appoint the student member from a list of 17 nominees within 60 days after it is submitted. The list must consist of the names of 18 two nominees from Alaska Pacific University, two nominees from Sheldon Jackson 19 College, and two nominees from each campus of the University of Alaska. The 20 nominees shall be selected from a student election held on each campus. Elections 21 under this subsection shall be held concurrently with student regent elections required 22 under AS 14.40.150(b) and conducted under rules established by the Office of the 23 Governor. The term of office of the student member is two years beginning June 1 24 of the year in which the appointment is made. Membership on the corporation is 25 immediately forfeited by a student member who ceases to be a full-time student. 26 Within 60 days after a vacancy occurs, the governor shall appoint a successor from 27 those students appearing on the list of nominees to serve for the unexpired term of the 28 original appointee. The term "campus" used in this subsection means a portion of the 29 University of Alaska designated as a "campus" by the Board of Regents. 30 (d) A governing body member, trustee, official, or employee of a public, 31 private, or proprietary institution of postsecondary or higher education in the state may

01 not be appointed to membership on the corporation as representative of the general 02 public for the purpose of (a) of this section. 03 (e) Members of the board serve without compensation, but the voting members 04 who are not state employees and the student member are entitled to per diem and 05 travel expenses authorized for boards and commissions under AS 39.20.180. 06 (f) Each year, the board shall elect a chair from among its voting membership. 07 A majority of the voting members constitute a quorum for organizing the board, 08 conducting board business, and exercising the powers of the corporation. 09 * Sec. 5. AS 14.42.160 is repealed and reenacted to read: 10 Sec. 14.42.160. EXECUTIVE OFFICER AND STAFF; ADMINISTRATION. 11 (a) The corporation may appoint an executive director as the corporation's executive 12 officer. The executive officer is a member of the exempt service under AS 39.25.110, 13 serves at the pleasure of the corporation, and receives compensation fixed by the 14 corporation. The executive officer appoints persons to the staff positions authorized 15 by the corporation, and staff compensation is fixed by the corporation. Each employee 16 of the corporation shall participate as a member of the public employees' retirement 17 system (AS 39.35). 18 (b) The corporation is not a division in the Department of Revenue. The 19 corporation, members of the corporation, the executive officer, and staff are in the 20 Department of Revenue for administrative support services only, and they are not 21 subject to the direction of the commissioner of revenue. 22 (c) Subject to review by the corporation, the executive director shall administer 23 the student loan and grant programs under AS 14.43. 24 * Sec. 6. AS 14.42 is amended by adding a new section to read: 25 Sec. 14.42.180. LEGAL COUNSEL. The attorney general is legal counsel for 26 the corporation. The attorney general shall advise the corporation in legal matters 27 arising in the discharge of its duties and represent the corporation in actions to which 28 it is a party. If, in the opinion of the corporation, the public interest is not adequately 29 represented by counsel in a proceeding, the attorney general, upon request of the 30 corporation, shall represent the public interest. 31 * Sec. 7. AS 14.42 is amended by adding a new section to read:

01 Sec. 14.42.195. FUNCTIONS OF THE CORPORATION. (a) The corporation 02 shall administer the student loan fund under AS 14.42.210 and the student loan and 03 grant programs under AS 14.43. 04 (b) The corporation may adopt regulations under AS 44.62 (Administrative 05 Procedure Act) to carry out the purposes of AS 14.43. 06 * Sec. 8. AS 14.42.200(10) is amended to read: 07 (10) gather information on student loans available to residents of 08 Alaska and disseminate the information to reasonably assure that qualified residents 09 are aware of financial resources available to those attending or desiring to attend 10 institutions for which loans may be made under AS 14.43.100 - 14.43.325 [AS 11 14.43.090 - 14.43.325], 14.43.600 - 14.43.700, or 14.43.710 - 14.43.790; 12 * Sec. 9. AS 14.42.210(a) is amended to read: 13 (a) The student loan fund is established in the corporation. The student loan 14 fund is a trust fund to be used to carry out the purposes of AS 14.42.100 - 14.42.390, 15 AS 14.43.100 - 14.43.325 [AS 14.43.090 - 14.43.325], 14.43.600 - 14.43.700, and 16 14.43.710 - 14.43.790. The fund consists of money or assets appropriated or 17 transferred to the corporation for the fund and money or assets deposited in it by the 18 corporation. The corporation may establish separate accounts in the fund and shall 19 establish separate accounts for the teacher scholarship revolving loan account 20 under AS 14.43.620 and the family education loan account under AS 14.43.720. 21 * Sec. 10. AS 14.42.210(b) is amended to read: 22 (b) Money and other assets of the student loan fund may be used to secure 23 bonds of the corporation, invested in student loans and investments under 24 AS 37.10.071, and used to make [PURCHASE] loans approved under AS 14.43.090 - 25 14.43.325, 14.43.600 - 14.43.700, or 14.43.710 - 14.43.790. 26 * Sec. 11. AS 14.43.100 is amended to read: 27 Sec. 14.43.100. APPLICATIONS. (a) Applications shall be submitted to the 28 executive director of the corporation [COMMISSION]. 29 (b) A person whose loan application is not approved by the executive director 30 of the corporation [COMMISSION] may appeal to the corporation [COMMISSION] 31 and the corporation [COMMISSION] shall consider the application.

