Legislature(1999 - 2000)
03/22/1999 01:45 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
VICE-CHAIRMAN KELLY invited Representative Mulder to present HB 27
and said the committee would hear testimony but would not move it
out today.
Number 255
REPRESENTATIVE ELDON MULDER, sponsor of HB 27, explained the bill
amends statute to allow student loan program monies to be loaned
through the Western Interstate Commission on Higher Education, or
WICHE Program, and repaid to the state of Alaska.
The intent of HB 27 is to allow for Alaska residents seeking to
further their education in postsecondary education through WICHE-
participating schools to secure those positions within the
professional student exchange program. Previously, Alaska secured
positions in the health and veterinary sciences fields through
participation and exchange, and the Alaskan student paid the in-
state tuition fee as a resident of the other western state. The
difference between that fee and the actual cost was carried by the
General Fund. With recent budget constraints, Alaska suspended its
participation in the WICHE Program. HB 27 would utilize the student
loan program to secure those positions and make them available at
a lower cost to the student, with the student paying back the
portion as a loan.
REPRESENTATIVE MULDER said the western states are interested in
Alaska resuming its participation in WICHE and this would reopen
the door for Alaskan students at a lower rate.
Number 307
VICE-CHAIRMAN KELLY asked if the portion of the General Fund that
previously supplemented the program would now be replaced with a
loan fund. REPRESENTATIVE MULDER replied yes, and clarified there
is no loan forgiveness.
VICE-CHAIRMAN KELLY repeated that Senator Miller would reschedule
HB 27 for action by the committee.
Number 317
MS. DIANE BARRANS, Executive Director of the Alaska Commission on
Postsecondary Education, said HB 27 would reactivate a program that
Alaska participated in for about 20 years, prior to the elimination
of General Fund support in 1994. Previously, Alaska participated in
up to 14 fields in the WICHE professional student exchange program.
After 1987, due to budget reductions the fields were limited to
just those where access was a critical issue. The support fees the
state paid on behalf of each participant were paid directly to the
receiving postsecondary institutions through the WICHE
administrative office. MS. BARRANS said it was grant aid, and
there was no legal obligation on the part of a participant to
either return and practice in the state, or to repay a portion of
the support.
This bill would enable the commission to utilize Alaska student
loan corporation receipts to provide residents with access.
However, from the corporation's perspective, as a result of this
funding change the corporation would require participants to bear
the entire cost of the program as a debt obligation. Under HB 27,
the commission as the administrator of the funds would set the
terms and conditions of the loan by regulation. Management would
recommend to the commission that they consider three aspects:
Alaska workforce needs, student access to graduate education, and
minimizing the risk to the student loan fund. The Commission will
take a position on the bill later this month at its quarterly
meeting.
Number 348
SENATOR WILKEN asked if line 16 on page 2 speaks to forgiveness and
its connection with the medical program, and how it differs from
WAMI.
MS. BARRANS replied that it is WAMI. The commission identified a
placement error of the current WAMI statutes that make it a loan
program, in the Western Compact section of statute. It does not
belong there because it's not a WICHE program. This relocates it
to a more appropriate area of loan statute, and allows the
professional student exchange program to be placed in 14.44.
SENATOR WILKEN asked how it would differ from a regular student
loan.
MS. BARRANS responded the terms of the loan would have different
features than the student loan program. There is no loan maximum
and it would tie directly to the support fee the state will be
paying on that student's behalf, ranging from $6000 to more than
$20,000 per year. The commission will recommend that the
corporation adopt regulations providing that interest accrue from
the date the money is paid on behalf of the participant.
SENATOR WILKEN asked if a student could get a $20,000 loan to buy
his placement and another student loan to go to school.
MS. BARRANS answered yes, the levels of debt that participants will
incur will be a factor for the commission in determining which
fields to lend money under this bill.
She gave examples of a physician's assistant only needing to borrow
$4,200 per year, as opposed to a medical student who would be
borrowing nearly $23,000 a year. MS. BARRANS said, "It really is
not feasible for the corporation to provide a loan of that
magnitude to someone knowing that they're probably borrowing, in
addition to that, $50,000 to $80,000 on average. They just could
not incur that debt and repay it."
She repeated that the commission would target the fields of mid-
level care where there's a need in Alaska, such as Physician
Assistant, Occupational Therapist, Physical Therapist, or
Optometrist. These are positions allowing repayment within a
reasonable amount of time. If not limited, participants would be
incurring mortgage-size loans.
SENATOR WILKEN questioned what the WICHE parameters would add to
the student loan program monies the commission is loaning out,
asking if it would be $50,000 or $250,000.
MS. BARRANS answered that the loan volume at peak would be $500,000
per year, out of about $69 million this year.
Number 405
SENATOR ELTON asked if the cost would be spread out to the
borrowers.
MS. BARRANS that the state pays dues to benefit in a variety of
programs, but those would not be prorated across these participants
in any way. There is a per-student fee charged under this specific
program, and that fee is what the participant would incur as a
debt.
The commission currently pays $83,000 per year in Compact Member
dues, but the state is not participating in this program right now.
The benefit Alaska is receiving for these dues is through the
undergraduate exchange, a WICHE program, that has 1,100 Alaskans
participating and no requirement of a per-participant fee. She
concluded, "If you break down that $83,000 per student, it's a very
effective way of increasing educational choice for Alaskans."
Number 423
VICE-CHAIRMAN KELLY announced the committee would hold HB 27 until
Senator Miller's return.
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