Alaskans working through academic schooling or vocational training should not be crippled by debt to better themselves, and in doing so, better our economy. In our state, a debate about student loan rates is going on that parallels the one just resolved in Congress. The Alaska Student Loan Corporation issues loans at adjustable interest rates which currently stand at 7.3 percent -- almost double what a bipartisan agreement in Washington agreed on for federal student loan interest rates, and triple the rate of a used car loan at some local banks.
After several weeks of political brinkmanship which allowed federal rates to double to 6.8 percent, Congress settled on an improved, but imperfect, treasury-note indexed rate. This compromise reduced rates cto 3.8 percent for now but allows them to rise along with interest rates. Meanwhile Alaska's rate remains 7.3 percent and will rise with interest rates as well. However defective the federal loan rates may be, the state programs are doubly so.
Reps. Les Gara, Geran Tarr and others have begun a push for reform here at home and rightfully so. Most Alaskans aren't wealthy enough to pay the entire bill for college themselves, and many need even more than the $8,500 in federal loans they can obtain. Thus, our students must be provided a chance to obtain an affordable student loan from the state as well. Gara and Tarr have called on all their colleagues, regardless of party, to work together to produce a comprehensive, permanent solution. A bill was introduced to start such a discussion last year; the bill was referred to the Education committee and ignored. All the while the sponsors and proponents have stated they don't care who gets the credit, as long as we get a solution, and offer Alaskans a more equitable chance at an affordable education.
House Bill 17 would help make academic and professional schooling for all Alaskans more affordable. Higher wages, stronger families, less dependency on public assistance, lower crime rates and countless other benefits would certainly follow as more Alaskans receive the education they deserve. The bill would effectively reduce the interest rate by 3 percent if the borrower maintains residency in Alaska, and was crafted with the Student Loan Corporation, which favored an annual 2.5 percent principal reduction. That equates to a 3 percent interest rate reduction.
The proposal would also help alleviate the major problem Alaska has filling professional jobs. Many teachers, for example, are hired from out of state and their retention rates are abysmal. Instead, HB 17 helps keep Alaska's best and brightest here, to strengthen our economy, whether they attend Alaskan schools or go outside and return with the skills we so desperately need. While the bill currently offers debt relief to those who remain or return to Alaska and complete their education in a limited period of time, Gara proposes to amend it so a student can complete their program based on their own schedule and plans to strengthen this part of the bill when the Legislature convenes in 2014. The rate reduction would be waiting for them as an incentive to graduate, and this would reduce Alaska's college level dropout rate, which remains the highest in the nation.
House Bill 17 would be a strong and cost effective step in the right direction to fill professional jobs with professional Alaskans, ensure equal opportunity for all, strengthen our economy and create a better future for ourselves and those who come after us. However, any bill or policy that can achieve these same goals will be much welcomed by students. Student loan debt is the second largest form of debt burdening Americans, after mortgages. Debt is crippling our students' ability to keep themselves afloat, let alone to plan for a future in Alaska where the cost of, rent, food, and fuel are already exorbitant.
It's time for the Legislature and governor to work together, like Congress did, to produce a solution -- and that begins with moving this bill through the legislative process.
Andrew Lessig is president of the UAA student government and a member of the state Commission on Postsecondary Education.