01 * Sec. 12. AS 14.43.110, as amended by sec. 1, ch. 5, SLA 1996, is amended to read: 02 Sec. 14.43.110. STUDENT LOANS. (a) In a school year, the corporation 03 [COMMISSION] may make a loan not to exceed 04 (1) $8,500 to a full-time undergraduate student or $4,500 [$5,000] to 05 a half-time undergraduate student attending a college or university if the full- or half- 06 time student is otherwise eligible under AS 14.43.125; 07 (2) $9,500 to a full-time graduate student or $5,000 [$4,500] to a 08 half-time graduate student attending a college or university if the full- or half-time 09 graduate student is otherwise eligible under AS 14.43.125; 10 (3) $5,500 to a full-time student or $2,000 to a half-time student if the 11 full- or half-time student is attending a career education program [THAT IS AT 12 LEAST SIX WEEKS IN LENGTH] and is otherwise eligible under AS 14.43.125. 13 (b) The corporation [COMMISSION] may make a loan for a summer term, 14 even if the total loan for the school year exceeds the limit imposed under (a) of this 15 section if the loan for the summer term is counted against the limit imposed under (a) 16 of this section for the following school year. 17 (c) The corporation [COMMISSION] shall adopt regulations establishing a 18 minimum amount for which a loan may be made. 19 * Sec. 13. AS 14.43.120(b), as amended by sec. 3, ch. 5, SLA 1996, is amended to read: 20 (b) Scholarship loans may only be used to attend a 21 (1) career education program operating on a sound fiscal basis that has 22 (A) operated for two years before the borrower attends; and 23 (B) submitted an executed program participation agreement as 24 required by the corporation [COMMISSION]; or 25 (2) a college or university that 26 (A) has operated for at least two years before the borrower 27 attends; 28 (B) is accredited by a national or regional accreditation 29 association recognized by the Council on Recognition of Postsecondary 30 Accreditation or is approved by the corporation [COMMISSION]; 31 (C) if the loans are federally insured, is approved by the United

01 States Secretary of Education; 02 (D) is a degree granting institution; and 03 (E) has submitted an executed program participation agreement 04 as required by the corporation [COMMISSION]. 05 * Sec. 14. AS 14.43.120(c), as amended by sec. 4, ch. 5, SLA 1996, is amended to read: 06 (c) To maintain a loan awarded to a full-time student, the student must 07 continue to be enrolled as a full-time student in good standing in a career education 08 program, college, or university that meets the requirements under (b) of this section. 09 To maintain a loan awarded to a half-time student, the student must continue to be 10 enrolled as a half-time student in good standing in (1) a career education program, 11 college, or university in the state that meets the requirements under (b) of this section, 12 or (2) a career education program, college, or university that meets the requirements 13 under (b) of this section, and be physically present in this [THE] state while attending 14 the career education program, college, or university. The corporation 15 [COMMISSION] shall adopt regulations defining "good standing" for purposes of this 16 subsection. 17 * Sec. 15. AS 14.43.120(d), as amended by sec. 4, ch. 5, SLA 1996, is amended to read: 18 (d) Scholarship loans may not be made to a student 19 (1) for more than a total of $42,500 for undergraduate study; 20 (2) for more than a total of $47,500 for graduate study; 21 (3) for more than a combined total of $60,000 for undergraduate and 22 graduate study; 23 (4) to attend an institution, if the total amount of scholarship loans 24 made to students to attend that institution exceeds $100,000 and the default rate on 25 those loans is (A) greater than 20 percent but less than 25 percent, and the institution 26 is unable to reduce its default rate within 24 months after the rate determination; or 27 (B) equal to or greater than 25 percent for two consecutive calendar years; for 28 purposes of this paragraph, the default rate shall annually be determined by the 29 corporation [COMMISSION] from loans required to be repaid under (g) of this 30 section on or after July 1, 1996; if a scholarship loan is refused based on the 31 provisions of this paragraph and, under a subsequent default rate determination [,] an

