HB 114-EDUCATION & SUPPLEMENTAL LOAN PROGRAMS  9:26:18 AM CO-CHAIR DRUMMOND announced that the next order of business would be HOUSE BILL NO. 114, "An Act relating to the education loan program and Alaska supplemental education loan program; and providing for an effective date." 9:26:25 AM SANA EFIRD, Executive Director, Alaska Commission on Postsecondary Education, introduced HB 114 on behalf of the House Rules Standing Committee at the request of the governor. She said the Alaska Commission on Postsecondary Education (ACPE) supports access to postsecondary education; the Alaska Student Loan Corporation (ASLC) operates as an enterprise agency of the State of Alaska, funding and facilitating the Alaska Student Loan Program. She then detailed the sectional analysis, which read as follows [original punctuation provided]: Section 1:  Amends AS 14.43.122(b), Consolidation of loans, by expanding the population eligible to apply for Alaska Refinancing Loans to include previous Alaska borrowers and graduates from Alaska high schools and postsecondary institutions, as well as current Alaska residents. Section 2:  Amends AS 14.43.173(a), Loan award maximums; use of loan award, by eliminating the loan maximums in statute and providing for the Alaska Student Loan Corporation (Corporation) to set the annual loan maximums. Section 3:  Amends AS 14.43.173(b), Loan award maximums; use of loan award, by eliminating lifetime loan maximums in statute and providing for the Corporation to set lifetime loan maximums. Section 4:  Amends AS 14.43.173(d), Loan award maximums; use of loan award, with a conforming change to allow the Corporation to set loan limits for both half-time and full-time loans. Section 5:  Amends AS 14.43.175, Repayment of loans, by providing for the Alaska Commission on Postsecondary Education to offer future student loan borrowers a loan program with immediate repayment requirements. 9:32:15 AM CO-CHAIR DRUMMOND asked Ms. Efird to clarify whether immediate repayment would mean avoiding interest. MS. EFIRD replied that interest is normally deferred while students are in school, and capitalized when students start making payments six months after graduation. The proposed legislation, she said, would allow students to pay interest up front so it's not capitalized into the end amount, thereby lowering the total cost of the loan. CO-CHAIR DRUMMOND asked whether "immediate repayment" means right after closing on a loan. MS. EFIRD replied that is correct. 9:33:34 AM REPRESENTATIVE STORY asked whether immediate repayment would be mandatory. MS. EFIRD replied that it would be an option. 9:33:50 AM MS. EFIRD said the proposed legislation would respond to requests from students and Alaska's higher education community, and that it would enhance the ability to meet the financial aid needs of student loan borrowers, allow responsible increases to annual loan limits, and amend the repayment program to assist borrowers in keeping overall costs down. She said the changes are intended to positively impact ASLC in offering economies of scale and provide the lowest interest rates possible. 9:35:11 AM LEE DONNER, Regional Managing Director, Hilltop Securities, testified in support of HB 114, sharing that Hilltop Securities has served as a financial adviser to ASLC since 2007. He explained that almost all student loan programs throughout the country require two eligibility standards. Residency is one eligibility standard, he said; the other eligibility standard, he said, is having attended school within the state, which he noted is an unusual standard. He said the proposed legislation is not likely to result in a large expansion in a program, and he noted that it would be limited to refinanced loans instead of loans initially held by current students. Because the loans have been refinanced, he said, the proposed legislation would not pose a credit risk due to the borrowers having established a post-college credit history. He said HB 114 would bring Alaska's loan refinancing standards more into line with other programs that Hilltop Securities advises. Ms. Donner said the immediate repayment option improves payment performance and lowers loan delinquency and default. Those who take advantage of the immediate repayment option not only enjoy a lower loan cost, he said, but they also perform better overall than those who don't. 9:41:43 AM MS. EFIRD pointed out that HB 114 has a zero fiscal note. [HB 114 was held over.]