Bills may give break on loans

Plan would forgive some student debt

Posted: Thursday, January 18, 2001

The state would forgive half the student loan money owed by college graduates if two bills heard by a legislative committee for the first time Wednesday become law.

The catch is graduates would have to work in Alaska to qualify for the financial break.

The sponsors said they offered the bills to plug a so-called brain drain in the state and beef up the number of nurses, teachers and other professionals now in short supply.

"Our really good students are going outside and not coming back," said Rep. John Davies, a Fairbanks Democrat and sponsor of one of the bills. "We've had an exodus."

Davies' bill would apply to anyone who receives a state student loan and graduates from college. Under his proposal, the state would reimburse 10 percent of a student loan each year for every year of employment in Alaska - up to five years or 50 percent of the loan.

Another bill sponsored by Rep. Gary Stevens, a Kodiak Republican, would work the same way but apply only to graduates who teach in the state.

"We have a real statewide shortage now in teachers here in Alaska. If we are serious about making sure the student achievement is high ... we need to make sure we have good quality teachers," Stevens said.

The trick is to convince the budget-conscious Republican majorities in the House and Senate that the idea is worth funding. Alaska's student loan program used to have a similar forgiveness provision, but it was cut about 10 years ago due to its expense.

Davies estimates his bill could cost roughly $20 million a year, depending on the number of students who qualify. Rep. Con Bunde heads the House Special Committee on Education that heard the bills Wednesday, and the Anchorage Republican said the price tag on Davies' bill is too high.

"We can't afford it. Where in the world are we going to get $20 million?" said Bunde, who also serves as vice chairman of the House Finance Committee. "We'd be lucky to find $20 million to put into education total."

Stevens agreed Davies' bill probably would cost too much. He said that's the reason he offered a bill that applies the benefit only to graduates who teach here.

"I'm not necessarily against (Davies' bill), I just don't think it would make it through the budget process. It would be so large and so expensive," Stevens said.

But Bunde said Stevens' bill might have an uphill battle, too, because it could cost the state up to $1 million a year. Bunde also questioned the wisdom of spending money to attract workers who might otherwise choose to live elsewhere.

"What kind of employee morale and loyalty would we have from someone who is working in an area because they have to financially, but they hate it?" Bunde said. "I share the concern about the brain drain, but you can only bribe people to stay in Alaska so much."

Education administrators and parents greeted the bills enthusiastically at the hearing Wednesday. Districts around the country are short of teachers and are offering breaks such as signing bonuses and low-interest housing loans, said Jack Walsh, an administrator with the Kodiak Island Borough School District.

"There are a lot of things we have to compete with," Walsh said.

He suggested forgiving a greater percentage of a loan for those teaching in such hard-to-fill specialties as math and special education.

Arnold Shryock of Kodiak said he'd like to see the plan apply to people like his daughter, who already have taken out loans. Both bills would apply only to loans taken after June 30, 2001.

The committee took no action on either bill Wednesday. Bunde said they will be considered again in two weeks.

The Associated Press contributed to this article. Kathy Dye can be reached at

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