SB 189: "An Act relating to eligibility for and default, collection, and repayment of student loans; relating to nonrenewal of certain occupational licenses for default on a student loan; and providing for an effective date."
00SENATE BILL NO. 189 01 "An Act relating to eligibility for and default, collection, and repayment of 02 student loans; relating to nonrenewal of certain occupational licenses for default 03 on a student loan; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 14.42.200(10) is amended to read: 06 (10) gather information on student loans available to residents of 07 Alaska and disseminate the information to reasonably assure that qualified residents 08 are aware of financial resources available to those attending or desiring to attend 09 institutions for which loans may be made under AS 14.43.090 - 14.43.325, 14.43.600 - 10 14.43.700, or 14.43.710 - 14.43.750 [14.43.710 - 14.43.790]; 11 * Sec. 2. AS 14.42.210(a) is amended to read: 12 (a) The student loan fund is established in the corporation. The student loan 13 fund is a trust fund to be used to carry out the purposes of AS 14.42.100 - 14.42.390, 14 AS 14.43.090 - 14.43.325, 14.43.600 - 14.43.700, and 14.43.710 - 14.43.750
01 [14.43.710 - 14.43.790]. The fund consists of money or assets appropriated or 02 transferred to the corporation for the fund and money or assets deposited in it by the 03 corporation. The corporation may establish separate accounts in the fund. 04 * Sec. 3. AS 14.42.210(b) is amended to read: 05 (b) Money and other assets of the student loan fund may be used to secure 06 bonds of the corporation, invested in student loans and investments under 07 AS 37.10.071 and used to purchase loans approved under AS 14.43.090 - 14.43.325, 08 14.43.600 - 14.43.700, or 14.43.710 - 14.43.750 [14.43.710 - 14.43.790]. 09 * Sec. 4. AS 14.43.120(v) is amended to read: 10 (v) In determining a rate of interest under (f)(2) of this section, 11 (1) the commission shall use a method that ensures that the rate of 12 interest is as low as possible without precluding the ability of the commission to 13 administer loans made under AS 14.43.090 - 14.43.160; and 14 (2) the total amount charged for administrative costs of the student loan 15 program may not exceed three [TWO AND ONE-HALF] percent above the amount 16 determined under (f)(1) of this section. 17 * Sec. 5. AS 14.43.125(a) is amended to read: 18 (a) A person is eligible for a [MAY APPLY FOR AND OBTAIN A 19 SCHOLARSHIP] loan if the person 20 (1) is 21 (A) enrolled as a full-time student in a career education, 22 associate, baccalaureate, or graduate degree program; 23 (B) enrolled as a half-time student in a career education, 24 associate, baccalaureate, or graduate degree program 25 (i) in the state; or 26 (ii) out of the state and is physically present in this state 27 while attending that program; or 28 (C) a graduate of a high school or the equivalent, or scheduled 29 for graduation from a high school within six months, who, at the time of loan 30 disbursement, will be enrolled in compliance with (A) or (B) of this 31 paragraph [WITH SUFFICIENT CREDITS TO BE ADMITTED TO A
01 CAREER EDUCATION PROGRAM OR TO AN ACCREDITED COLLEGE 02 OR UNIVERSITY]; 03 (2) is not delinquent and has never been [OR] in default on a 04 [PREVIOUSLY AWARDED SCHOLARSHIP] loan previously awarded by the 05 commission; [AND] 06 (3) is a resident of the state at the time of application for the loan; for 07 purposes of this section, a person qualifies as a resident of the state if at the time of 08 application for the loan the person 09 (A) has been physically present in the state for at least one year 10 immediately before the time of application for the loan with the intent to 11 remain indefinitely; 12 (B) is dependent on a parent or guardian for care, the parent or 13 guardian has been present in the state for at least one year immediately before 14 the time of application for the loan with the intent to remain indefinitely, and 15 the person has been present in the state for at least one year of the immediately 16 preceding five years except that the commission may by a two-thirds vote, 17 acting upon a written appeal by the person, grant an exemption to the 18 requirement that the person has been present in the state for one year of the 19 immediately preceding five years; 20 (C) has been physically present in the state for at least one year 21 immediately before the applicant was absent from the state, the person intends 22 to return permanently to the state, and the absence is due solely to 23 (i) serving an initial period of up to three years on active 24 duty as a member of the armed forces of the United States; 25 (ii) serving for up to three years as a full-time volunteer 26 under the Peace Corps Act; 27 (iii) serving for up to three years as a full-time volunteer 28 under the Domestic Volunteer Service Act of 1973; 29 (iv) required medical care for the applicant or the 30 applicant's immediate family; 31 (v) being a person who otherwise qualifies as a resident
