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HCR 24: Relating to student loan default rates at vocational education schools.

00 HOUSE CONCURRENT RESOLUTION NO. 24                                                                                      
01 Relating to student loan default rates at vocational education schools.                                                 
02 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                               
03  WHEREAS private vocational education is an integral part of Alaska's education                                         
04 system; and                                                                                                             
05  WHEREAS private vocational education schools in the state account for 21.96 percent,                                   
06 state funded public schools, universities, and colleges account for 54.42 percent, and schools,                         
07 universities, and colleges outside the state account for 23.62 percent of the total Alaska                              
08 Student Loan Program loan dollars in default; and                                                                       
09  WHEREAS the statutory authority for promulgating 20 AAC 15.925 (Program and                                            
10 Institutional Default Rates) was enacted by the legislature in 1987; and                                                
11  WHEREAS the Alaska Commission on Postsecondary Education did not promulgate                                            
12 20 AAC 15.925 (Program and Institutional Default Rates) until November 1995, eight years                                
13 after the legislature authorized the regulation; and                                                                    
14  WHEREAS 20 AAC 15.925 (Program and Institutional Default Rates) applies only                                           
01 to private vocational education schools; and                                                                            
02  WHEREAS the Alaska Commission on Postsecondary Education has no authority to                                           
03 conduct credit checks on potential borrowers; and                                                                       
04  WHEREAS The Alaska Student Loan Program has changed dramatically from 1987                                             
05 to 1995; and                                                                                                            
06  WHEREAS 20 AAC 15.925 (Program and Institutional Default Rates) does not take                                          
07 into account new owners of private vocational education schools who have a substantially                                
08 lower default rate than the schools' previous owners and the regulation calculates the schools'                         
09 average default rate over the life of the school; and                                                                   
10  WHEREAS 20 AAC 15.925 (Program and Institutional Default Rates) does not give                                          
11 private vocational education schools a grace period to bring down default rates, and the                                
12 regulation immediately prohibits a school whose default rate is greater than 1.5 times the                              
13 average default rate from participating in the Alaska Student Loan Program; and                                         
14  WHEREAS 20 AAC 15.925 (Program and Institutional Default Rates) does not                                               
15 provide a mechanism for a private vocational education school to reenter the Alaska Student                             
16 Loan Program once the school has been prohibited from participating in the program; and                                 
17  WHEREAS the executive director of the Alaska Commission on Postsecondary                                               
18 Education has stated in writing that the reason the regulation was promulgated was at the                               
19 direction of the legislature in 1995; further, in testimony before the House Labor and                                  
20 Commerce Committee, the executive director's assistant said the direction from the legislature                          
21 for promulgating this regulation came from a letter of intent attached to legislation that did                          
22 not pass the legislature; and                                                                                           
23  WHEREAS the Alaska Commission on Postsecondary Education has had no                                                    
24 systematic loan default management program; and                                                                         
25  WHEREAS solving the default rate problem of the Alaska Student Loan Program will                                       
26 require examination of all the loans of the program and not just those loans made to                                    
27 vocational education students; and                                                                                      
28  WHEREAS 20 AAC 15.925 (Program and Institutional Default Rates) is unfair to the                                       
29 private vocational education students in the state; and                                                                 
30  WHEREAS ameliorating the Alaska Student Loan Program default rate would be                                             
31 assisted by soliciting and utilizing the knowledge and expertise of those who are actively                              
01 involved in the state's private vocational school industry; and                                                         
02  WHEREAS the private vocational education schools have expressed willingness to                                         
03 cooperate fully with the commission to lower default rates; and                                                         
04  WHEREAS immediate implementation of 20 AAC 15.925 (Program and Institutional                                           
05 Default Rates) will cause irrevocable harm to private vocational education in the state and is                          
06 not in the best interests of the students, the schools, or the state;                                                   
07  BE IT RESOLVED that the Governor is respectfully requested to urge the Alaska                                          
08 Commission on Postsecondary Education to immediately cease implementation of 20 AAC                                     
09 15.925 (Program and Institutional Default Rates) and take whatever action is necessary to                               
10 rescind the regulation; and be it                                                                                       
11  FURTHER RESOLVED that the Governor is respectfully requested to urge the                                               
12 Alaska Commission on Postsecondary Education to work and consult with all affected parties                              
13 in order to achieve a satisfactory resolution of the issues raised by student loan default rates                        
14 and to craft a more equitable loan default regulation.