Legislature(2013 - 2014)SENATE FINANCE 532
03/27/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| SB195 | |
| SB140 | |
| SB166 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 140 | TELECONFERENCED | |
| + | SB 166 | TELECONFERENCED | |
| + | HB 199 | TELECONFERENCED | |
| += | HB 266 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 195 | ||
SENATE BILL NO. 195
"An Act relating to the membership and authority of
the Alaska Commission on Postsecondary Education;
relating to the Alaska Student Loan Corporation;
relating to teacher education loans; relating to
interest on and consolidation of postsecondary
education loans; relating to Alaska supplemental
education loans; relating to AlaskAdvantage grants;
relating to the Alaska family education loan program;
relating to postsecondary educational institutions;
and providing for an effective date."
10:15:42 AM
DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, AND EXECUTIVE OFFICER, ALASKA STUDENT LOAN
CORPORATION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
expressed appreciation for the legislation. She opined that
it had been two decades since a substantive review of loan
limits and the policies that guided the state's financial
aid administration.
10:16:21 AM
Senator Dunleavy queried that language in the bill that
stated that a person representing private higher education
had to be non-profit.
Ms. Barrans replied that the membership of the commission
was comprised of representative from both the for-profit
and non-profit sectors. She said that the language allowed
the governor the latitude to choose any of the institutions
in the sector, rather than being limited to a member of the
board of trustees.
10:17:31 AM
Senator Dunleavy wondered if there was a seat reserved for
for-profit educational entities.
Ms. Barrans replied in the affirmative.
10:17:38 AM
Senator Dunleavy inquired if there was a practice of
loaning more willingly for certain categories of
educational entities.
Ms. Barrans responded that that there was not an express
policy relative to the question. She said that loan limits
were divided between collegiate and vocational
institutions, without speaking to whether those
institutions were non-profit or for-profit. She explained
that rating agencies requested a break out of the portfolio
of lenders who financed their loans in the financial market
in order to determine, by educational sector, what portion
of the loans when to one or the other. If a portfolio
reflected a high proportion of proprietary lending, it
could result in higher overcollateralization requirements
because of the historical trend of higher default rates
associated with vocational schools, particularly in the
for-profit sector.
10:20:45 AM
Vice-Chair Fairclough requested that Ms. Barrans discuss
the 15 credit per semester requirement in order to access
funds.
Ms. Barrans said that the reason the 15 credits per term
had been proposed, rather than 30 credits per year, was
because it was a student's enrollment level on each term
that determined the amount of loan that they could receive.
She stated that there was flexibility; if a student
enrolled and met the full-time requirement of 12 credits
for fall, but then increased their credits to 15 for
spring, they could qualify for the higher amount for the
spring term. She noted that if a student enrolled for full-
time of 12 credits, and did not complete the 12 credits in
the term, the student could make up the credits during the
academic year for the purpose of continuing eligibility for
the next year's loan. She stated that the department worked
to ensure that students were completing the number of
credits that their loan was awarded for without risking
over-awarding students, which could be a risk if the loan
were awarded at the beginning of the year for a higher
amount based on the student's best intentions.
10:22:53 AM
Co-Chair Meyer queried the default rate for Alaska student
loans.
Ms. Barrans replied that the most recent published rate was
slightly higher than 6 percent. She said that looking back
over the last 10 years, the rate had been as low as 3.8
percent, peaking in 2008 and 2009 at about 7.5 percent, but
gradually rising as the economy has recovered.
10:23:28 AM
Co-Chair Meyer understood that Alaska's default rate was
lower than the national average.
Ms. Barrans replied that the default rate for the federal
loan program was substantially higher than Alaska. She
noted that the federal loans had no credit underwriting
criteria; taxpayers underwrite the credit for federal
loans.
Co-Chair Meyer probed the difference between the two loans.
Ms. Barrans responded that if the barrower did not have a
credit score of at least 680, they would need a credit
worthy co-signer.
10:24:14 AM
Co-Chair Meyer discussed the new fiscal note. He understood
that with the purchase of new software with $460,000
capital dollars the state would see a savings of $82.8
thousand.
Ms. Barrans replied that the savings would be approximately
$30,000 per year due to reduced software maintenance. She
relayed that the current system was inadequate to support
the number of student receiving student loans.
10:25:40 AM
Co-Chair Meyer inquired if the expense was reflected in the
governor's FY15 capital budget.
Ms. Barrans replied that it was not.
10:25:51 AM
Vice-Chair Fairclough offered that the investment of
capital would save the state money in the long run and
provided a smoother streamlined process for the students
that were accessing student loans.
10:26:25 AM
Co-Chair Kelly MOVED to REPORT CSSB 195(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 195(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new fiscal impact note from
the Department of Education and Early Development.
10:26:49 AM
AT EASE
10:30:05 AM
RECONVENED