01 and is accompanying a spouse who qualifies as a resident under (i) - 02 (iv) of this paragraph; 03 (vi) an absence allowed under (D)(i) - (iv) of this 04 paragraph; or 05 (D) is a dependent of a parent or guardian who has been 06 physically present in the state for at least one year immediately before the 07 parent or guardian was absent from the state, the parent or guardian intends 08 to return permanently to the state, and the absence is due solely to 09 (i) participating in a foreign exchange student program 10 recognized by the commission; 11 (ii) attending a school as a full-time student; 12 (iii) full-time employment by the state; 13 (iv) being a member of or employed full-time by the 14 state's congressional delegation; 15 (v) being a person who otherwise qualifies as a resident 16 and is accompanying a spouse who qualifies as a resident under (i) - 17 (iv) of this paragraph; 18 (4) does not have a past due child support obligation established by 19 court order or by the child support enforcement division under AS 25.27.160 - 20 25.27.220 at the time of application or loan disbursement; [AND] 21 (5) has not, within the previous five years, had a [SCHOLARSHIP] 22 loan discharged or written off by the commission for any reason; 23 (6) does not have a status, at the time of the application for a loan 24 or disbursement of loan funds, that would prevent the person from repaying the 25 loan as it becomes due; 26 (7) has not within the previous seven years defaulted on another 27 loan made to the person by a lending entity unless the person can show good faith 28 efforts to repay the loan and extraordinary circumstances that led to the default; 29 and 30 (8) does not have a credit history, at the time of application for a 31 loan, that demonstrates chronic inability or unwillingness to pay an extension of
01 credit or loan as it becomes due. 02 * Sec. 6. AS 14.43.125 is amended by adding new sections to read: 03 (d) Notwithstanding (a)(6) - (8) of this section, the commission may issue a 04 loan to a person if another person who satisfies the requirements of (a)(2) and (a)(4) - 05 (8) of this section cosigns the loan. 06 (e) The commission may withhold disbursement of a loan if the borrower 07 becomes ineligible under this section. 08 * Sec. 7. AS 43.43 is amended by adding new sections to read: 09 Sec. 14.43.145. Default. (a) For the purposes of this chapter, a loan is in 10 default if a loan payment has become 180 or more days past due. Upon default, 11 (1) repayment of the remaining balance is accelerated and due; 12 (2) the commission may take the borrower's permanent fund dividend 13 under AS 43.23.067; 14 (3) the commission may issue an order to withhold and deliver under 15 AS 14.43.147; and 16 (4) the commission may provide notice of the default to a licensing 17 entity for nonrenewal of the license under AS 14.43.148. 18 (b) The commission shall notify the borrower of the default, and the 19 consequences of default imposed under (a) of this section, by mailing a notice to the 20 borrower's most recent address provided to the commission by the borrower or 21 obtained by the commission. 22 (c) A borrower may appeal a notice of default by filing a statement with the 23 executive director, within 30 days after the date of the notice, requesting that the loan 24 status be reviewed. AS 44.62 (Administrative Procedure Act) does not apply to the 25 review of default under this section. The borrower has the burden to show that, at the 26 time of the notice of default, no loan payment was more than 180 days past due or that 27 the borrower entered into, and was in compliance with, a default forbearance 28 agreement with the commission. The decision of the executive director is a final 29 decision that may be appealed to the superior court under the Alaska Rules of 30 Appellate Procedure. 31 Sec. 14.43.147. Order to withhold and deliver. (a) Thirty days after the
