05/01/1997 09:10 AM Senate FIN

                                                                               
       SENATE BILL NO. 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."                    
                                                                               
  Co-chair  Sharp  called  the  meeting   back  to  order  and                 
  introduced SB 189.  Senator Gary Wilken, sponsor of the bill                 
  was invited to join  the committee.  He referred  briefly to                 
  the sectional analysis and sponsor statement.                                
                                                                               
  Senator Pearce  said Alaska  had a  successful student  loan                 
  program but they were very  unsuccessful in their collection                 
  and management.   She said specifically that  Post Secondary                 
  had not been able  to figure out the direct  deposit system.                 
  Senator Wilken said the Commission was aware of this problem                 
  and they were trying to correct it.                                          
                                                                               
  Diane Barrans, Executive Director, Post Secondary  Education                 
  was  invited  to  join  the committee.    She  described the                 
  Commission's position on SB  189.  The current loss  of $2.7                 
  million was a significant decrease over last year.  Co-chair                 
  Sharp indicated that  money had  been expended for  computer                 
  update and wanted to know the  present status of this.   Ms.                 
  Barrans  said the  new  computers were  brought  on line  in                 
  November  and that it was a successful conversion.  Co-chair                 
  Sharp asked  the  amount  of new  loans  that  entered  into                 
  default status.   Ms. Barrans explained the  default system.                 
  She said  that between  FY  '95 and  FY  '96 there  was  $18                 
  million in default.  Senator Pearce asked if a  co-signature                 
  on the loan would help correct the default situation and how                 
  would the Commission consider this  suggestion.  Ms. Barrans                 
  said it would be  agreeable to the Commission but  noted the                 
  average age of borrowers was 28 years of age.                                
                                                                               
                                                                               
  Senator  Pearce said there was  still some problems with the                 
  direct deposit system.   The  debit was being  made but  the                 
  credit was not being entered to  the student's account.  Ms.                 
  Barrans acknowledged this problem but  said they were trying                 
  to work this out through the Department of Revenue.  Senator                 
  Pearce  noted  the  problem lay  therein  and  suggested the                 
  Commission  should  be working  through  private enterprise.                 
  Ms. Barrans  also felt that  the Commission must  relay more                 
  precisely to borrower's how  the system worked.  This  was a                 
  timing issue  and not  a software  problem.  Senator  Pearce                 
  suggested perhaps  automatic debit could  be set up  to meet                 
  the proper time frame of the borrower.                                       
                                                                               
  Senator   Phillips   moved  amendment   #1  and   asked  the                 
  Commission's comments regarding  full-time students  outside                 
  paying  back  half-time  loan used  in-state.    Ms. Barrans                 
  indicated that had been an oversight and amendment  #1 would                 
  correct this.  Without objection amendment #1 was adopted.                   
                                                                               
  Senator  Torgerson asked  about doctors and  attorneys being                 
  left out of the bill.   Ms. Barrans said attorneys were  not                 
  included but doctors  were.   Senator Torgerson referred  to                 
  page 4 and page 7 line 7.  Ms. Barrans at this point noted a                 
  technical amendment should be made on  page 14, line 24; the                 
  section should correctly read "20".                                          
                                                                               
  Senator Torgerson  moved amendment  #3, page 9,  line 21  to                 
  read all language  necessary to include attorneys.  He moved                 
  to remove the  motion pending clarification of  amendment #2                 
  and without objection his motion was removed.                                
                                                                               
  Senator Phillips advised the committee  that amendment #2 as                 
  proposed by Ms.  Barrans had not  been moved.  He  therefore                 
  moved amendment #2, page  14, line 24 and  without objection                 
  it was adopted.                                                              
                                                                               
  Senator Torgerson then  moved his amendment #3, page 9, line                 
  21 and without objection  it was adopted.  He moved CSSB 189                 
  with  individual  recommendations  and  accompanying  fiscal                 
  notes and without objection it was reported out.