01 institution's default rate does not exceed the limits established under this paragraph, 02 the corporation [COMMISSION] may not refuse to issue a scholarship loan to attend 03 that institution based on the provisions of this paragraph. 04 * Sec. 16. AS 14.43.120(f) is amended to read: 05 (f) Interest on a loan made under AS 14.43.100 - 14.43.160 [AS 14.43.090 - 06 14.43.160] is equal to the interest rate 07 (1) paid in each year on bonds issued by the corporation [ALASKA 08 STUDENT LOAN CORPORATION] under AS 14.42.220; and 09 (2) necessary to pay the administrative cost of the student loan program 10 that is represented by the loan. 11 * Sec. 17. AS 14.43.120(g), as amended by sec. 6, ch. 5, SLA 1996, is amended to read: 12 (g) A borrower's obligation to commence repayment of the principal and 13 interest on the loan begins six months after the borrower is no longer enrolled under 14 (c) of this section. The borrower shall repay the total amount owed in periodic 15 installments of at least $50 a month over a period of not more than 15 years from the 16 commencement of the repayment obligation. If the corporation [COMMISSION] and 17 the borrower agree to a different repayment schedule, the borrower shall repay the loan 18 in accordance with the agreement. A borrower may make payments earlier than 19 required by this subsection or the agreement. 20 * Sec. 18. AS 14.43.120(i), as amended by sec. 8, ch. 5, SLA 1996, is amended to read: 21 (i) If a loan is in default, the corporation [COMMISSION] 22 (1) shall notify the borrower that [, IF THE BORROWER HAS AN 23 OCCUPATIONAL LICENSE ISSUED UNDER AS 08, THE LICENSE MAY NOT 24 BE RENEWED UNDER AS 08.02.025 AND THAT] repayment of the remaining 25 balance is accelerated and due and that, if the borrower has an occupational license 26 issued under AS 08, the license may not be renewed under AS 08.02.025, by 27 mailing the borrower a notice at the most recent address provided to the commission 28 by the borrower; 29 (2) may take the borrower's permanent fund dividend under 30 AS 43.23.065(b)(3) to satisfy the balance due on a defaulted loan; and 31 (3) shall provide notice of the default to the Department of Commerce

01 and Economic Development, if the loan recipient is licensed under AS 08. 02 * Sec. 19. AS 14.43.120(m), as amended by sec. 11, ch. 5, SLA 1996, is amended to read: 03 (m) In case of hardship, the corporation [COMMISSION] may extend 04 repayment of a loan for an additional period of up to five years. 05 * Sec. 20. AS 14.43.120(r) is amended to read: 06 (r) The rate of interest, time of payment of an installment of principal or 07 interest, or other loan terms [OF A SCHOLARSHIP LOAN] may be modified if 08 required to establish or maintain tax-exempt status under 26 U.S.C. 103 (Internal 09 Revenue Code of 1986), as amended, for the interest on bonds issued by the 10 corporation [ALASKA STUDENT LOAN CORPORATION]. 11 * Sec. 21. AS 14.43.120(t), as amended by sec. 13, ch. 5, SLA 1996, is amended to read: 12 (t) Payment of interest under (l) of this section and forgiveness under (s) of 13 this section are subject to appropriation by the legislature. Money obtained from the 14 sale of bonds by the corporation [STUDENT LOAN CORPORATION] under 15 AS 14.42.220 may not be appropriated for the payment of interest or the forgiveness 16 of loans. 17 * Sec. 22. AS 14.43.120(u), as amended by sec. 14, ch. 5, SLA 1996, is amended to read: 18 (u) The corporation [COMMISSION] by regulation shall set a loan 19 origination fee, not to exceed five percent of the total [SCHOLARSHIP] loan amount, 20 to be assessed upon a [SCHOLARSHIP] loan that is funded from the student loan fund 21 of the corporation [ALASKA STUDENT LOAN CORPORATION]. The loan 22 origination fee shall be deducted at the time the loan is disbursed. Subject to 23 appropriation, the loan origination fees shall be deposited into an origination fee 24 account within the student loan fund of the corporation [ALASKA STUDENT LOAN 25 CORPORATION], and subsequently used by the corporation to offset losses incurred 26 as a result of death, disability, default, or bankruptcy of the borrower. 27 * Sec. 23. AS 14.43.120(v) is amended to read: 28 (v) In determining a rate of interest under (f)(2) of this section, 29 (1) the corporation [COMMISSION] shall use a method that ensures 30 that the rate of interest is as low as possible without precluding the ability of the 31 corporation [COMMISSION] to administer loans made under AS 14.43.100 -

01 14.43.160 [AS 14.43.090 - 14.43.160]; and 02 (2) the total amount charged for administrative costs of the student loan 03 program may not exceed two and one-half percent above the amount determined under 04 (f)(1) of this section. 05 * Sec. 24. AS 14.43.122(a) is amended to read: 06 (a) The corporation [COMMISSION] may offer the option of consolidating 07 into a single loan 08 (1) multiple loans made to a borrower who has received more than 09 one loan under this chapter [THE OPTION OF CONSOLIDATING THE MULTIPLE 10 LOANS INTO A SINGLE LOAN]; or 11 (2) [TO CONSOLIDATE] loans made to married borrowers if the 12 married borrowers agree to be jointly and severally liable for repayment of the 13 consolidated loan [,] regardless of the borrowers' future marital status or the death of 14 one of the borrowers. 15 * Sec. 25. AS 14.43.125(a), as amended by sec. 15, ch. 5, SLA 1996, is amended to read: 16 (a) A person may apply for and obtain a student [SCHOLARSHIP] loan if the 17 person 18 (1) is 19 (A) enrolled as a full-time student in a career education, 20 associate, baccalaureate, or graduate degree program; 21 (B) enrolled as a half-time student in a career education, 22 associate, baccalaureate, or graduate degree program 23 (i) in the state; or 24 (ii) out of the state and is physically present in this state 25 while attending that program; or 26 (C) a graduate of a high school or the equivalent, or scheduled 27 for graduation from a high school within six months, with sufficient credits to 28 be admitted to a career education program or to an accredited college or 29 university; 30 (2) is not delinquent or in default on a previously awarded student 31 [SCHOLARSHIP] loan; and

