Legislature(2025 - 2026)ADAMS 519
04/08/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB101 | |
| HB28 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 101 | TELECONFERENCED | |
| + | HB 28 | TELECONFERENCED | |
| += | HB 10 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 28
"An Act establishing a student loan repayment pilot
program; and providing for an effective date."
3:14:53 PM
Co-Chair Foster asked the sponsor to join the committee.
REPRESENTATIVE ANDI STORY, SPONSOR, introduced the bill
with prepared remarks:
Thank you for hearing HB 28, Student Loan Repayment
Program. This bill seeks to help address Alaska's
outmigration problem and our high employee vacancy
rates for teachers and state employees. According to
the Depart of Labor data, Alaska has had 12
consecutive years with more residents leaving our
great state than arriving. The data says we have about
the same number of people leaving the state as before,
BUT a significant number of people are not moving into
the state as they once did. This is a problem as we
are short on having certified teachers (600 teachers
short this year). In addition, Alaska continues to
have high vacancy rates in state employment. The state
employee vacancy rates are hindering citizens from
receiving timely essential state services such as
public assistance, ferry transportation, professional
licensing, retirement benefits, payroll and more.
Also, it is important to know that only 35 percent of
residents who leave Alaska for postsecondary education
outside of our state, return.
House Bill 28 seeks to incentivize in - migration
through a postsecondary education loan repayment
program and urges former Alaskan residents to "Come
Back Home." That is what I have nicknamed this bill,
"Come Back Home," to fill these essential state
employee positions or teacher positions for our
children.
Why it focuses on prior Alaskan residents is they
already have established roots here. They have family
and friends, a connection to this place and land, they
are more likely to remain after receiving incentives
like an employersponsored loan repayment program that
this bill establishes. House Bill 28 sets up a pilot
loan repayment program for up to 120 individuals that
makes a payment to the person's student loan lending
institution after they complete a year of work. The
payment is $8,000 per year, for three years for a
total of $24,000. The Student Loan Debt by State, from
the U.S. Department of Education says Alaskans have a
total of $32,000 student loan debt on average. This
bill reaches out to former residents who have traveled
south for their higher education degrees or technical
certificates or have completed their degree programs
or certifications through the University of Alaska
system and have moved and been out of the state for a
year or more. I believe this is a positive pilot
program to get 120 former Alaskans back living and
working in our state.
The funding for this pilot program would come from the
Alaska Higher Education Investment Fund (AHEIF). Kerry
Thomas, Acting Executive Director from the Alaska
Commission on Postsecondary Education (ACPE) is here
to provide information about the loan repayment
program vs. a loan forgiveness program that the state
used to have, and to talk about the HEIF. ACPE would
oversee this program.
Representative Story asked her staff to review the fiscal
note [sectional analysis].
CHERIE BOWMAN, STAFF, REPRESENTATIVE ANDI STORY, reviewed
the sectional analysis (copy on file):
Section 1: Adds a new section to the uncodified law
creating a student loan repayment pilot program:
a) The program will be developed and administered by
the Alaska Commission on Postsecondary Education.
Subject to appropriation, the commission may award a
grant to a person who:
1) applies not later than October 31, 2025;
2) is a full-time state employee or public school
teacher;
3) has a degree or certificate from a higher education
institution from outside Alaska;
4) was an Alaska resident for at least a year before
attending the out-of-state institution;
5) or has completed a degree or certificate through
the University of Alaska system and has resided
outside of the state for 12 months or more prior to
returning to Alaska to work as a full-time state
employee or public school teacher;
6) owes payment on a student loan taken to obtain
their degree or certificate.
b) The Commission will establish an application
process, along with policies to determine the
efficiency and success of the program in recruiting
and retaining grant recipient employees with the state
and school districts. The commission will report to
the legislature yearly.
c) To participate, applicants may be required to
refinance their existing student loans through the
commission.
d) Grants awarded are only for full-time teachers or
state employees, and payable only at the completion of
a year of work.
e) Participants may receive a grant each year for a
maximum of three years in an amount not to exceed
$8,000 per year. If the balance of the participant's
outstanding loan is less than $24,000, the grant will
be equal to one-third of the balance in each year of
participation in the program.
f) Up to 125 grants will be awarded each fiscal year.
