Legislature(2013 - 2014)BELTZ 105 (TSBldg)
03/10/2014 08:00 AM Senate EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| SJR23 | |
| SB195 | |
| SB208 | |
| SB139 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 208 | TELECONFERENCED | |
| *+ | SB 195 | TELECONFERENCED | |
| + | SJR 23 | TELECONFERENCED | |
| + | SB 139 | TELECONFERENCED | |
195-CONST. AM: STUDENT LOAN DEBT
8:18:28 AM
CHAIR STEVENS announced that the next order of business would be
SB 195.
SENATOR ANNA FAIRCLOUGH, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 195, introduced the bill. She said SB 195
makes substantive housekeeping changes to Alaska State Statutes
regarding the Alaska Commission on Post-Secondary Education and
the Alaska Student Loan Corporation. These changes include
allowing the commission to set favorable terms for borrowers. It
increases the total loan limit a student may borrow. Loan limits
have not been changed for almost 20 years. In fact, since 1995,
the tuition at the University of Alaska has almost doubled.
Post-secondary expenses have increased. Alaska students and
their financial aid officers report that borrowers with high
unmet costs of attendance are increasingly choosing loans with
higher loan limits, even when the loan limits have higher
interest rates. This bill also defines an on-time status for
students to reach completion. There is evidence that shows a
strong correlation between enrollment intensity and the
completion rate. The bill also clarifies the corporation's
authority to offer consolidations of loans to state residents.
Research shows that students with multiple lenders are more
likely to default or otherwise struggle with repayments.
8:20:01 AM
KRISTEN PRATT, Staff, Senator Anna Fairclough, Alaska State
Legislature, Juneau, Alaska, explained the sections of SB 195 on
behalf of the sponsor. She related that Sections 1 and 2 broaden
the commission membership to clarify representation by an Alaska
private, nonprofit higher education institution's
representative.
CHAIR STEVENS asked who will be included on the commission that
has not been included in the past.
SENATOR FAIRCLOUGH explained that current state statute limits
the authority or the body to members of the Alaska Pacific
University. The bill would broaden it to others that offer post-
secondary education to serve on the commission.
MS. PRATT continued to explain that Sections 3 and 4 clarify the
authority for the commission and Department of Education and
Early Development (DEED), to work together to assess education
outcomes of public school students.
Section 5 corrects misplacement of language by removing from
paragraph (5) and inserting in paragraph (6) and clarifies
specific corporation powers into paragraphs (12), (13), and
(15).
Section 6 provides that a borrower may apply for a state
supplemental education loan without first having to exhaust all
other federal or private education loan options. Section 7 is a
conforming change to Section 6, regarding the financing program
for education loans.
Section 8 clarifies that corporation education loans are not
offered as lines of credit. Section 9 clarifies that state
education grants are not funded by the corporation's education
loan fund. Section 10 is a conforming change with Section 9.
Section 11 adds a new section (d) to AS 14.42.210. It moves the
corporation power to offer below-market loan terms. Section 12
adds a new section to AS 14.42.215 and clarifies that the
corporation sets the interest rates on loans it finances.
Section 13 permits the corporation's trust indenture to govern
the size of its capital reserve. Section 14 is a conforming
change to Section 13.
Section 15 incorporates the term "perfected", a term of art for
uniform commercial code purposes, as recommended by the
corporation's bond counsel. Section 16 updates the name of an
institutional accreditation organization.
Section 17 repeals and reenacts AS 14.43.122. It clarifies
corporation authority to offer consolidation loans to state
residents. It removes the option for joint consolidation of
married borrowers. Section 18 clarifies the definition of "half-
time student" for undergraduates and adds a definition for
graduate students.
Section 19 revises the school year definition to align with the
state fiscal year and to conform to the standard education
lending year. Section 20 clarifies that, subject to the annual
loan limits, a borrower may receive loans up to the amount of
their unmet cost of education without regard to other loans that
may be available.
Section 21 provides for applicability of institutional standards
for participation in state education loan programs. Sections 22
and 23 update references to federal education loans.