01 (3) is a resident of the state at the time of application for the loan; for 02 purposes of this section, a person qualifies as a resident of the state if at the time of 03 application for the loan the person 04 (A) has been physically present in the state for at least one year 05 immediately before the time of application for the loan; 06 (B) is dependent on a parent or guardian for care, the parent or 07 guardian has been present in the state for at least one year immediately before 08 the time of application for the loan, and the person has been present in the state 09 for at least one year of the immediately preceding five years, except that the 10 corporation [COMMISSION] may by a two-thirds vote, acting upon a written 11 appeal by the person, grant an exemption to the requirement that the person has 12 been present in the state for one year of the immediately preceding five years; 13 (C) has been physically present in the state for at least one year 14 immediately before the applicant was absent from the state and the absence is 15 due solely to 16 (i) serving an initial period of up to three years on active 17 duty as a member of the armed forces of the United States; 18 (ii) serving for up to three years as a full-time volunteer 19 under the Peace Corps Act; 20 (iii) serving for up to three years as a full-time volunteer 21 under the Domestic Volunteer Service Act of 1973; 22 (iv) required medical care for the applicant or the 23 applicant's immediate family; 24 (v) being a person who otherwise qualifies as a resident 25 and is accompanying a spouse who qualifies as a resident under (i) - 26 (iv) of this paragraph; 27 (vi) an absence allowed under (D)(i)-(iv) of this 28 paragraph; or 29 (D) is a dependent of a parent or guardian who has been 30 physically present in the state for at least one year immediately before the 31 parent or guardian was absent from the state and the absence is due solely to;

01 (i) participating in a foreign exchange student program 02 recognized by the corporation [COMMISSION]; 03 (ii) attending a school as a full-time student; 04 (iii) full-time employment by the state; 05 (iv) being a member of or employed full-time by the 06 state's congressional delegation; 07 (v) being a person who otherwise qualifies as a resident 08 and is accompanying a spouse who qualifies as a resident under (i) - 09 (iv) of this paragraph; 10 (4) does not have a past due child support obligation established by 11 court order or by the child support enforcement division under AS 25.27.160 - 12 25.27.220 at the time of application; and 13 (5) has not, within the previous five years, had a [SCHOLARSHIP] 14 loan discharged or written off by the corporation or the former Alaska Commission 15 on Postsecondary Education [COMMISSION] for any reason. 16 * Sec. 26. AS 14.43.125(c), as amended by sec. 16, ch. 5, SLA 1996, is amended to read: 17 (c) A person may not be awarded a scholarship loan under AS 14.43.100 - 18 14.43.160 [AS 14.43.090 - 14.43.160] if that person receives a teacher scholarship loan 19 under AS 14.43.600 - 14.43.700 for the same period of attendance. 20 * Sec. 27. AS 14.43.150(a) is amended to read: 21 (a) In a court proceeding regarding a defaulted loan under this chapter in 22 which the court has entered judgment in favor of the corporation or the former 23 Alaska Commission on Postsecondary Education [COMMISSION], the court may, 24 on its own motion or motion of the corporation [COMMISSION], after notice and an 25 opportunity for hearing, order the loan recipient to assign to the corporation 26 [COMMISSION] that portion of salary or wages due the loan recipient currently and 27 in the future in an amount sufficient to pay the amount ordered by the court to be 28 repaid [TO THE COMMISSION]. 29 * Sec. 28. AS 14.43.160 is amended to read: 30 Sec. 14.43.160. DEFINITIONS. In AS 14.43.100 - 14.43.160, [AS 14.43.090 31 - 14.43.160]

01 (1) "career education" means a course or program in vocational- 02 technical training or education approved by the corporation that is a half-time program at 03 least 12 weeks in length or a full-time program at least six weeks in length 04 [COMMISSION]; 05 (2) "federally insured" means a loan covered by the provisions of the 06 Guaranteed Student Loan Program of Title IV, Part B, of the Higher Education Act of 07 1965 (P.L. 89-329), as amended; 08 (3) "full-time student" means an undergraduate or career education 09 student who is enrolled and is in regular attendance at classes for at least 12 semester 10 hours of credit or the equivalent during the semester or a graduate student who is 11 enrolled and is in regular attendance at classes for at least nine semester hours of credit 12 or the equivalent; any combination of semester hours of credit, or the equivalent, 13 aggregating to the requisite number of semester hours and undertaken during a 14 semester at two or more public or private institutions of higher education constitutes 15 full-time student status; 16 (4) "half-time student" means an undergraduate, graduate, or career 17 education student who during the semester is enrolled and is in regular attendance at 18 classes at one or more public or private institutions of higher education for at least a 19 total of six semester credit hours or an equivalent of six semester credit hours, and 20 includes a career education student enrolled and in regular attendance in classes for at 21 least 15 hours a week; 22 (5) "school year" means the period from September 1 of one year 23 through August 31 of the following year; 24 (6) "summer term" means the period from June 1 - August 31. 25 * Sec. 29. AS 14.43.255(a) is amended to read: 26 (a) There is created a memorial scholarship revolving loan fund to be 27 administered by the corporation. The fund shall be used to provide educational 28 scholarship loans to students selected under AS 14.43.250 - 14.43.325. Repayments 29 [UNLESS THE INSTRUMENT EVIDENCING THE MEMORIAL SCHOLARSHIP 30 LOAN HAS BEEN SOLD OR ASSIGNED TO THE ALASKA STUDENT LOAN 31 CORPORATION, REPAYMENTS] of a loan shall be deposited into the memorial