01 date a notice of default under AS 14.43.145(b) is mailed or the date of the decision of 02 the executive director under AS 14.43.145(c), whichever is later, the commission may 03 issue an order to withhold and deliver property to a person, or agency or political 04 subdivision of the state, who the commission has reason to believe possesses property 05 due, owing, or belonging to the borrower. 06 (b) The order to withhold and deliver shall be served personally or by certified 07 mail, return receipt requested, upon the person, or agency or political subdivision of 08 the state, possessing the property. The order must state the amount of the borrower's 09 liability and include notice of the terms of this section. All real and personal property, 10 including earnings, that are due, owing, or belonging to the borrower are subject to an 11 order to withhold and deliver. 12 (c) A person, or agency or political subdivision of the state, served with an 13 order to withhold and deliver, is required to make true answers under oath and in 14 writing to inquiries contained in the order within three weeks after service of the order 15 and to all inquiries subsequently made. 16 (d) Upon receipt of the order, the person, or agency or political subdivision of 17 the state, shall immediately withhold property due, owing, or belonging to the 18 borrower and shall deliver the property to the commission after three weeks have 19 expired from the date of the service of the order. Money shall be delivered by 20 remittance payable to the order of the commission. 21 (e) An employer shall withhold the earnings of a borrower subject to an order 22 at each succeeding interval of payment until the entire amount of the debt stated in the 23 order has been withheld. An employer may, for each payment made under an order 24 to withhold and deliver, deduct $5 from other wages or salary owed to the borrower. 25 (f) If a borrower who is subject to an order terminates employment, the 26 employer shall promptly notify the commission and provide the borrower's last known 27 home address and the name and address of the borrower's new employer, if known. 28 The employer shall keep a record of the order for two years after the borrower 29 terminates employment. If the employer reemploys the borrower within that two-year 30 period, the employer shall immediately reimplement the order unless the employer has 31 received notice of satisfaction under (j) of this section.
01 (g) An employer may not discharge, discipline, or refuse to employ a borrower 02 on the basis of an order issued under this section. A person who violates this 03 subsection or a regulation adopted to implement it is liable for a civil penalty of not 04 more than $10,000. The employee may seek restitution or reinstatement from the 05 employer. 06 (h) A person, or agency or political subdivision of the state, who complies 07 with an order to withhold and deliver that is regular on its face is not subject to civil 08 liability to an individual or agency for conduct in compliance with the notice. A state 09 agency that complies with an order to withhold and deliver that is regular on its face 10 is not required to pay interest under AS 37.05.285 for failure to make timely payment 11 to the borrower. 12 (i) An order to withhold and deliver under this section is subject to the 13 exemptions under AS 09.38. 14 (j) Upon satisfaction of a loan obligation, the commission shall, within 15 15 working days, notify all persons served with an order under this section that the order 16 is no longer in force. If the commission receives money under an order after 17 satisfaction of the loan, the commission shall within 15 working days return the 18 overpayment to the borrower. If the commission fails to return an overpayment as 19 required under this subsection, the commission is liable to the borrower for the amount 20 of the overpayment, plus legal interest under AS 45.45.010. 21 (k) If a person, or agency or political subdivision of the state, knowingly fails 22 to make an answer to an order under this section within the time prescribed, or 23 knowingly fails to honor an order under this section, the person, or agency or political 24 subdivision of the state, is liable to the commission in an amount equal to 100 percent 25 of the amount that is the basis of the order, together with costs, interest, and 26 reasonable attorney fees. In this subsection, "knowingly" has the meaning given in 27 AS 11.81.900. 28 (l) A borrower against whom an order has been served under this section may 29 apply for relief to the superior court. 30 Sec. 14.43.148. Nonrenewal of license. (a) Notwithstanding any other 31 provision of law, a licensing entity may not renew a license issued to a borrower if the
