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