20 AAC 15.960 - Repayment of loans

(a) For an interest-bearing loan other than a family education loan, commission staff shall add accrued interest to the principal balance of the loan at the time the borrower is obligated to commence repayment under AS 14.43.120(g) or at the end of a deferment period under AS 14.43.120(k). The staff shall add to the principal balance of the loan the interest that accrued and was unpaid due to the borrower's failure to provide
(1) the commission staff with the information required under 20 AAC 15.945(a) to calculate the correct date for the commencement of repayment under AS 14.43.120(g); or
(2) notice under 20 AAC 15.965(b) that eligibility for a deferment period under AS 14.43.120(k) has ended.
(b) If a payment is made on a loan in an amount larger than that required by the repayment schedule, the excess is applied first to any outstanding interest charges and then to the remaining principal balance of the loan.
(c) A payment on a delinquent loan is applied first to collection costs, then to any outstanding interest charges, then to the outstanding principal balance of the loan, until those amounts are paid in full.
(d) For the purposes of AS 14.43.120(m), a borrower must demonstrate that both the borrower and the cosigner, if any, are in economic hardship. If a person who is a borrower or, if applicable, a cosigner is in economic hardship as a result of voluntary withdrawal of the person from full employment, the person's hardship status will be calculated as if the person were fully employed. Economic hardship is demonstrated by one or more of the following:
(1) currently receiving state or federal economic assistance based on poverty;
(2) the person's employment provides monthly net income that is equal to or less than the monthly minimum wage;
(3) the person's monthly educational debt liability is greater than or equal to 20 percent of the person's net monthly income and the person's net monthly income, less the education debt, is no more than twice the monthly minimum wage;
(4) the annual family income of the person is no more than the poverty guidelines for the applicable family size established under 42 U.S.C 9901 - 42 U.S.C. 9912 (Community Services Block Grant Act); or
(5) an extraordinary circumstance outside the person's control, such as an ongoing medical condition, that is projected to continue for six months or longer and prevents the person from paying the monthly amount required under the original payment schedule.
(e) A cosigner's obligation to repay a loan
(1) begins when the borrower's obligation begins;
(2) is deferred while the borrower's obligation is deferred under AS 14.43.120(k); and
(3) continues even if the borrower's obligation to repay the loan is discharged or canceled before the loan, including interest, is repaid in full.
(f) During a borrower's deferment under AS 14.43.120(k)(8), a cosigner's obligation will not be deferred under (e)(2) of this section if the cosigner's signature was required under 20 AAC 15.940(e) (2).
(g) The commission staff will notify a cosigner of any deferment granted to a borrower, or any agreement it reaches with the borrower, that will increase the amount due over time on the note.
(h) For the purposes of this section, "monthly minimum wage" means 168 multiplied by the minimum hourly wage established for the state in which the person is residing.


20 AAC 15.960
Eff. 12/4/96, Register 140; am 3/22/97, Register 141; am 3/15/98, Register 145

Authority:AS 14.43.105

AS 14.43.120

AS 14.43.125

AS 14.43.305

AS 14.43.320

AS 14.43.630

AS 14.43.640

AS 14.43.730

AS 14.43.740

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