01 licensing entity has received notice from the commission that the licensee is in default 02 on a loan made by the commission. If the licensee has appealed the determination of 03 default status, the commission shall notify the licensing entity and renewal may not be 04 denied under this section unless and until the appeal has been concluded and the 05 default status affirmed. Unless a temporary license is issued under (c) of this section, 06 the denial of renewal is effective at the beginning of that renewal period. Denial of 07 renewal of a license shall continue until the licensing entity receives notice of a release 08 from the commission. If a license is denied under this section, the licensing entity 09 shall refund the renewal fee less the temporary license fee, if any. 10 (b) The licensing entity shall provide written notice of the denial of renewal 11 of the license by giving written notice to the licensee or sending the notice to the 12 licensee's last known mailing address on file with the licensing entity. The licensing 13 agency shall include with the notice a form to request review under (d) of this section; 14 the form must include the commission's address and telephone number. The notice 15 must inform the licensee of the temporary license granted under (c) of this section if 16 the applicant is otherwise eligible and that, upon expiration of that time period, 17 renewal of the license will be denied unless the licensing entity receives a notice of 18 release under (f) of this section from the commission. 19 (c) A licensing entity shall issue a temporary license valid for the first 150 20 days of the renewal period to a licensee whose license renewal is denied under this 21 section if the licensee is otherwise eligible for renewal. Only one temporary license 22 may be issued during a renewal period. The licensing entity shall adopt by regulation 23 a fee for issuance of a temporary license under this section; the amount of the fee shall 24 be set so that the fees collected under this section, to the extent reasonable, cover the 25 costs of implementing and administering this section. 26 (d) Within 30 days after receiving the notice under (b) of this section, the 27 licensee may request review by the commission. AS 44.62 (Administrative Procedure 28 Act) does not apply to the denial of renewal of a license under this section. Within 29 30 days after receiving a written request for review, the executive director shall inform 30 the applicant in writing of the executive director's findings. The executive director's 31 finding is a final decision that may be appealed to the superior court under the Alaska
01 Rules of Appellate Procedure. 02 (e) For the purpose of review under (d) of this section, the licensee has the 03 burden to show that 04 (1) the commission has not sent a notice of default in compliance with 05 AS 14.43.145(b); 06 (2) the notice of default has been rescinded after review under 07 AS 14.43.145(c); or 08 (3) the licensee has met the requirements of (f) of this section. 09 (f) The commission shall provide a notice of release to the licensing entity if 10 the licensee 11 (1) pays all costs of collection and the interest and principal that would 12 have been due if the loan had not been accelerated; or 13 (2) has negotiated a payment schedule with the commission after the 14 loan is in default and has made complete and timely payments under the negotiated 15 agreement for the four most recent and consecutive months. 16 (g) Notwithstanding (a) of this section, the denial of renewal of a teacher's 17 certificate is effective not sooner than the end of the contract year after the commission 18 has notified the teacher of the default status of the loan as provided under 19 AS 14.43.145. 20 (h) In this section, 21 (1) "license" means, 22 (A) except as provided in (B) of this paragraph, a license, 23 certificate, permit, registration, or other authorization that, at the time of 24 issuance, will be valid for more than 150 days and that may be acquired from 25 a state agency to perform an occupation, including the following: 26 (i) license relating to boxing or wrestling under 27 AS 05.10; 28 (ii) authorization to perform an occupation regulated 29 under AS 08; 30 (iii) teacher certificate under AS 14.20; 31 (iv) authorization under AS 18.08 to perform emergency
