The chaos last spring over the state budget and education funding may have accelerated the move of talented Alaska high school graduates to out-of-state colleges and universities, a state education officials said last Wednesday.

The compact is a citizen group that focuses mainly on vocational and technical education.

“We’re seeing a decline in applications for the Alaska Performing Scholarships,” to Alaska post-secondary institutions, which translates to a 9 percent decline in the number of scholarship award recipients, said Stephanie Butler, Executive Director of the Alaska Commission of Postsecondary education.

Butler spoke to the Alaska Business/Education Compact, an Anchorage-based group that focuses mainly on career and technical education.

A decline of scholarship applications and awards is an indicator of the drain of young Alaskans to Lower 48 colleges and universities. Another sign is that fall enrollment at the University is down statewide and particularly at the University of Alaska Anchorage, Butler said.

Alaska educators and employers are concerned about a rising number of high school graduates going out of state because many may not return. Studies show that 80 percent of students in higher education stay in the area of the colleges and universities where they graduate.

The postsecondary education commission administers Alaska student loan programs many of which can be used either in-state and out-of-state, but the performing scholarships must be used in-state at the University of Alaska or another higher education institution, or a career/vocational school.

Because the scholarships are only for students pursuing postsecondary education in-state it is a signal that more students are choosing to leave the state for higher education.

The scholarships go to graduating high school students who take a demanding academic program in and achieve a certain level of grades, so the applicantsare typically academic higher-achievers.

The state budget controversy last spring couldn’t have come at a worse time. Gov. Mike Dunleavy announced his budget in February, which included terminating the commission and the Alaska Student Loan Corp., the entity that funds the education loans.

The governor also proposed ending the Alaska Education Higher Investment Fund, or HEIF, which finances the performing scholarships as well as WWAMI, a multi-state program that allows Alaska students to attend the University of Washington School of Medicine after doing preliminary work at the University of Alaska.

The governor’s budget cuts set off a storm of controversy in the Legislature and the public. The timing couldn’t have been worse.

It came just as high school senior and parents were making decisions on where to apply for higher education, Butler said. “We were getting a lot of calls from people worried about whether the scholarships would be funded,” she said.

“Students and parents were having to decide whether to apply in-state (and be eligible for the scholarships) or out of state. We couldn’t tell them anything, so we believe a lot of student wound up going out of state,” Butler said.

The Legislature wound up getting the funds restored, and the governor accepted that, but by then the decisions had been made. However, there are still two bills pending in the Legislature that would repeal the HEIF, House Bill 130 and Senate Bill 110.

So far there doesn’t seem to be any major change this year in the number of state financial-aid loans administered by the commission, Butler said. These can be for studies pursued both in-state and out-of-state. The mix seems about 50-50 between the two, and Butler said she cannot yet tell whether there’s any trend toward more students in school out of state.

The performance scholarships provide up to $4,755 per year for Alaska students who complete a rigorous high school curriculum, earn good grades and score well on required exams, Butler said. The Legislature funded $11.75 million in scholarship grants under the program in Fiscal Year 2019, the state financial year that ended last June 30.

A second state education grant program, also administered by the commission, provides needs-based assistance to eligible modest-income students, who also attend qualifying post-secondary schools in the state including the University of Alaska.

The awards range from $500 to $4,000 per academic year, Butler said. Funding for this follows a formula set in statute, which is one-half of the amount funded for performing scholarships, Butler said. In FY 2019 the Legislature approved $5.875 million for these.

Of the conventional college loan financing, there are three kinds offered:

• Alaska Supplemental Education Loans, currently offered at fixed rates between 5.4 percent and 8.5 percent base on the applicants’ FICO score (meaning the parents’, since they co-sign).

• Alaska Family Education Loan currently offered at fixed rates of 6.5 percent, where family members can borrow to pay a student’s education costs. These require in-state residency of the borrower and student. They have no FICO score requirement but do require an absence of adverse credit history.

• Alaska Education Loan Refinancing Program, which allows state, federal and private loans to be rolled into one state education refinancing loan with a fixed interest rate of 4.85 percent. These also require Alaska residency and a minimum FICO score of 720, or a qualifying cosigner.

Last year there were 835 supplemental education loans totaling $8.7 million, and 62 family education loans totaling $700,000, according to data from the student loan corporation.

As of June 30 the Alaska Student Loan Corp.’s revolving loan fund thad an equity balance of $219.4 million, according to the loan corporation.

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