SENATE BILL NO. 189 "An Act relating to eligibility for and default, collection, and repayment of student loans; relating to nonrenewal of certain occupational licenses for default on a student loan; and providing for an effective date." Co-chair Sharp called the meeting back to order and introduced SB 189. Senator Gary Wilken, sponsor of the bill was invited to join the committee. He referred briefly to the sectional analysis and sponsor statement. Senator Pearce said Alaska had a successful student loan program but they were very unsuccessful in their collection and management. She said specifically that Post Secondary had not been able to figure out the direct deposit system. Senator Wilken said the Commission was aware of this problem and they were trying to correct it. Diane Barrans, Executive Director, Post Secondary Education was invited to join the committee. She described the Commission's position on SB 189. The current loss of $2.7 million was a significant decrease over last year. Co-chair Sharp indicated that money had been expended for computer update and wanted to know the present status of this. Ms. Barrans said the new computers were brought on line in November and that it was a successful conversion. Co-chair Sharp asked the amount of new loans that entered into default status. Ms. Barrans explained the default system. She said that between FY '95 and FY '96 there was $18 million in default. Senator Pearce asked if a co-signature on the loan would help correct the default situation and how would the Commission consider this suggestion. Ms. Barrans said it would be agreeable to the Commission but noted the average age of borrowers was 28 years of age. Senator Pearce said there was still some problems with the direct deposit system. The debit was being made but the credit was not being entered to the student's account. Ms. Barrans acknowledged this problem but said they were trying to work this out through the Department of Revenue. Senator Pearce noted the problem lay therein and suggested the Commission should be working through private enterprise. Ms. Barrans also felt that the Commission must relay more precisely to borrower's how the system worked. This was a timing issue and not a software problem. Senator Pearce suggested perhaps automatic debit could be set up to meet the proper time frame of the borrower. Senator Phillips moved amendment #1 and asked the Commission's comments regarding full-time students outside paying back half-time loan used in-state. Ms. Barrans indicated that had been an oversight and amendment #1 would correct this. Without objection amendment #1 was adopted. Senator Torgerson asked about doctors and attorneys being left out of the bill. Ms. Barrans said attorneys were not included but doctors were. Senator Torgerson referred to page 4 and page 7 line 7. Ms. Barrans at this point noted a technical amendment should be made on page 14, line 24; the section should correctly read "20". Senator Torgerson moved amendment #3, page 9, line 21 to read all language necessary to include attorneys. He moved to remove the motion pending clarification of amendment #2 and without objection his motion was removed. Senator Phillips advised the committee that amendment #2 as proposed by Ms. Barrans had not been moved. He therefore moved amendment #2, page 14, line 24 and without objection it was adopted. Senator Torgerson then moved his amendment #3, page 9, line 21 and without objection it was adopted. He moved CSSB 189 with individual recommendations and accompanying fiscal notes and without objection it was reported out.