04/16/2009 09:00 AM Senate FINANCE

HOUSE BILL NO. 109                                                                                                            
                                                                                                                                
     "An  Act   relating  to   eligibility  for   the  Alaska                                                                   
     supplemental education loan  program and to the interest                                                                   
     rate for a  loan made under the Alaska  family education                                                                   
    loan program; and providing for an effective date."                                                                         
                                                                                                                                
10:02:37 AM                                                                                                                   
                                                                                                                                
KATIE  KOESTER,  STAFF, REPRESENTATIVE  PAUL  SEATON,  CHAIR,                                                                   
HOUSE  EDUCATION  COMMITTEE, summarized  the  legislation  as                                                                   
addressing   the    Alaska   Commission   on    Postsecondary                                                                   
Education's   inability   to   get  financial   backing   for                                                                   
alternative   student   loans.   The   legislation   requires                                                                   
borrowers  for an  Alaska student  loan to  have either  good                                                                   
credit or a co-signer. House Bill  109 also sets the interest                                                                   
rate  of the  Family Education  Loan (FEL),  which allows  an                                                                   
individual  to borrow  on behalf  of  another family  member.                                                                   
Currently,  the   interest  is  rate  is  7.3   percent;  the                                                                   
provision would allow  the rate to be set in  the same manner                                                                   
as the Alaska student loan.                                                                                                     
                                                                                                                                
Co-Chair Stedman mentioned the zero fiscal note.                                                                                
                                                                                                                                
Senator  Thomas asked  what loans  would be  affected by  the                                                                   
legislation.  Ms.  Koester  replied that  the  Stafford  loan                                                                   
would not change  as it is federally guaranteed.  The changes                                                                   
would apply to the Alaska student loan and the FEL.                                                                             
                                                                                                                                
10:06:28 AM                                                                                                                   
                                                                                                                                
DIANE  BARRANS, EXECUTIVE  DIRECTOR, POSTSECONDARY  EDUCATION                                                                   
COMMISSION,  DEPARTMENT OF EDUCATION  and EARLY  DEVELOPMENT,                                                                   
elaborated  that  the  credit   criteria  that  is  currently                                                                   
applied  to   supplemental  education  loans   would  change.                                                                   
Applicants  would not  qualify  for loans  if  found to  have                                                                   
adverse credit. Qualification  would begin at the  low end of                                                                   
the good credit scale.                                                                                                          
                                                                                                                                
Co-Chair  Hoffman MOVED  to report  HB 109  out of  Committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB 109 was  REPORTED out of Committee with  no recommendation                                                                   
and attached zero  note 1 by the Department  of Education and                                                                   
Early Development.