01 scholarship revolving loan fund and shall be used to make new loans. 02 * Sec. 30. AS 14.43.300(g), as amended by sec. 18, ch. 5, SLA 1996, is amended to read: 03 (g) The corporation [COMMISSION] by regulation shall set a loan 04 origination fee, not to exceed five percent of the total memorial scholarship loan 05 amount, to be assessed upon a memorial scholarship loan. The loan origination fee 06 shall be deducted at the time the loan amount is disbursed. The [SUBJECT TO 07 APPROPRIATION, THE] loan origination fee shall be deposited into a origination fee 08 account within the memorial scholarship revolving loan fund, and subsequently 09 transferred by the corporation [COMMISSION] to the appropriate memorial 10 scholarship accounts within the memorial scholarship revolving loan fund to offset 11 losses incurred due to loan debt cancellation as a result of death, disability, default, 12 or bankruptcy of the borrower [STUDENT]. 13 * Sec. 31. AS 14.43.305(i) is amended to read: 14 (i) To the extent they are not in conflict with terms and conditions under 15 AS 14.43.250 - 14.43.325, the terms and conditions of a memorial scholarship loan 16 made under AS 14.43.250(b)(5) are the same as the terms and conditions for a 17 scholarship loan under AS 14.43.100 - 14.43.160 [AS 14.43.090 - 14.43.160], except 18 that the interest on the loan is equal to five percent. 19 * Sec. 32. AS 14.43.320(b) is amended to read: 20 (b) To the extent that they are not in conflict with the provisions of 21 AS 14.43.250 - 14.43.325, the provisions of AS 14.43.100 - 14.43.160 [AS 14.43.090 - 22 14.43.160] relating to scholarship loans are applicable to loans made under 23 AS 14.43.250 - 14.43.325. 24 * Sec. 33. AS 14.43.405(b) is amended to read: 25 (b) To the extent that they are not in conflict with the provisions of 26 AS 14.43.400 - 14.43.405, the provisions of AS 14.43.100 - 14.43.160 [AS 14.43.090 - 27 14.43.160] relating to student financial aid are applicable to the grants made under 28 AS 14.43.400 - 14.43.500. 29 * Sec. 34. AS 14.43.410 is amended to read: 30 Sec. 14.43.410. DISTRIBUTION OF FUNDS. The funds appropriated for the 31 educational incentive grant program shall be allocated to eligible students in

01 accordance with the provisions of the federal state student incentive grant program and 02 regulations adopted under AS 14.42.200 and AS 14.43.405 [AS 14.43.105 AND 03 14.43.405]. 04 * Sec. 35. AS 14.43.415 is amended to read: 05 Sec. 14.43.415. ELIGIBILITY; PRIORITY. (a) A student may apply for an 06 educational incentive grant if the student 07 (1) is a resident of Alaska; 08 (2) is [EITHER] 09 (A) enrolled as a full-time undergraduate student in a degree 10 program in an accredited postsecondary educational institution; or 11 (B) eligible to be admitted to an accredited postsecondary 12 educational institution; and 13 (3) establishes financial need in accordance with standards for 14 determining financial need adopted by the corporation [COMMISSION] under 20 15 U.S.C. 1070c-2. 16 (b) The corporation [COMMISSION] shall adopt regulations to [, BY 17 REGULATION,] establish a system of priority in the selection of recipients of grants 18 under AS 14.43.400 - 14.43.500 under which students from "low income" families or 19 whose incomes are considered "low income" shall be given preference in the award 20 of the educational incentive grants. 21 * Sec. 36. AS 14.43.620(a) is amended to read: 22 (a) The [THERE IS CREATED A] teacher scholarship revolving loan account 23 is created within the student loan fund (AS 14.42.210). The account [FUND] shall 24 be used to make scholarship loans to students selected under AS 14.43.600 - 25 14.43.700. Repayments [UNLESS THE INSTRUMENT EVIDENCING THE 26 TEACHER SCHOLARSHIP LOAN HAS BEEN SOLD OR ASSIGNED TO THE 27 ALASKA STUDENT LOAN CORPORATION, REPAYMENTS] of principal and 28 interest on a teacher scholarship loan shall be paid into the teacher scholarship 29 revolving loan account [FUND] and shall be used to make new teacher scholarship 30 loans. If estimated funds available are inadequate to fully fund estimated teacher 31 scholarship loans for any fiscal year, additional funding from the general fund may be