Section 24 clarifies that the corporation funds the loan and
revises upwards the annual maximum loan amount a person may
borrow. Section 25 revises upwards the aggregate maximum
borrowing limit to conform to Section 24. Section 26 adds a new
section that clarifies that the commission determines the amount
a loan applicant may borrow based upon their enrollment status
and not to exceed the costs of attendance.
Section 27 amends the maximum length of a post-enrollment
deferment period. Section 28 simplifies the name of the Alaska
Advantage Education Grant Program to Alaska Education Grant
Program for ease of use and identification as a state funded
grant. Sections 29 and 30 conform to Section 28. Section 30 also
incorporates by reference the commission's existing authority to
promulgate program regulations.
Section 31 permits the commission to set grant terms and
conditions. It directs the commission to establish annual grant
maximums relative to a student's enrollment status. Section 32
revises upwards the annual grant maximum. Section 33 revises
upwards the aggregate grant amount a person may receive to
conform to Section 32.
Section 34 adds a new section to enable the commission to
designate awards as a state match in the event federal funds for
education grants are available and require such a match. Section
35 repeals and reenacts AS 14.43.620(a). It clarifies that the
revolving loan fund for Teacher Education Loans is administered
by the commission.
Section 36 adds a new section that clarifies that loans to new
borrowers may only be made if sufficient funds are available. It
conforms to Section 35. Section 37 also conforms to Section 35
and clarifies that the commission sets the Teacher Education
Loan interest rate on loans financed from the fund.
Section 38 increases upwards the annual and aggregate loan
amounts available to a borrower under the Family Education Loan.
Section 39 clarifies that to be eligible for the Family
Education Loan, both the borrower and student must be Alaska
residents.
Section 40 changes the name of the program to conform to Section
30. It permits the administrative costs of the state grant
program to be paid from the education grant account. Section 41
amends the general definitions to incorporate "on-time"
enrollment status. Section 42 modifies the institutional
authorization exemption of short education or training courses
by increasing the maximum number of days or total hours of a
course.
Section 43 clarifies that the commission may enter into multi-
state reciprocity agreements for the purposes of regulating the
delivery of education and training programs in Alaska. Section
44 limits the mandatory meningococcal immunization notice
requirement to students who are physically present on an
institution's campus.
Section 45 is conforming language that eliminates various
statutes to achieve the intent of this legislation. Section 46
is a transition section. It clarifies the commission will set
Teacher Education Loan interest rates upon enactment. The
corporation will set interest rates before enactment.
Section 47 contains revisor's instructions that the state grant
administrators retain existing regulations until the new act is
implemented. Section 48 provides for an effective date.
8:28:06 AM
CHAIR STEVENS asked what it means that a borrower and a student
must be Alaska "residents," and how long it would take for a
student to become a resident.
SENATOR FAIRCLOUGH replied that it takes one year.
CHAIR STEVENS stated that in one year a student from Connecticut
attending UAF could become an Alaska resident.
SENATOR FAIRCLOUGH said that is correct.
SENATOR GARDNER referred to Section 1 and asked if the other
schools now included offer a Bachelor of Arts program, or just a
certification or associates degree.
DIANE BARRANS, Executive Director, Alaskan Commission on
Postsecondary Education, Juneau, Alaska, answered questions
related to SB 195. She explained that those private, nonprofit,
higher education institutions offer an associate degree or
higher.
SENATOR GARDNER requested examples of those schools.
MS. BARRANS listed the schools: Alaska Pacific University,
Alaska Christian College, and Alaska Bible School. She added
that there are other institutions in the state that offer those
credentials as well, but they are covered by another non-
proprietary sector. Previously, the statute limited it to
alternating representation from Sheldon Jackson College and
Alaska Pacific and when Sheldon Jackson College closed, Alaska
Pacific was left.
8:31:37 AM
CHAIR STEVENS noted the Governor has termed this legislative
year the "education session." He wondered how urgent this bill
is and what happens if it is not enacted this year. He asked if
it would it fit into the Governor's omnibus bill.
SENATOR FAIRCLOUGH said she has not checked with the Governor.
