In 1987, the Alaska State Legislature made sweeping changes to the Alaska Student Loan program in response to the state's fiscal crisis. One of the major changes was elimination of the student loan forgiveness clause, which at one time allowed Alaskans to have 10 percent of their student loan forgiven for each year they remained in the state after finishing their education, up to 50 percent.
The forgiveness clause was the primary reason I returned to Alaska after graduating from college, and once I stayed for the five years of my forgiveness period, my career and my home were well established here -- and I have never left.
Gov. Parnell's proposed scholarship program is well-intentioned, but it has several flaws that a forgiveness program would not have. The proposed program only provides scholarships for postsecondary institutions and technical programs that are physically located in Alaska. While we do have a good university system, Alaska benefits when some of its citizens get degrees and certificates from universities and training programs across the nation. Some programs are not available here -- while we might joke that we could get by without lawyers, for example, Alaskans who get law degrees from top universities could be the key to fighting for our rights to develop our resources responsibly. The diversity of experience, thought and skill that results when our students leave home to earn a degree or learn a trade, and return to share those skills in Alaska, is invaluable.
The proposed merit-based scholarship program dictates the "inputs" required to obtain a higher education or vocational scholarship -- a minimum number of years in four subject areas, minimum GPAs and minimum examination scores. There is no guarantee that students who meet the scholarship requirements will be accepted in a postsecondary or vocational program, complete that program, get a job, and then stay in or return to work in Alaska.
A student loan forgiveness program is based on "outputs." The forgiveness program works after a student has been accepted to a postsecondary or vocational program, obtains a student loan to attend that program, completes the program, gets a job, and is an active participant in Alaska's economy.
A scholarship program provides free money on the front end, with no "skin in the game" by the student. While it might entice a few more students to take more rigorous courses and finish high school, that's as far as the incentive goes. A forgiveness program requires the student to invest in his or her own education and encourages students to complete their programs, stay in or return to Alaska, get a job, and continue to keep their student loan current to earn the forgiveness.
In 1987, the administration calculated that eliminating the forgiveness clause would save the state $96 million over the next 24 years, or $4 million a year. The proposed scholarship fund requires a $400 million endowment as a funding source. Reinstating the forgiveness clause would require a much smaller endowment: $80 million invested for a 5 percent return would generate $4 million each year. Of course, the Alaska student loan program has changed a lot since 1987, and those estimated savings may no longer be accurate. Student loan experts, the Legislature and the public would need to work together to craft a forgiveness program that is workable and affordable.
Many Alaskans in my generation took advantage of the student loan forgiveness program, returned to the state, and are still making significant contributions to their communities, and to the economy, more than 30 years later. The forgiveness clause was eliminated as a result of a fiscal crisis, not because the policy didn't meet its objectives of encouraging Alaskans to stay in, or return to, the state after they completed higher or vocational education.
Instead of rushing to create a new program and a new bureaucracy, let's take the time to look at alternatives that have worked in the past and could work in the future.
Blythe Campbell is a third-generation Alaskan living in Anchorage.
By BLYTHE CAMPBELL