00                             HOUSE BILL NO. 17                                                                          
01 "An Act providing for a reduction of the principal of postsecondary education loans for                                 
02 residents."                                                                                                             
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 14.43 is amended by adding a new section to read:                                                  
05            Sec. 14.43.123. Reduction of loan principal for residents. (a)                                           
06       Notwithstanding a contrary provision of law, the commission shall provide for a                                   
07       reduction of 2.5 percent a year of the principal amount of a loan issued under                                    
08       AS 14.43.091 - 14.43.160, 14.43.161 - 14.43.168, or 14.43.170 - 14.43.175 at the end                              
09       of each calendar year if                                                                                          
10                 (1)  the borrower establishes and maintains residency for one year                                      
11       before obtaining the loan;                                                                                        
12                 (2)  the borrower maintains residency in the state while repaying the                                   
13       loan;                                                                                                             
14                 (3)  the loan for which the reduction of the principal is allowed is not in                             

01       default;                                                                                                          
02                 (4)  the principal of the loan is not otherwise eligible to be fully repaid                             
03       or forgiven by the state under another program; and                                                               
04                 (5)  the borrower completed in a timely manner the degree or certificate                                
05       program for which the loan was issued.                                                                            
06            (b)  The reduction of principal under (a) of this section is subject to                                      
07       appropriation by the legislature to the commission of the amount necessary to offset                              
08       the amount of reduced principal provided to borrowers. The commission shall, by                                   
09       regulation, establish an equitable system for reducing or prorating principal reductions                          
10       among borrowers if the amount appropriated is insufficient to offset the full amount of                           
11       principal reductions.                                                                                             
12            (c)  A reduction of the principal of the loan provided under this section is in                              
13       addition to any other available reduction of the principal of the loan or interest rate.                          
14            (d)  A person who is issued a reduction of the principal of a loan under this                                
15       section in error shall repay the amount of the reduction, plus interest.                                          
16            (e)  The commission may adopt regulations necessary to implement this                                        
17       section, including regulations for partial reductions in principal during the year when a                         
18       borrower returns to the state after completing the degree or program under (a)(5) of                              
19       this section. The regulations must include a description of timely completion of                                  
20       postsecondary education programs.                                                                                 
21            (f)  In this section, "resident" or "residency" means living in the state with the                           
22       intention of remaining permanently without claiming residency in another state or                                 
23       country.                                                                                                          
24    * Sec. 2. AS 14.43.171 is amended to read:                                                                         
25            Sec. 14.43.171. Applicability of other laws. The provisions of                                             
26       AS 14.43.120(d)(4), 14.43.122, 14.43.123, 14.43.135, 14.43.140, 14.43.145 -                                   
27       14.43.160, 14.43.164, 14.43.166, and 14.43.168 apply to the loans made under                                      
28       AS 14.43.170 - 14.43.175 as if the loans were made under those applicable provisions.