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.