The total dollar amount awarded may not exceed
$1,000,000 in a fiscal year. If the amount
appropriated in a fiscal year is insufficient to meet
the amounts awarded, the commission will reduce the
amounts awarded.
Section 2: Adds a new section to the uncodified law
requiring the commission to submit a report on
December 21 of 2025, 2026, and 2027 that describes the
effects of the pilot program on recruitment and
retention of teachers and state employees. The last
report will include an analysis of the overall success
rate and effectiveness of the program.
Section 3: This bill sunsets on December 31, 2027.
Section 4: This Act takes effect immediately.
Co-Chair Foster wanted to move to invited testimony. He
asked about the fiscal note.
Representative Story replied that Kerry Thomas would review
the fiscal note.
RICARDO WORL, SELF, JUNEAU, introduced himself and read
from prepared remarks:
I grew up in Juneau, graduated from West Anchorage HS
in 1980 and earned my bachelor's degree from a small
private school on the east coast in 1984. To cover
tuition, room and board payments, my parents had to
scrape up the cash every month. I applied for
scholarships which were fewer 40 years ago, and
ultimately took on student loans like many college
students. It wasn't until I graduated that I learned
my parents liquidated assets and sold several
significant art pieces from our home to ensure we
could cover tuition.
When I finished college, I had about $30,000 in
student loans from the AK Commission on Postsecondary
Education (ACPE). Many of my classmates from West HS
also took advantage of the State's student loan
program. I can confidently say that the forgiveness
clause absolutely swayed our decision to move back
home. I came back to Alaska to pursue a profession in
publishing and ultimately ended up with a career in
non-profits, public service and serving our rural
communities.
In two months I will be attending my 45 year high
school reunion in Anchorage where I will catch up with
other life-long Alaskans who chose to move back home
and who were incentivized by the generous student loan
forgiveness program.
I moved back home to Juneau 30 years ago and am aware
of how significant the State of Alaska has been for
employment opportunities in our state. I remain
mindful of the challenges our state agencies face in
recent years of trying to recruit and fill essential
positions in education, public safety and marine
transportation. I encourage this committee to support
House Bill 28. This is a proven and effective
recruitment tool to attract our young people back to
Alaska and an incentive for them to seek a career
within state government.
- Alaska students entering college in recent years
were in our schools during a period where they were
directly impacted by funding reductions the loss of
programs, teachers, and overcrowded classrooms
- Now that they are in college they have to hear
more bad news as our country's ideology questions the
validity of higher education, is holding funding for
colleges (and now school districts) hostage if they
don't eliminate diversity, equity and inclusion, and
the worst is having to see classmates being
investigated or taken from the street because of their
opinions. All on top of everything costing more.
- Just this week, our families are adjusting to
economic uncertainty as retirement accounts and
investments lose value.
Let's give our students a little bit of good news. Let
them know we are thinking about their futures and
their economic wellbeing. HB 28 and the student loan
repayment program is a bright light and a clear
message that we want to invest in their future.
Mr. Worl thanked the committee and expressed appreciation
for their service to the state.
3:27:22 PM
Co-Chair Foster asked to hear from ACPE.
KERRY THOMAS, ACTING EXECUTIVE DIRECTOR, ALASKA COMMISSION
OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, shared that she was present to provide
information about the bill and student loan repayment. She
read from prepared remarks (copy on file):
I'm here to provide information about student loan
repayment and House Bill 28, as well as the higher
education investment fund as the funding source. Thank
you for having me here today.
What is student loan repayment?
To provide background, student loan repayment is:
An employer-sponsored benefit
It's an agreement in which employer agrees to pay
down an employee's student loan for fulfilling a set
of terms established by of the employer.
The employer determines the service requirement,
frequency and loan repayment amount
Any employer, private or public sector, can offer
loan repayment.
Why is loan repayment better than loan forgiveness?
