(a) Proceeds from an education loan to a full-time student may only be used for books and supplies, tuition and required fees, loan origination fees, and room and board. Proceeds from an education loan to a half-time student may only be used for books and supplies, tuition and required fees, and loan origination fees.
(b) Education loans may only be used to attend a
(1) career education program operating on a sound fiscal basis that has
(A) operated for two years before the borrower attends; and
(B) submitted an executed program participation agreement as required by the commission; or
(2) college or university that
(A) has operated for at least two years before the borrower attends;
(B) is accredited by a national or regional accreditation association recognized by the Council for Higher Education Accreditation or is approved by the commission;
(C) if the loans are federally insured, is approved by the United States Secretary of Education;
(D) is a degree granting institution; and
(E) has submitted an executed program participation agreement as required by the commission.
(c) To maintain a loan awarded to a full-time student the student must continue to be enrolled as a full-time student in good standing in a career education program, college, or university that meets the requirements under (b) of this section. To maintain a loan awarded to a half-time student, the student must continue to be enrolled as a half-time student in good standing in (1) a career education program, college, or university in the state that meets the requirements under (b) of this section, or (2) a career education program, college, or university that meets the requirements under (b) of this section, and be physically present in the state while attending the career education program, college, or university. The commission shall adopt regulations defining “good standing” for purposes of this subsection.
(d) Education loans may not be made to a student
(1) for more than a total of $42,500 for undergraduate study;
(2) for more than a total of $47,500 for graduate study;
(3) for more than a combined total of $60,000 for undergraduate and graduate study;
(4) to attend an institution if the total amount of education loans made to students to attend that institution exceeds $100,000 and the default rate on those loans is (A) greater than 20 percent but less than 25 percent, and the institution is unable to reduce its default rate within 24 months after the rate determination; or (B) equal to or greater than 25 percent for two consecutive calendar years; for purposes of this paragraph, the default rate shall be determined by the commission for each annual group of loans required to be repaid under (g) of this section on or after July 1, 1996; if an education loan is refused based on the provisions of this paragraph and, under a subsequent default rate determination, an institution's default rate does not exceed the limits established under this paragraph, the commission may not refuse to issue an education loan to attend that institution based on the provisions of this paragraph.
(e) Interest on an education loan accrues from the time the loan is disbursed; however, the state shall pay the interest while the borrower continues to be enrolled under (c) of this section.
(f) [Repealed, § 45 ch 89 SLA 2014.]
(g) A borrower's obligation to commence repayment of the principal and interest on the loan begins six months after the borrower is no longer enrolled under (c) of this section. The borrower shall repay the total amount owed in periodic installments of at least $50 a month over a period of not more than 15 years from the commencement of the repayment obligation. If the commission and the borrower agree to a different repayment schedule, the borrower shall repay the loan in accordance with the agreement. A borrower may make payments earlier than required by this subsection or the agreement.
(h) Security may not be required for a loan; however, a loan origination fee, as specified in (u) of this section, shall be deducted at the time that the loan is disbursed. Additionally, the borrower shall pay all fees and costs incurred in collection on the loan if it becomes delinquent or in default.
(i) [Repealed, § 18 ch 54 SLA 1997.]
(j) [Repealed, § 19 ch 92 SLA 1987.]
(k) A borrower's obligation to make periodic payments of principal shall be deferred, but the borrower's obligation to pay interest shall continue, unless the state pays the interest by appropriation under (t) of this section, during any of the following periods:
(1) return to full-time student status in good standing in a career education program, college, or university that meets the requirements under (b) of this section;
(2) if the borrower received a loan to attend as a half-time student, return to
(A) half-time student status in good standing in a career education program, college, or university in the state that meets the requirements under (b) of this section;
(B) at least half-time student status in good standing in a career education program, college, or university that meets the requirements under (b) of this section, and the borrower is physically present in the state while attending the career education program, college, or university; a borrower is not eligible for deferral under this paragraph for a period longer than eight years; or
(C) full-time student status in good standing in a career education program, college, or university that meets the requirements under (b) of this section;
(3) serving an initial period of up to three years on active duty as a member of the armed forces of the United States;
(4) serving, for up to three years, as a full-time volunteer under the Peace Corps Act;
(5) serving, for up to three years, as a full-time volunteer under the Domestic Volunteer Service Act of 1973;
(6) serving, for up to two years, as a full-time volunteer under the National and Community Service Trust Act of 1993 (AmeriCorps);
(7) for a one-time period up to 12 months in which the borrower is seeking and unable to find employment in the United States; or
(8) during the period of disability if, after the loan is disbursed, the borrower becomes totally disabled as certified by competent medical authority.
(l) The state shall pay the interest on that portion of a loan that is not federally insured during
(1) the period while the borrower continues to be enrolled under (c) of this section; and
(2) deferments under (k) of this section.
(m) In case of hardship, the commission may extend repayment of a loan for an additional period of up to five years.
(n) [Repealed, § 11 ch 89 SLA 1981.]
(o) [Repealed, § 19 ch 92 SLA 1987.]
(p) [Repealed, § 102 ch 21 SLA 2000.]
(q) [Repealed, § 18 ch 54 SLA 1997.]
(r) The rate of interest, time of payment of an installment of principal or interest, or other terms of an education loan may be modified if required to establish or maintain tax-exempt status under 26 U.S.C. 103 (Internal Revenue Code of 1986), as amended, for the interest on bonds issued by the Alaska Student Loan Corporation.
(s) A portion of a loan shall be forgiven by the state if, after being enrolled in the course of study for which the loan was granted, the borrower is a student who is unable to complete the school term as a result of serving on active duty as a member of the armed forces of the United States. The portion of the loan that shall be forgiven by the state is equal to the amount borrowed by the student for the school term in which the borrower's studies are terminated.
(t) Payment of interest under (l) of this section and forgiveness under (s) of this section are subject to appropriation by the legislature. Money obtained from the sale of bonds by the Student Loan Corporation under AS 14.42.220 may not be appropriated for the payment of interest or the forgiveness of loans.
(u) The corporation by regulation shall set a loan origination fee, not to exceed five percent of the total education loan amount, to be assessed upon an education loan that is funded from the education loan fund of the corporation. The loan origination fee shall be deducted by the commission at the time the loan is disbursed. The loan origination fees shall be deposited into an origination fee account within the education loan fund of the corporation, and subsequently used by the corporation to offset losses incurred as a result of death, disability, default, or bankruptcy of the borrower.
(v) [Repealed, § 45 ch 89 SLA 2014.]