01 medical services; 02 (v) asbestos worker certification under AS 18.31; 03 (vi) boiler operator's license under AS 18.60.395; 04 (vii) certificate of fitness under AS 18.62; 05 (viii) hazardous painting certification under AS 18.63; 06 (ix) certification as a correctional, probation, or parole 07 officer under AS 18.65.245; 08 (x) security guard license under AS 18.65.400 - 09 18.65.490; 10 (xi) license relating to insurance under AS 21.27; 11 (xii) employment agency permit under AS 23.15.330 - 12 23.15.520; 13 (xiii) registration as a broker-dealer, agent, or investment 14 adviser under AS 45.55.030; 15 (xiv) certification as a pesticide applicator under 16 AS 46.03.320; 17 (xv) certification as a storage tank worker or contractor 18 under AS 46.03.375; 19 (xvi) certification as a water and wastewater works 20 operator under AS 46.30; and 21 (B) does not include 22 (i) a commercial fishing license under AS 16.05.480, 23 including a crewmember fishing license; 24 (ii) a vessel license issued under AS 16.05.490 or 25 16.05.530; 26 (iii) a license issued under AS 47.35; 27 (iv) a business license issued under AS 43.70; 28 (v) an entry permit or interim-use permit issued under 29 AS 16.43; or 30 (vi) a driver's license issued under AS 28.15; 31 (2) "licensee" means a person holding a license or applying to renew
01 a license; 02 (3) "licensing entity" means the state agency that issues or renews a 03 license; in the case of a license issued or renewed by the Department of Commerce 04 and Economic Development after an applicant's qualifications are determined by 05 another agency, "licensing entity" means the Department of Commerce and Economic 06 Development; 07 * Sec. 8. AS 14.43.640(a) is repealed and reenacted to read: 08 (a) To the extent that they are not in conflict with the provisions of 09 AS 14.43.600 - 14.43.700, the provisions of AS 14.43.100 - 14.43.160 are applicable 10 to loans made under AS 14.43.600 - 14.43.700. 11 * Sec. 9. AS 14.43.720(a) is amended to read: 12 (a) The family education loan account is created within the scholarship 13 revolving loan fund (AS 14.43.090). The account shall be used to make family 14 education loans to families selected under AS 14.43.710 - 14.43.750 [AS 14.43.710 - 15 14.43.790], to pay the costs of collecting family education loans that are in default if 16 those costs are not recovered from the family, and to pay the costs of administering 17 the account. Unless the instrument evidencing the family education loan has been sold 18 or assigned to the Alaska Student Loan Corporation, repayments of principal and 19 interest on family education loans shall be paid into the family education loan account. 20 If estimated funds available from family education loan repayments are inadequate to 21 fully fund estimated family education loans in a fiscal year, additional funding from 22 the general fund may be requested and appropriated for that year. 23 * Sec. 10. AS 14.43.740(a) is amended to read: 24 (a) The provisions of AS 14.43.100, 14.43.110, 14.43.120(a) - (d), [(i),] (m), 25 and (r) - (u), [AND] 14.43.135, 14.43.145 - 14.43.150, and 14.43.910 - 14.43.990 26 apply to a loan made under AS 14.43.710 - 14.43.750 [AS 14.43.710 - 14.43.790]. 27 * Sec. 11. AS 14.43.740(c) is amended to read: 28 (c) Interest on a loan made under AS 14.43.710 - 14.43.750 [AS 14.43.710 - 29 14.43.790] is at a rate of five percent a year unless the loan is in default. Interest on 30 a loan that is in default is 10 percent a year. 31 * Sec. 12. AS 14.43.740(d) is amended to read:
01 (d) Repayment of the principal and interest on a loan made under 02 AS 14.43.710 - 14.43.750 [AS 14.43.710 - 14.43.790] begins on the first of the month 03 immediately following loan disbursement. The loan may be cancelled without 04 prejudice at any time before actual disbursement. The loan shall provide for 05 repayment of the total amount owed in periodic installments in not more than 10 years 06 from the commencement of repayment. If the commission and the borrower agree to 07 a different repayment schedule, the borrower shall repay the loan in accordance with 08 the agreement. 09 * Sec. 13. AS 14.43.740 is amended by adding a new subsection to read: 10 (f) The commission may withhold disbursement of a loan if the borrower or 11 family member is no longer eligible under AS 14.43.750. 