Loan repayment is vastly different from loan
forgiveness. Loan forgiveness is when the state or
federal government provides a student loan to attend a
certain program of study and the student agrees to
work in their field of study after graduation in
return for the loan being forgiven. In Alaska, the
WWAMI program is a well-known loan forgiveness
program. Some of the benefits of loan repayment vs.
loan forgiveness are:
Loan repayment guarantees a return on the state's
investment
With loan repayment, public funds are going to
degree holders contributing to the state's economic
and social well being
The cost of administering loan repayment programs
are significantly lower than loan forgiveness programs
o Loan repayment does not involve costly loan
servicing, collections or litigation activities when
the recipients do not return to Alaska and work or do
not repay their loans
Why is loan repayment good for employers and
employees?
Student Loan Repayment Programs are growing as an
employer tool to recruit and retain talented workers.
Student loan repayment benefits both employers and
employees:
It reduces employee's financial stress by
reducing or eliminating student loan debt while
working
It helps employers remain competitive in a tight
labor market
Research shows student loan repayment programs:
Enhances recruitment efforts - employers offering
student loan repayment benefits are able to hire
faster
o Employers offering student loan repayment hire 13
percent faster.
Retain existing employees longer American
Student Assistance found employers offering repayment
retain employees 36 percent longer.1
Loan Repayment and HB 28
The benefits of student loan repayment programs are
well documented. Many state governments have shifted
to offering student loan repayment in place of loan
forgiveness programs to attract and retain talent in
workforce shortage areas. (Texas, Mississippi,
Pennsylvania are a few examples among many others).
Alaskan postsecondary graduates carry an average
of $35,346 in student loan debt.
According to recent surveys, 57 percent of
employees say student loans are a major problem.
86 percent of employees say they will commit to
work 5 years for a company helping to pay their loans.
Funding:
Funding for the student loan repayment pilot program
created in HB 28 is from the Alaska Higher Education
Investment Fund (AHEIF or HEIF) and totals
approximately $3M over three years.
In regards to the HEIF,
The Department of Revenue is the investment
manager for the AHEIF.
ACPE administers three programs currently funded
by the AHEIF:
o WWAMI Medical Education Program
o Alaska Performance Scholarship (APS)
o Alaska Education Grant (AEG)
In addition to its role as administrator, ACPE
also provides higher education policy information to
the State of Alaska.
Due to recent changes in the ACPE programs funded
by the AHEIF, an additional $1 million draw over the
next three years for a total $3 million draw from the
AHEIF, will increase the likelihood that fund earnings
cannot keep pace with spending from the fund.
o WWAMI is directly appropriated from the AHEIF,
while the APS and AEG programs are subject to a
maximum appropriation rate of 7 percent of the fund's
beginning balance for the following fiscal year
o Recent program changes impacting AHEIF funding:
.notdef The WWAMI program funding increased by 50 percent
starting in FY25 to $5.1 million per year to
accommodate 30 participants instead of 20.
.notdef Legislative changes to the APS program in FY24
resulted in expected APS and AEG program costs of
$25.5 million for FY26, which is 20 percent higher
than was originally expected. AEG funding is tied to
APS funding in statute, therefore expected program
costs for FY26 increased. Since the changes to APS
recently took place, it is unknown what the long-term
impact to spending for this program will be.
.notdef Combined, expected expenditures from the AHEIF
for WWAMI, APS and AEG have increased by approximately
30 percent between FY24 and FY26.
Increasing AHEIF spending by $1 million per year
over three years to fund HB 28 would raise projected
annual expenditures by 3 percent, further reducing
fund value but not significantly altering long-term
sustainability.
Summary:
Student loan repayment programs are increasing in
popularity and employers not offering these benefits
may struggle to compete in the job market
In 2021, 17 percent of employers offered student
loan repayment. As of 2023, that number increased to
34 percent of employers.
42-55 percent of high school graduates attending
college leave Alaska for postsecondary education and
approximately 35 percent return; approximately 1200 to
1500 Alaskans leave each year and only 420 to 525
return. HB 28 provides an incentive to bring these
Alaskans back to our state.
3:34:57 PM
Co-Chair Foster asked for a review of the fiscal note.
Ms. Thomas reviewed the fiscal note control code Ciavl with
prepared remarks.
Co-Chair Foster thanked Ms. Thomas for her review.
HB 28 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
day. He did not anticipate having the 9:00 a.m. meeting.