She emphasized that SB 195 is about students and she has been
working with Ms. Barrans for over a year on this issue. She
noted that they tried to introduce a bill to this effect last
session. Student loan debt is becoming a national problem. She
stated that if the bill does not pass this session she will
offer it again. She maintained that it is the right thing to do
for Alaska students and the commission supports it. It is a
policy decision for the legislature. The bill provides tools for
the commission to perform better for students.
8:33:29 AM
SENATOR GARDNER applauded Senator Fairclough's efforts to reduce
the cost of student loans. She thought other elements of the
bill that are clean-up or long-standing wishes should go to the
Senate Judiciary Committee to address.
SENATOR FAIRCLOUGH replied that SB 195 goes to Senate Finance,
which can adequately deal with the bonding issues. She added
that she was surprised that SJR 23 did not get assigned to
Senate Judiciary, but it has three referrals. She said she is
not opposed to a recommendation that SB 195 be referred to
Senate Judiciary. She noted that the changes are at the request
of the Alaska Commission on Post-Secondary Education.
SENATOR GARDNER read some of the unclear parts, such as in
Section 15 which incorporates the term "perfected, a term of art
for uniform commercial code purposes." Section 17 "clarifies
corporation authority to offer consolidation loans to state
residents. Removes the option for joint consolidation of married
borrowers." She maintained that parts of the bill remain a
concern.
8:36:13 AM
SENATOR GARDNER noted Section 6, "Provides that a borrower may
apply for a state supplemental education loan without first
having to exhaust all federal or private education loan
options." She asked for the rationale for requiring students to
exhaust other loan options first and for the impact of the
change.
SENATOR FAIRCLOUGH explained that the intent is to provide the
lowest cost loan, so students would apply for a federal loan
first at a 3.48 percent interest rate.
MS. BARRANS said she did not know why the requirement to exhaust
private loans is there. It seems counterintuitive when the state
is offering a lower interest rate than private lenders. With
respect to the federal loans, the logic is that the federal
government may offer a better interest rate, and payback
options. When the state issues tax exempt bonds, under IRS
provisions, the state has to only supplement the aid from the
federal government. However, if the corporation could issue
taxable debt, that provision would not be required. Rather than
have it in statute, and lack the option of doing either taxable
or tax-exempt debt, it is better to remove it and apply it when
appropriate.
8:39:08 AM
SENATOR GARDNER remarked that in past there was no flexibility
regarding federal loans, and the new provision allows the
commission to make recommendations and allows the student to do
whatever is best in a changing world.
MS. BARRANS said absolutely.
CHAIR STEVENS brought up the issue of student privacy concerns
and requested an opinion of how that applies to student data in
Section 3.
MS. BARRANS explained that the bill does not go to privacy. The
commission, under its current authority, can collect information
and do outcomes reporting. This bill clarifies that it is
subject to approval by DEED, but is not mandatory in any way.
She added that in the commission's dealing with DEED, student
privacy agreement is tantamount and clearly spelled out. She
mentioned the Alaska Performance Scholarship outcomes report,
which does not contain students' personal information, as an
example.
SENATOR GARDNER asked about Section 12, which clarifies that the
corporation sets the interest rate on loans it finances. She
asked if that was a new policy.
MS. BARRANS related that student loan program statutes predated
the existence of the corporation. In some of the older statutes
it said the commission would set the interest rate, which was
changed over time. Section 12, under corporation powers,
consolidates the authority to set interest rates on any loan
financed by the corporation.
8:42:54 AM
SENATOR GARDNER addressed Section 46 - "Commission to set
Teacher Education Loans interest rate upon enactment." She
inquired if those rates are currently set in statute.
MS. BARRANS explained that there is a formula by which rates are
set by the corporation. Under the bill, the corporation would no
longer fund Teacher Education Loans; they would be funded by the
state and the commission would be setting the interest rates on
those loans.
CHAIR STEVENS asked if SB 195 should be included in SB 139.
MS. BARRANS said she has not studied SB 139. It would be a
subject of discussion with the Governor's staff. This bill is
discreet to the student loan program and it may not make sense
to blend it into SB 139.
8:44:39 AM
SENATOR GARDNER stated that Section 38 "Increases upwards the
annual and aggregate loan amounts available to a borrower under
the Family Education Loan." She requested more information about
the Family Education Loan.