12 * Sec. 14. AS 14.43.750(a) is amended to read: 13 (a) A person may apply for and obtain a family education loan on behalf of 14 a family member if 15 (1) the borrower 16 (A) is a resident of the state at the time of application for the 17 loan; for purposes of this paragraph, a borrower qualifies as a resident of the 18 state if the borrower has been physically present in the state for at least one 19 year immediately before the time of application for the loan with the intent 20 to remain indefinitely or, if not physically present in the state, the 21 borrower has not declared or established residency in another state, 22 intends to return permanently to the state, and the absence meets the 23 requirements imposed under AS 14.43.125(a)(3)(C)(i) - (vi); 24 (B) satisfies the requirements of AS 14.43.125(a)(6) - (8); 25 (2) the family member 26 (A) is enrolled as a full-time student in a career education, 27 associate, baccalaureate, or graduate degree program; or 28 (B) is a graduate of a high school or the equivalent, or 29 scheduled for graduation from a high school within six months, who, at the 30 time of loan disbursement, will be enrolled in compliance with (A) of this 31 paragraph [WITH SUFFICIENT CREDITS TO BE ADMITTED TO A
01 CAREER EDUCATION PROGRAM OR TO AN ACCREDITED COLLEGE 02 OR UNIVERSITY]; and 03 (3) neither the borrower nor the family member 04 (A) is delinquent or has ever been [OR] in default on a 05 [PREVIOUSLY AWARDED STUDENT] loan previously awarded by the 06 commission; 07 (B) is past due on a child support obligation established by 08 court order or by the child support enforcement division under 09 AS 25.27.160 - 25.27.220 at the time of application or loan disbursement; 10 (C) has, within the previous five years, had a loan 11 discharged or written off by the commission for any reason [FROM THE 12 STATE]. 13 * Sec. 15. AS 21.27.390 is amended by adding a new subsection to read: 14 (d) This section does not apply to a temporary license issued under 15 AS 14.43.148. 16 * Sec. 16. AS 43.23.067 is repealed and reenacted to read: 17 Sec. 43.23.067. Claims of defaulted education loans. (a) AS 09.38 does not 18 apply to a permanent fund dividend taken under AS 14.43.145. Notwithstanding 19 AS 09.35, the Alaska Commission on Postsecondary Education may take a permanent 20 fund dividend under AS 14.43.145 by delivering a claim to the department certifying 21 the following information: 22 (1) the name and social security number of the individual whose 23 dividend is being claimed; 24 (2) the amount the individual owes on a loan awarded under AS 14.43; 25 and 26 (3) a statement that the loan is in default under AS 14.43.145, or, if the 27 individual has requested review of the status of the loan under AS 14.43.145(c), that 28 a final determination has been made that the loan is in default. 29 (b) The Alaska Commission on Postsecondary Education shall notify the 30 individual of a claim under (a) of this section. The notice shall be sent to the address 31 provided in the individual's permanent fund dividend application and must provide the
01 following information: 02 (1) the amount of the claim; 03 (2) notice that the amount of the permanent fund dividend up to the 04 amount of the claim shall be paid to the Alaska Commission on Postsecondary 05 Education to be credited against the individual's loan balance; and 06 (3) the individual's right to a hearing under (c) of this section. 07 (c) Within 30 days after the date of the notice under (b) of this section, the 08 individual may request a hearing. AS 44.62.330 - 44.62.630 apply to a hearing under 09 this section. At the hearing, the borrower has the burden to show that 10 (1) the commission has not sent a notice of default in compliance with 11 AS 14.43.145(b); 12 (2) the notice of default has been rescinded after review under 13 AS 14.43.145(c); or 14 (3) the amount owed by the borrower is less than the amount claimed 15 from the permanent fund dividend. 16 (d) If the amount owed by the borrower is determined under (c) of this section 17 to be some amount greater than $0, but less than the amount claimed, the commission 18 may amend its claim to the amount determined to be owing. 19 * Sec. 17. AS 08.02.025; AS 14.43.120(i), 14.43.120(q), 14.43.740(b), and 14.43.790 are 20 repealed. 21 * Sec. 18. Notwithstanding sec. 20 of this Act, the Alaska Commission on Postsecondary 22 Education may immediately proceed to adopt regulations necessary to implement the changes 23 made by this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), 24 but not before the effective date of sec. 1 of this Act. 25 * Sec. 19. Section 18 of this Act takes effect immediately under AS 01.10.070(c). 26 * Sec. 20. Except as provided in sec. 19 of this Act, this Act takes effect July 1, 1997.