Legislature(1993 - 1994)
03/18/1994 03:00 PM House HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 in-state. 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 discussion. 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.