Legislature(2017 - 2018)BELTZ 105 (TSBldg)
01/30/2018 01:00 PM LABOR & COMMERCE
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HB 86-STUDENT LOAN DEFAULT/OCC. LICENSE RENEWAL 2:34:23 PM CHAIR COSTELLO announced the consideration of HB 86. 2:34:38 PM REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, Juneau, Alaska, sponsor of HB 86, quoted Thomas Jefferson who said, "Government is best which governs least." He said the goal of HB 86 is to revoke the Alaska Commission on Postsecondary Education's authority to use the nonrenewal of occupational licenses as an incentive to ensure the payment of student loans that are in default. The commission has not exercised this authority since 2010 and has found that garnishing wages is a more effective tool. In the past, those who had their licenses revoked left the state and established practice elsewhere. In those instances, the state not only lost the ability to collect but also a skilled member of the Alaskan workforce. Thus, it makes sense to ensure that this sort of government overreach cannot occur. 2:35:56 PM CERI GODINEZ, Staff, Representative Matt Claman, Alaska State Legislature, Juneau, Alaska, presented HB 86, reading from the following prepared statement: House Bill 86 repeals current statutes that allow the Alaska Commission on Postsecondary Education (ACPE) to threaten nonrenewal of occupational licenses for individuals who have defaulted on their student loans. Repealing this authority will allow licensed individuals to continue their work in order to earn an income and pay back their defaulted loans without fear of losing their license. There are already many difficulties that one faces if they default on their student loans, not limited to late fees, court costs, liens on property, and adverse reports to consumer reporting agencies. The current statute states that the commission has the authority to provide notice to a licensing authority for nonrenewal of a license upon default. If the ACPE posts such notice, the licensing entity may not renew said license during the next renewal cycle. Many of these laws were passed in the 1990s and early 2000s, when student aid was often provided by states. Now, however, most loans are federal. In 2016, Montana became the first state to repeal similar statutes and now only 20 states remain. This bill allows us to follow Montana's example and reduce that number to 19 states and protect our licensed nurses, pharmacists, social workers, teachers, correctional officers, and many others. I'll now provide a brief sectional analysis of the bill. Section One deletes language that is no longer necessary after the repeals mentioned in section two. Section Two repeals the following statutes: AS 14.43.145(a)(4) which gives authority to the commission to provide notice of default to a licensing entity for nonrenewal of a license. AS 14.43.148 which indicates that a licensing entity may not renew a license if they have received notice from the commission that the licensee has defaulted on a loan issued by the commission. AS 21.27.390(d) which references temporary licenses. CHAIR COSTELLO asked Ms. Butler if the department had a position on the bill. 2:38:26 PM STEPHANIE BUTLER, Executive Director, Alaska Commission on Postsecondary Education, Department of Education and Early Development (DEED), Juneau, Alaska, stated that the commission is not currently using its authority to threaten nonrenewal of an occupational license for individuals who have defaulted on their student loans. It has not been an effective tool and therefore the commission has no concerns with HB 86. CHAIR COSTELLO asked her to comment on the March 20, 2017 memo in which Representative Birch asked if she had a sense of the magnitude of the debt and number of recipients who would be impacted by the bill. MS. BUTLER said at that time there was about $240 million in outstanding state loans. The value of that portfolio currently is slightly less than $200 million. She reiterated that the commission has found it is most effective to collect on defaulted loans by garnishing either wages or the permanent fund dividend PFD. CHAIR COSTELLO noted that the memo identified 46 defaulted borrowers with outstanding loans, none of whom are employed in Alaska. MS. BUTLER said that's correct and the commission has released the holds on those licenses. CHAIR COSTELLO asked if the comment about garnishing a permanent fund dividend was hypothetical. MS. BUTLER answered yes. SENATOR MICCICHE asked if the commission is powerless to collect on those 46 defaulted loans. MS. BUTLER replied there are nationwide tools such as credit reporting, but the ability to collect is less when the defaulted borrower is out of state. SENATOR MICCICHE asked if garnishing wages is an option, although more difficult, when the defaulted borrower is out of state. MS. BUTLER answered yes. SENATOR MICCICHE asked, "It's not something you use, and you have no concern about eliminating the potential to revoke licensing?" MS. BUTLER replied that's correct; it wasn't an effective tool. 2:42:52 PM SENATOR GARDNER asked if [$200] million was the total outstanding, not the amount in default. MS. BUTLER replied that's correct. SENATOR MEYER summarized that nonrenewal has not been used since 2010, and the best tool is to garnish the PFD or wages. MS. BUTLER said that's correct. SENATOR MICCICHE expressed interest in looking at the data on the average amounts of the defaulted loans. MS. BUTLER agreed to follow up with the information. CHAIR COSTELLO asked the sponsor to comment on the perception that it's a lose-lose situation if a defaulted borrower leaves the state. The state doesn't collect, and it also loses that worker. REPRESENTATIVE CLAMAN said his office found that having the authority to exercise this power was a double negative. CHAIR COSTELLO said she would hold the bill awaiting the information on the 46 borrowers with outstanding occupational license holds. SENATOR MEYER asked if licensing entities check on outstanding loans in other states. MS. BUTLER said she was unaware of any state reciprocity specific to defaulted student loans. SENATOR MEYER asked if they were talking about state or federal loans. MS. BUTLER replied only state loans. SENATOR MEYER commented on the need to keep students in Alaska. SENATOR MICCICHE clarified that his request was on the outstanding state loans. He added that he is inclined to forgive loans to encourage Alaskans to stay here as opposed to eliminating a collection tool. 2:49:54 PM CHAIR COSTELLO opened public testimony on HB 86. 2:50:06 PM AMBER MICHAIS, Registered Nurse, Alaska Nurses Association, Anchorage, Alaska, stated support for HB 86 and described it as student debt relief. She said student debt is a significant issue and it makes sense to keep someone who has student debt working. Preventing them from working by nonrenewal of their professional license makes it difficult to impossible to pay back their loan. HB 86 will ensure that Alaska nurses are able to continue their profession so that Alaskans receive care when it's needed. She shared that she has high balance loans and the current law could cripple her ability to support her family should she find herself in default. SENATOR GARDNER pointed out that debt relief is not the focus of the bill. It's about how to best protect the state's interest in collecting where appropriate. 2:53:29 PM CHAIR COSTELLO closed public testimony on HB 86 and held the bill in committee.