SB 153: "An Act providing for a reduction of the principal of postsecondary education loans for residents."

00 SENATE BILL NO. 153 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.