Legislature(1993 - 1994)

03/18/1994 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 488 - RESTRICT STUDENT LOANS TO ALASKA SCHOOL                             
  Number 008                                                                   
  REP. AL VEZEY, prime sponsor of HB 488, said the bill                        
  provides that undergraduate students who elect to attend                     
  school outside the state would not be eligible for a student                 
  loan.  He referred to the Alaska Commission on Postsecondary                 
  Education (ACPE) 1992-93 annual report, Table 17 in the                      
  appendices, and reported to date, the Alaska Student Loan                    
  Program has loaned $369 million to students attending                        
  schools in-state.  During the same period of time it has                     
  loaned $326 million to students attending out-of-state                       
  schools.  In the 1992-93 school year the student loan                        
  program issued $29 million in loans to in-state students.                    
  During the same period it issued nearly $19 million in loans                 
  to students attending school out of state.  Rep. Vezey said                  
  Alaska could not build a better educational system if it                     
  continued to subsidize the better students' attendance of                    
  out-of-state programs, when those programs were available in                 
  Alaska.  He concluded, the reason for the bill is Alaska is                  
  unnecessarily exporting money and brainpower and HB 488 is                   
  in the best interests of the future, the economy, and the                    
  quality of educational programs in Alaska.                                   
  Number 058                                                                   
  REP. CON BUNDE mentioned an observation made about the                       
  Washington, Alaska, Montana and Idaho (WAMI) loan program is                 
  that students develop contacts where they do their                           
  postgraduate work and then remain living in those areas.                     
  Number 078                                                                   
  PHYLLIS LARSON, concerned parent, testified against HB 488.                  
  She said she has lived in Alaska for 25 years and various                    
  members of her family have taken advantage of this program                   
  including her husband, son and hopefully, her daughter.  She                 
  added the state loans have all been repaid.  She described                   
  her daughter's various extracurricular activities and                        
  academic achievements and said neither her daughter or other                 
  students should be penalized because they choose to go                       
  outside the state for their education.  She said she                         
  believes this bill would be discriminatory against students                  
  in their endeavors to receive the education they so desire                   
  and to become the adults they wish to become.                                
  REP. VEZEY added since 1992 the student loan program has not                 
  been capitalized by the state, but has been self-sustaining                  
  in that it issues bonds.  In 1991, the student loan                          
  corporation showed a loss of $31 million; in 1992, the loss                  
  was $29 million; and in 1993, the loss was $25 million.  He                  
  indicated at some point the state would be asked to provide                  
  additional capitalization to this fund and it would need to                  
  be determined if appropriating money to schools in the lower                 
  forty-eight would be desirable.                                              
  REP. BUNDE said Mr. Joe McCormick, ACPE's Executive Director                 
  was at a quarterly meeting and would be unable to attend                     
  today's committee meeting.                                                   
  Number 134                                                                   
  DIANE BARRANS, Director of Student Financial Aid Programs,                   
  ACPE, said the commission has not yet taken an official                      
  position on HB 488.  She said one concern was whether the                    
  university system was prepared to absorb the students who                    
  would then choose to attend school in Alaska.                                
  CHAIR TOOHEY asked what was involved in increasing the                       
  capacity of the University of Alaska, Fairbanks (UAF) and                    
  University of Alaska, Anchorage (UAA) to handle the students                 
  who are now getting loans.                                                   
  MS. BARRANS said she did not know.                                           
  Number 153                                                                   
  CHAIR TOOHEY questioned the origin of the money put into                     
  this fund and wondered if there were strings attached.  She                  
  stated personally, as a mother of three children and someone                 
  who has made use of the fund, she is opposed to HB 488.                      
  Number 167                                                                   
  REP. VEZEY pointed out the student loan program has been in                  
  effect since 1971.  He remarked on the program's growth and                  
  said in 1971 it was a $1.3 million a year program, and did                   
  not pass the $10 million a year mark until 1981; it is now                   
  running in the range of $50-60 million a year.                               
  Number 180                                                                   
  REP. BUNDE said given the degree to which the loans have                     
  needed to be subsidized, support from the general fund might                 
  not be forthcoming.  As a member of the ACPE, he said there                  
  is an effort by the commission to make the operation more                    
  business-like so general fund support would not be required.                 
  He referred to Ms. Barrans for further comment on the ACPE's                 
  fiscal note.                                                                 
  MS. BARRANS said she has not worked on the fiscal note and                   
  could consult with the finance officer and report back to                    
  the committee.                                                               
  Number 207                                                                   
  REP. BUNDE questioned the $18,000 increases in operating                     
  expenses followed by a huge reduction in operating expenses                  
  shown on the fiscal note.                                                    
  Number 214                                                                   
  MS. BARRANS said fewer loans would be outgoing so there                      
  would be a reduction in repayment as well.  She said the                     
  personal service increase refers to a review of graduate                     
  applications to determine if a course of study outside the                   
  state is available and similar to an in-state program.                       
  Number 229                                                                   
  CHAIR TOOHEY asked what portion of out-of-state students                     
  default on their loans in comparison to students that remain                 
  REP. VEZEY said Mr. McCormick of the ACPE would have easy                    
  access to that information.                                                  
  Number 239                                                                   
  REP. GARY DAVIS said even though he made personal use of the                 
  loan program when he was in school, given today's economy,                   
  Alaskans are forced to make some hard decisions.  He pointed                 
  out that other states may withhold scholarships and grants                   
  to Alaskan students because other states and colleges know                   
  that Alaskan students have this 5,000 plus dollar allotment                  
  available to them.  He concluded by saying, unfortunately                    
  this is the type of legislation that Alaskans are forced to                  
  look at if drastic measures are not taken elsewhere.                         
  REP. VEZEY said the bill provides loans to graduate-level                    
  work outside of Alaska if those programs are unavailable in                  
  the state.  He said the ACPE indicated there were more                       
  problems collecting from Alaskan students attending schools                  
  out-of-state as compared to Alaskan students attending                       
  school in the state.                                                         
  Number 310                                                                   
  MS. BARRANS clarified there is a greater ability to collect                  
  from students who are actually in Alaska, partially because                  
  of the ACPE's access to the permanent fund dividends.                        
  Through extending contract work done with national credit                    
  bureaus and collection agencies, the ACPE intends to extend                  
  its outreach ability.                                                        
  MS. BARRANS said, "Historically when bills of this nature                    
  have been seen, we have been asked to get a bond counsel                     
  opinion in terms of whether or not restricting our loans to                  
  in-state borrowers only would have any impact on our ability                 
  to bond for the funding.  If it were to infringe upon our                    
  ability to bond, then we would have to look again to the                     
  general fund as a source of funds for new loans."                            
  Number 330                                                                   
  CHAIR TOOHEY asked if Alaskan students did not attend out-                   
  of-state schools, would they consequently be deprived of any                 
  undergraduate studies.                                                       
  REP. VEZEY said textile engineering, and possibly                            
  architecture are programs of study unavailable in Alaska.                    
  REP. G. DAVIS said most graduate schools, even medical                       
  schools and law schools do not have a prescribed                             
  undergraduate program, but it would benefit predental or                     
  premedical students to attend such programs.                                 
  MS. BARRANS said the ACPE could provide this information by                  
  doing a comparison study of programs offered by different                    
  universities.  She added there are no physical therapy or                    
  occupational therapy programs available in Alaska.                           
  REP. BUNDE said testimony from students is missing in this                   
  Number 370                                                                   
  CHAIR TOOHEY said there was not a quorum and HB 488 would be                 
  held over.  Chair Toohey said HB 291 would be the next order                 
  of business.                                                                 

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