01 requested and appropriated for that year. 02 * Sec. 37. AS 14.43.630(a) is amended to read: 03 (a) [THE TEACHER SCHOLARSHIP LOAN PROGRAM SHALL BE 04 ADMINISTERED BY THE COMMISSION IN ACCORDANCE WITH 05 REGULATIONS ADOPTED BY THE COMMISSION.] The corporation 06 [COMMISSION] shall 07 (1) annually allocate the [LOAN AWARDS] available [FOR] teacher 08 scholarship loans awards [ANNUALLY] to local school boards giving a preference 09 to rural school districts; and 10 (2) [DEVELOP AND] distribute to the local school boards an 11 application form for teacher scholarship loans; [THE FORM MUST INCLUDE A 12 REQUIREMENT THAT] the applicant must provide [SUPPLY] a high school 13 academic transcript and a statement of intent to enter a teaching career at the 14 elementary or secondary school level in the state. 15 * Sec. 38. AS 14.43.650(a) is amended to read: 16 (a) To be eligible for a teacher scholarship loan, a student must 17 (1) be a graduate of a public or private high school in the state [,] with 18 sufficient credits to be admitted to an accredited college or university; 19 (2) be enrolled in or show evidence of intent to enroll in a degree 20 program directed at a teaching career at the elementary or secondary school level; 21 (3) meet the conditions set by the student's local school board with 22 respect to the district's requirements for teachers in particular subject areas; 23 (4) submit to the local school board an application on a form provided 24 by the corporation [COMMISSION] under AS 14.43.630(a)(2); an application may 25 be submitted six months before graduation from high school; and 26 (5) not have a past due child support obligation established by court 27 order or by the child support enforcement division under AS 25.27.160 - 25.27.220 at 28 the time of application. 29 * Sec. 39. AS 14.43.650(c), as amended by sec. 20, ch. 5, SLA 1996, is amended to read: 30 (c) A student may not be awarded a teacher scholarship loan under 31 AS 14.43.600 - 14.43.700 if the student receives a student [SCHOLARSHIP] loan

01 under AS 14.43.100 - 14.43.160 [AS 14.43.090 - 14.43.160] for the same period of 02 attendance. 03 * Sec. 40. AS 14.43.720(a) is amended to read: 04 (a) The family education loan account is created within the student 05 [SCHOLARSHIP REVOLVING] loan fund (AS 14.42.210 [AS 14.43.090]). The 06 account shall be used to make family education loans to families selected under 07 AS 14.43.710 - 14.43.790, to pay the costs of collecting family education loans that 08 are in default if those costs are not recovered from the family, and to pay the costs of 09 administering the account. Repayments [UNLESS THE INSTRUMENT 10 EVIDENCING THE FAMILY EDUCATION LOAN HAS BEEN SOLD OR 11 ASSIGNED TO THE ALASKA STUDENT LOAN CORPORATION, 12 REPAYMENTS] of principal and interest on family education loans shall be paid into 13 the family education loan account. If estimated funds available from family education 14 loan repayments are inadequate to fully fund estimated family education loans in a 15 fiscal year, additional funding from the general fund may be requested and 16 appropriated for that year. 17 * Sec. 41. AS 14.43.740(d) is amended to read: 18 (d) A borrower's obligation to commence repayment [REPAYMENT] of 19 the principal and interest on a family education loan [MADE UNDER AS 14.43.710 - 20 14.43.790] begins on the first of the month immediately following loan disbursement. 21 The loan may be cancelled without prejudice at any time before actual disbursement. 22 The borrower shall repay [LOAN SHALL PROVIDE FOR REPAYMENT OF] the 23 total amount owed in periodic installments over a period of [IN] not more than 10 24 years from the commencement of the repayment obligation. If the corporation 25 [COMMISSION] and the borrower agree to a different repayment schedule, the 26 borrower shall repay the loan in accordance with the agreement. The borrower may 27 make payments earlier than required by this section or the agreement. 28 * Sec. 42. AS 14.43.990 is repealed and reenacted to read: 29 Sec. 14.43.990. DEFINITION. In this chapter, "corporation" means the Alaska 30 Student Loan Corporation. 31 * Sec. 43. AS 14.44.035 is amended to read:

