Legislature(1999 - 2000)
02/02/1999 03:00 PM House HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 27-GRADUATE STUDENT LOANS Number 2079 CO-CHAIRMAN DYSON introduced the next order of business as HOUSE BILL NO. 27, "An Act relating to graduate student loans; and providing for an effective date." REPRESENTATIVE ELDON MULDER, Alaska State Legislature, sponsor of HB 27, explained a constituent raised a concern regarding Western Interstate Commission on Higher Education (WICHE) which allows students in participating states to receive a tuition break; basically 1.5 times the resident rate. In the past a flat grant was given to participate in the WICHE program, but with budget constraints that became cost prohibitive. Last year repayment constrictions were put on Washington, Alaska, Montana, Idaho Medical Education Program (WAMI). REPRESENTATIVE MULDER noted as the opportunity of utilizing the student loan program was explored, it became attractive to WICHE because they want more Alaskans to participate while Alaskan students would benefit through a price break. HB 27 allows Alaska's students to participate in the WICHE program utilizing the student loan program and get a tremendous price break on tuition from those out-of-state institutions. The Postsecondary Commission has some small technical changes on this bill, and the Commission needs regulatory authority to implement this bill. Number 2185 REPRESENTATIVE GREEN indicated WICHE would only apply to those students wanting to take something that wasn't offered in-state. "Do you know what the WICHE repayment percentage has been compared to non-WICHE students?" REPRESENTATIVE MULDER responded that this program is not available now, therefore, he didn't know. He guessed a graduate students may be more sincere about repayment than an undergraduate student who may or may not make it and have huge financial debt several years later. REPRESENTATIVE GREEN referred to the fiscal note that states "Program funds disbursed as student loans are not subject to the Executive Budget Act, therefore an appropriation is not required." He asked, "if we supply x number of dollars to look for schools not available here, do we have any idea how much money the state would have out in perpetuity?" REPRESENTATIVE MULDER suggested Diane Barrans, Executive Director, Postsecondary Education Commission, could answer that question. Number 2280 REPRESENTATIVE BRICE asked for clarification of the language on lines 12 and 13 of HB 27 which states, "WICHE graduate education program." He wanted to be sure it applies to all programs, not just a graduate program in Education. REPRESENTATIVE MULDER said the Postsecondary Education Commission would have to make that interpretation. REPRESENTATIVE GREEN commented "I think if that had been the desire, it would have been capitalized." REPRESENTATIVE KEMPLEN referred to lines 6 and 7 of HB 27 and suggested the word "program" be changed to "degree". TAPE 1, SIDE B Number 0001 REPRESENTATIVE MULDER explained getting a degree isn't required when financial assistance is offered. The student can be in a program but it can't be stipulated that the student is going to get a degree. REPRESENTATIVE GREEN asked about the word "pursuing". Could someone qualify for this to just take some courses, or does it need to be a degree program? Number 0041 DIANE BARRANS, Executive Director, Postsecondary Education Commission, explained that it's inherent in the program to be admitted into a degree program. The term "program" here is not problematic. REPRESENTATIVE WHITAKER made a point of clarification: "Medical" was deleted, "graduate program" was inserted on lines 6 and 7. REPRESENTATIVE MULDER responded "It is, as well as lines 12 through 14 which state 'Western Interstate Commission on Higher Education graduate education program to agree to repay to the state the financial support provided to that person by the state' which within those lines it stipulates you can get a student loan to go to graduate school." Number 0098 REPRESENTATIVE KEMPLEN felt when you're pursuing something, that indicates you want to eventually attain it. He suggested using "participating" rather than "pursuing". "Pursuing" doesn't logically link with the intent. Number 0195 MS. BARRANS explained residents in this category are pursuing admission into eligible programs. Once accepted, he/she would be participating. The Commission could work with either word. MS. BARRANS informed the committee she contacted the WICHE Compact office in Boulder and copied them with HB 27. The memo from the Director of the Professional Student Exchange Programs (PSEP) supported this effort to revitalize the program. She noted that if Alaska revises its participation in this format, Alaska would be the only state in the compact that requires a repayment without some service obligation as an alternative to repayment. Other states that support students in graduate education programs allow them to return to the state and serve to receive some reduction, in part or in whole, in their obligation to the state. This would be a philosophical change for a state participating in the WICHE Compact. The Compact office acknowledges there are economic constraints and they would invite Alaska's participation in the program even under these circumstances. The memo will be made available to the committee. MS. BARRANS said this legislation will be before the Commission and the Alaska Student Loan Corporation at the February and March meetings. Ms. Barrans expected the Commission and Alaska Student Loan Corporation to support the concept of the bill. Most of the public institutions in the west only admit residents to their graduate education programs. The subsidy on the part of the state is substantial and the only exceptions are students accepted under the Compact, under the philosophy of regional resource sharing. This program will allow Alaskans access into certain graduate fields. MS. BARRANS identified two structural concerns with this bill: 1) The Commission would need to have explicit authority to adopt regulations to implement the program; 2) WAMI loan provisions would need to be placed into Section 14:43, Scholarships, Loans and Grants, which is not administered by WICHE, in order to remove any questions about forgiveness benefits. Number 0353 REPRESENTATIVE DYSON asked if Ms. Barrans had language to amend this