HOUSE BILL NO. 27 "An Act relating to graduate student loans; and providing for an effective date." Co-Chair Mulder, Sponsor explained that he introduced HB 27 as a response to comments by his constituents. In the past, the state of Alaska secured positions in the Western Interstate Commission on Higher Education (WICHE) program as a direct grant program. In 1997, the state of Alaska decided that it could no longer afford the grant process. Under the WICHE program students are allowed to pursue degrees in selected programs in other state institutions. Student fees are at a reduced rate. Rates are either at the in-state rate or at a reduced out-of-state rate. The program helps reduce costs and secure positions at other WICHE schools. Students are allowed opportunities to get degrees at a greatly reduced rate. Co-Chair Mulder explained that the original legislation was amended in the House Health, Education and Social Services Committee. He observed that repayment of the loan portion was in AS 14.44.040. Legislative Legal Division drafters felt that the program should be placed in AS 14.44.030. The committee substitute incorporates this technical change. Representative Bunde expressed support for the legislation. He observed concerns by students regarding opportunities to enter into programs at WICHE institutions. He maintained that students are willing to repay the state of Alaska for the cost of their education if they have the opportunity for a seat in the program. In response to a question by Representative Bunde, Co-Chair Mulder explained that the department would set appropriate fees under section 3 on page 3. He did not know the interest rate. In response to a question by Co-Chair Therriault, Co-Chair Mulder reviewed the changes made by HB 27. Sections 1 and 2 relocate the program to AS 14.44.030. The changes proposed by Co-Chair Mulder are incorporated in sections 3, 4, and 5. Section 6 is the effective date. Co-Chair Therriault observed that the state used to negotiate with Washington, Alaska, Montana, Idaho Medical Education Program (WAMI) schools for the number of spots that would be reserved for Alaskan students. DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION COMMISSION, DEPARTMENT OF EDUCATION provided information on HB 27. She noted that the Commission did not have a position because it had not yet reviewed the legislation. She pointed out that the Commission is supportive of an effort to increase access. She observed that the legislation would increase access. The mechanism will remain the same. The WICHE administrative office would continue to manage the program. Students would apply with the Commission for certification in the Professional Student Exchange Program. The Commission acts as a conduit for Alaskan residents to get their name into the WICHE pool for the schools that participate. The WICHE administrative staff would negotiate what the support fee would be in each field. Students would have to sign a contract agreeing to pay the support fee plus interest. The Commission sets the fee and the students sign a promissory note. There would be a direct transmittal through the WICHE administrative offices to the institution. The range of fees would be between $7,000 per year for a three-year program, or $15,000 for a four-year program. The fifteen fields available are divided into two categories; those that need WICHE support to get the WICHE slot and those fields of study that do not require WICHE support for entry. Support would be focused on fields that require WICHE support. This is the area of greatest need. In response to a question by Representative J. Davies, Ms. Barrans explained that there may be as many as 7 schools participating in the physical therapy program. If a student were admitted to the Professional Student Exchange Program, in the North Dakota or California programs they would pay that state's resident rate plus the support fee. The support fee would be constant. The WICHE staff, based on a range of differentials, negotiates the support fee. For some schools it is in excess of the non-resident rate. The benefit for the student would vary depending on which program they attend. Ms. Barrans explained that students would not be considered for admission to some programs, except as a certified WICHE student. The surcharge that the student pays in some schools provides them consideration and admission into the program. In response to a question by Representative J. Davies, Ms. Barrans explained that students must be a one-year resident of the state of Alaska in order to apply for certification in the program. Representative Bunde noted that Alaska has maintained its membership in the program even though the program was not funded. Ms. Barrans confirmed that the state of Alaska maintained its membership fees. She observed that Alaskan students have continued to participate in the Western Regional Graduate and Undergraduate exchange. She observed that 800-900 Alaskans participate annually. These benefits are available as a member state. Representative Bunde questioned if the reluctance to embrace loans has been addressed. Ms. Barrans noted that the WICHE Commission has not been notified of Alaska's return to the program. If HB 27 is adopted the program would operate under new terms. She anticipated that the Commission would restate concerns that students are incurring debts without the opportunity for a service obligation that would allow them to retire the debt through service in the state. She observed that the Commission recognizes that, due to Alaska's economic condition, the program can only operate under these terms. In response to a question by Representative Bunde, Ms. Barrans explained that each institution retains its ability to decide admissions. Representative Bunde observed that there is a zero fiscal note attached to the legislation. Ms. Barrans explained that there is no forgiveness attached to the legislation. Co-Chair Mulder acknowledged that it is the desire of the WICHE Council to have a forgiveness clause. He pointed out that the state forgiveness would be $500 to $750 thousand dollars a year, if half of the participating students returned to the state to reduce their obligation. He pointed out that there are fiscal restraints. Representative Mulder MOVED to report CSHB 27 (HES) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 27 (HES) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Education, dated 2/8/99.