01 Sec. 14.44.035. ADMINISTRATION. The Alaska Student Loan Corporation 02 [COMMISSION ON POSTSECONDARY EDUCATION] shall administer the state's 03 participation in the Western Regional Higher Education Compact. 04 * Sec. 44. AS 14.48 is amended by adding a new section to read: 05 Sec. 14.48.035. ALASKA POSTSECONDARY EDUCATION COMMISSION. 06 (a) The Alaska Postsecondary Education Commission is created in the department 07 consisting of the voting members of the Alaska Student Loan Corporation under 08 AS 14.42.120. The public members are subject to confirmation by the legislature and 09 serve at the pleasure of the governor for four-year staggered terms. 10 (b) Members of the commission serve without compensation, but the members 11 who are not state employees are entitled to per diem and travel expenses authorized 12 for boards and commissions under AS 39.20.180. 13 (c) The commission shall elect a chair from among its membership at its 14 annual meeting each year. A majority of the members constitute a quorum for 15 organizing the commission, conducting its business, and exercising the powers of the 16 commission. 17 (d) The employees of the department shall serve as staff to the commission. 18 * Sec. 45. AS 14.48.040 is amended to read: 19 Sec. 14.48.040. COMMISSION TO ADMINISTER CHAPTER. The Alaska 20 Commission on Postsecondary Education shall administer this chapter [AND MAY 21 HIRE NECESSARY PERSONNEL]. The commission may obtain from departments, 22 commissions, and other state agencies information and assistance needed to carry out 23 the provisions of this chapter. 24 * Sec. 46. AS 14.48.050 is amended by adding new subsections to read: 25 (b) The commission has the following advisory functions to the governing 26 boards of higher education institutions in this state, the governor, the legislature, and 27 other appropriate state and federal officials: 28 (1) coordinate the development or the start of comprehensive plans for 29 the orderly systematic growth of public and private postsecondary education, including 30 community colleges and occupational education, and submit recommendations on the 31 need for, and location of, new facilities and programs; and

01 (2) advise as to the functions and purposes of the public and private 02 colleges and universities in the state and counsel as to the programs appropriate to 03 each. 04 (c) The commission may 05 (1) require the institutions of public and private higher education and 06 other institutions of postsecondary education in the state to submit data on costs, 07 selection and retention of students, enrollments, plant capacities and use, and other 08 matters pertinent to effective planning and coordination, and shall furnish information 09 concerning these matters to the governor, the legislature, and other state and federal 10 agencies as requested; 11 (2) establish task forces, committees, or subcommittees, not necessarily 12 consisting of commission members or employees, to advise and assist the commission 13 in carrying out its functions assigned by this chapter and federal statute; the 14 commission may contract with, or use, existing institutions of higher education or other 15 individuals or organizations to make studies, conduct surveys, submit 16 recommendations, or otherwise contribute to the work of the commission. 17 * Sec. 47. AS 14.48.090 is repealed and reenacted to read: 18 Sec. 14.48.090. FEES. The commission shall adopt regulations that establish 19 the amount and manner of payment of fees for applications, authorizations, permits, 20 and renewals under this chapter. 21 * Sec. 48. AS 14.48.120 is amended by adding a new subsection to read: 22 (d) In addition to the sanctions imposed under (a) of this section, the 23 commission may assess a civil fine, not to exceed $5,000, for costs of investigating 24 and adjudicating a matter under this chapter. 25 * Sec. 49. AS 39.05.100(a) is amended to read: 26 (a) A person appointed to a board or commission of the state government shall 27 be and have been before the last general election, (1) a registered voter in the state, 28 if the appointment is made at large or (2) a registered voter from the judicial district, 29 if the appointment is made from a specific judicial district. The student member of 30 the Board of Regents of the University of Alaska appointed under AS 14.40.150(b), 31 the student member of the Alaska Student Loan Corporation [COMMISSION ON

01 POSTSECONDARY EDUCATION] appointed under AS 14.42.120 [AS 14.42.015(e)], 02 and a member of the Alaska Human Relations Commission appointed under 03 AS 44.19.600, are exempt from the requirement of this subsection if the member was 04 not old enough to be a registered voter in the last general election. 05 * Sec. 50. AS 39.25.110(11) is amended to read: 06 (11) the officers and employees of the following boards, commissions, 07 and authorities: 08 (A) [REPEALED 09 (B)] Alaska Permanent Fund Corporation; 10 (B) [(C)] Alaska Industrial Development and Export Authority; 11 (C) [(D)] Alaska Commercial Fisheries Entry Commission; 12 (D) [(E)] Alaska Student Loan Corporation [COMMISSION 13 ON POSTSECONDARY EDUCATION]; 14 (E) [(F)] Alaska Aerospace Development Corporation; 15 * Sec. 51. AS 39.50.200(b)(32) is amended to read: 16 (32) Alaska Commission on Postsecondary Education (AS 14.48.035) 17 [(AS 14.42.015)]; 18 * Sec. 52. AS 39.50.200(b) is amended by adding a new paragraph to read: 19 (56) Alaska Student Loan Corporation (AS 14.42.100). 20 * Sec. 53. AS 43.23.067(a) is amended to read: 21 (a) AS 09.38 does not apply to permanent fund dividends taken under 22 AS 14.43.120(i). Notwithstanding AS 09.35, the Alaska Student Loan Corporation 23 may take a permanent fund dividend [EXECUTION ON A CLAIM] under 24 AS 14.43.120(i) [IS ACCOMPLISHED] by delivering a certified claim to the 25 department containing the following information: 26 (1) the name and social security number of the individual whose 27 dividend is being claimed; 28 (2) the amount the individual owes on the scholarship loan; and 29 (3) a statement that 30 (A) a [THE] debt for at least the amount claimed has not 31 been contested, or, if contested, that the issue has been resolved in favor of the