MS. BARRANS explained that the Family Education Loan is a loan
through which a family member may borrow on behalf of a student.
SENATOR GARDNER pointed out that Section 31 permits the
commission to set grant terms and conditions. She asked if that
is already the case or if this is a new permission.
MS. BARRANS described it as a clarification to make sure the
commission can do so.
8:46:00 AM
CHAIR STEVENS asked if teacher loans mentioned in the bill
encourage students to go into teaching. Lack of teachers and
lack of Native teachers are current state issues.
MS. BARRANS said when looking at outcomes of that particular
issue, it does not seem so. It is not a particularly effective
tool. Conceptually, it is very attractive in that rural
districts nominate individuals who are graduates of Alaska high
schools who express an interest in teaching. If those students
complete the degree and teach in a qualifying school, they can
have the entire loan forgiven. Fewer than one-in-five actually
meet all of the criteria. It is not a successful model. Other
states have a similar issue and have gone to loan repayment or
loan assumption programs that create a fund for people who
successfully complete the program to then be able to apply for a
benefit. All the money goes to people who have already shown
commitment.
CHAIR STEVENS requested clarity on "one-in-five."
MS. BARRANS said one-in-five participants in the program were
successful and received the forgiveness benefit by teaching in a
qualifying school.
8:48:38 AM
SENATOR GARDNER said Section 27 amends the maximum length of a
post-enrollment deferment period. She requested more
information.
MS. BARRANS related that, currently, borrowers have a six-month
grace period after separating from school. Section 27 changes it
to up to six months.
SENATOR GARDNER asked about how that decision is made.
MS. BARRANS replied that it depends on how long until a student
is employed after leaving school. Interest accrues during that
time so sooner is better than later.
SENATOR GARDNER asked if the student's contract contains that
provision.
MS. BARRANS said yes.
8:50:31 AM
CHAIR STEVENS opened public testimony.
MIKE COONS, representing himself, Palmer, Alaska, testified on
SB 195. He agreed with the consolidation of existing loans. He
asked how much could be consolidated after four years and if
there is any loan counseling. He asked if a student could pay
down a loan while they were attending school.
MS. BARRANS explained said there is financial counseling
outreach to students as early as junior high. There are also
online programs, such as Reality Check. Once a student is
borrowing, the commission sends out an annual statement and a
monthly bulletin.
She addressed the importance of passing the bill. She stressed
that anything supporting the commission to better serve students
to expeditiously move to their credential is worthwhile. Alaska
has a high percent of students that attend part time and a low
graduation rate. Those two issues are connected, so anything the
commission can do to allow students to attend full time and to
graduate on time is very beneficial.
8:55:46 AM
SENATOR GARDNER asked if Ms. Barrans has any information about
Alaska's low completion rate compared to other states.
MS. BARRANS said the data supports that there is a direct
correlation between the lack of full-time attendance and the low
completion rate. The longer it takes, the lower the graduation
rate. Students who attend regularly are engaged in their post-
secondary education.
CHAIR STEVENS held SB 195 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01_SJR23_BillText_VersionU.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 - ACPE Constitutional Amendment |
| 02_SJR23_SponsorStatement.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 - ACPE Constitutional Amendment |
| 03_SJR23_FiscalNote1_DivElections.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 Constitutional Amendment ACPE |
| 03a_SJR23_FiscalNote2_LAA.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 - Constitutional Amendment ACPE |
| 04_SJR23_Sectional.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 - ACPE Constitutional Amendment |
| 05_SJR23_SupportLetter_Barrans.pdf |
SEDC 3/10/2014 8:00:00 AM |
SJR 23 - ACPE Constitutional Amendment |
| 01_SB195_BillText_VersionU.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 195 |
| 02_SB195_SponsorStatement.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 195 |
| 03_SB195_FiscalNote1_ACPE.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 195 |
| 04_SB195_Sectional.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 195 |
| 05_SB195_SupportLetter_Barrans.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 195 |
| 01_SB208_BillText_VersionA.PDF |
SEDC 3/10/2014 8:00:00 AM |
SB 208 |
| 03_SB208_FiscalNote1_DEED.pdf |
SEDC 3/10/2014 8:00:00 AM |
SB 208 |