bill and would it be done by Thursday. MS. BARRANS agreed that it could be done. In response to a question from Representative Brice that even though the state participated in WICHE before, under HB 27 the loan will be repaid. It is important to develop conditions and terms that reduce risk through this program. A separate Professional Student Exchange Program will loan students amounts which exceed what is currently available under the Alaska Student Loan Program. REPRESENTATIVE BRICE asked if there is current authority to participate in the WICHE program. He questioned if the financial aid to that is not through the student loan program, it stands to reason that the Commission does not need explicit authority to adopt regulations to do this, but that you already have that authority under general provisions. MS. BARRANS explained in the past, the program utilized pass through dollars. Money was passed along to the WICHE Compact staff in Boulder who then dispersed it directly to institutions. None of the money went directly to the students. Ms. Barrans referred to Alaska Statutes, Section 14.44.025 which explicitly speaks to services under that Compact: "State participation under Articles VIII and XIII of the Western Regional Higher Education Compact shall be limited to the provision of adequate services and facilities in the professional fields of study available through the Professional Student Exchange Program administered by the Western Interstate Commission on Higher Education." Under Section 14.44.035. Administration. "The ACPE shall administer the state's participation in the Western Regional Higher Education Compact" but according to the Attorney General's office, we need to have explicit authority if we're going to promulgate regulations. Number 0550 MS. BARRANS responded to a question from Representative Green regarding reciprocity. The Professional Student Exchange Program identified those programs as ones having a high cost to establish and for which there is a need to share resources in the west. Those programs are identified by WICHE staff and ratified by the representatives to the Commission. Currently there are only 14 fields available through the PSEP. There are two other exchange programs that are administered under the WICHE Compact: Western Regional Graduate Exchange Program (WGRP) and Western Undergraduate Program (WUE). Residents from other states participate in Alaskan education programs under those other two programs. We are a receiving state but not in the Professional Student Exchange Program. REPRESENTATIVE GREEN asked would the state be subsidizing those outside students in expensive programs to some degree. MS. BARRANS responded the rates vary depending on which exchange program is used: graduate students pay resident tuition; undergraduate students pay 150% of the resident tuition. The reason a support fee is paid by a participating state in the PSEP is to offset the cost of subsidizing the graduate education program. A state can choose to subsidize their own residents, but usually doesn't choose to subsidize the education of non- residents. When 10 Alaskans attend a physical therapy program in North Dakota through this program, a support fee is paid that's associated with each student. The fee goes to the institution receiving those students. The student pays a resident rate of tuition out-of-pocket but the state sends a support fee. In HB 27 the participants will incur the support fee as an additional debt. Those are the terms and conditions that the Commission needs to establish by regulation. REPRESENTATIVE GREEN asked if it would be desirable to include provisions for a resident to work off some of their indebtedness by returning to Alaska. MS. BARRANS replied, "It has always been the Commission's position that if the public policy objective of the program is not only to gain access but to provide a source of a work force to the state of Alaska, that there has to be an incentive for folks to return if in fact they're incurring all this debt. We have always supported a forgiveness benefit in the past." It couldn't be funded through corporation receipts because they are obligated funds under the Alaska Student Loan Corporation. The amount eligible for forgiveness would have to be funded from the general fund. MS. BARRANS responded to questions by Representative Brice about the student indebtedness to the state and what loan program is being used. The support fees vary depending on the field of study. HB 27 establishes a new loan program in addition to the regular student loan program the state now provides. Number 874 TERESA WILLIAMS, Assistant Attorney General, Fair Business Practices, Civil Division (Anchorage), Department of Law, testified via teleconference from Anchorage. There needs to be explicit authority in HB 27 for the Commission to draft regulations to implement the loan program. The language of HB 27 merely states that there will be a repayment obligation and it would be necessary to set up how that loan program works which the Commission would need to do through regulation. "I also agree that the WAMI program needs to be pulled out of WICHE program. Under the current language the forgiveness provisions apply to the WICHE program because that particular statute which was enacted last year allows for receipt of financial aid under the WICHE section. If it remains where it is, there will be confusion that there would be forgiveness of all the WICHE programs." Ms. Williams agreed with Representative Dyson that new wording for HB 27 would be ready on Thursday for action. Number 953 MS. WILLIAMS agreed the word "degree" could be substituted for "program" and that would be more appropriate. REPRESENTATIVE MULDER reported he will work with the staff to prepare a committee substitute to incorporate changes and recommendations of the attorney general's office which should be ready for the committee Thursday morning. Number 1059 REPRESENTATIVE GREEN asked if there was any merit to trying to pursue a forgiveness benefit if a student returned to the state and worked. REPRESENTATIVE MULDER responded he would love to see that happen again but considering the fiscal restraints we have, we can't afford it right now. REPRESENTATIVE DYSON said the hearing on HB 27 would be continued on Thursday. [HB 27 was held over.]
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