01 Alaska Student Loan Corporation [COMMISSION ON POSTSECONDARY 02 EDUCATION]; and 03 (B) if the debt has been contested and resolved in favor of the 04 Alaska Student Loan Corporation [COMMISSION ON POSTSECONDARY 05 EDUCATION], no appeal is pending, the time limit for filing an appeal has 06 expired, or the appeal has been resolved in favor of the commission. 07 * Sec. 54. AS 43.23.067(b) is amended to read: 08 (b) The Alaska Student Loan Corporation [COMMISSION ON 09 POSTSECONDARY EDUCATION] shall notify the individual of a claim under (a) 10 of this section. The notice shall be sent to the address provided in the individual's 11 permanent fund dividend application and must provide the following information: 12 (1) the amount of the claim; and 13 (2) notice that the amount of the permanent fund dividend that does not 14 exceed the amount of the claim shall be paid to the Alaska Student Loan 15 Corporation [COMMISSION ON POSTSECONDARY EDUCATION] unless the 16 commission releases the claim or the individual requests a hearing within 30 days after 17 the date the notice is sent by the commission. 18 * Sec. 55. AS 14.42.010, 14.42.015, 14.42.020, 14.42.025, 14.42.030, 14.42.035, 14.42.040, 19 14.42.045, 14.42.050, 14.42.055, 14.42.170, 14.42.200(18), 14.42.210(c); AS 14.43.090, 20 14.43.105, 14.43.255(c), 14.43.320(a), 14.43.405(a), 14.43.620(b), and 14.43.720(b) are 21 repealed. 22 * Sec. 56. TRANSITIONAL PROVISION: TEMPORARY FEE SCHEDULE FOR 23 CERTAIN ACTIVITIES RELATED TO POSTSECONDARY EDUCATIONAL 24 INSTITUTIONS AND AGENTS. Until a new fee schedule is adopted by regulation to 25 implement the changes made by sec. 47 of this Act, the commission may charge the fees set 26 out in the following schedule for an authorization to operate an institution in this state and for 27 an agent's permit related to activities for postsecondary educational institutions: 28 (1) authorization to operate $100; 29 (2) renewal of authorization to operate $100; 30 (3) an agent's permit $ 50; 31 (4) renewal of an agent's permit $ 50.

01 * Sec. 57. TRANSITION. (a) The terms of the members of the Alaska Commission on 02 Postsecondary Education terminate on the effective date of sec. 1 of this Act. The governor 03 may appoint to the Alaska Student Loan Corporation a person who has served on the Alaska 04 Commission on Postsecondary Education and who meets the qualifications of AS 14.42.120, 05 as repealed and reenacted by this Act. The terms of public persons initially appointed to the 06 Alaska Student Loan Corporation must be set as provided in AS 39.05.055. 07 (b) Litigation, hearings, investigations, and other proceedings pending under a law 08 amended or repealed by this Act, or in connection with functions transferred by this Act, 09 continue in effect and may be continued and completed notwithstanding a transfer or 10 amendment or repeal provided for in this Act. 11 (c) Regulations adopted by the Alaska Commission on Postsecondary Education under 12 authority of AS 14.43 remain in effect until regulations adopted by the Alaska Student Loan 13 Corporation under that chapter, as amended by this Act, take effect. The Alaska Student Loan 14 Corporation may implement and enforce commission regulations until the regulations of the 15 corporation take effect. Notwithstanding sec. 59 of this Act, the Alaska Student Loan 16 Corporation may immediately proceed to adopt regulations necessary to implement the 17 changes made by this Act to AS 14.43. The regulations take effect under AS 44.62 18 (Administrative Procedure Act), but not before the effective date of sec. 1 of this Act. 19 (d) Regulations adopted under the authority of AS 14.48 by the Alaska Commission 20 on Postsecondary Education, as constituted before July 1, 1996, remain in effect. 21 Notwithstanding sec. 59 of this Act, the commission may immediately proceed to adopt 22 regulations necessary to implement the changes made by this Act to AS 14.48. The 23 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 24 effective date of sec. 1 of this Act. 25 (e) Contracts, rights, liabilities, notes, or other obligations created by or under a 26 section of AS 14.43 amended or repealed by this Act, and in effect on June 30, 1996, remain 27 in effect notwithstanding this Act, with all contracts, rights, liabilities, notes, or other 28 obligations created by or under a section of AS 14.43 amended or repealed by this Act 29 becoming contracts, rights, liabilities, notes, or other obligations of the Alaska Student Loan 30 Corporation. 31 (f) Records, equipment, appropriations, and other property of agencies of the state

01 whose functions are transferred under this Act shall be transferred to implement the provisions 02 of this Act. 03 (g) An individual who is an employee of the Alaska Commission on Postsecondary 04 Education on June 30, 1996, becomes an employee of the Alaska Student Loan Corporation 05 on July 1, 1996. 06 (h) Employees of the Alaska Student Loan Corporation who were, on June 30, 1996, 07 employees of the Alaska Commission on Postsecondary Education, are no longer eligible to 08 accrue credited service under AS 14.25. 09 * Sec. 58. Section 57(c) and (d) take effect immediately under AS 01.10.070(c). 10 * Sec. 59. Except as provided in sec. 58 of this Act, this Act takes effect July 1, 1996.