AFSA Sends Rate Caps Veto Letter
AFSA’s State Government Affairs team submitted a veto letter to Alaska Governor Mike Dunleavy to veto S.B. 39, a well-intentioned but deeply problematic proposal to cap the Annual Percentage Rate (APR) on loans up to $25,000. If enacted, this bill would severely limit access to safe, affordable credit for thousands of Alaskans, especially those with less-than-perfect credit.
S.B. 39 would cap APRs in a way that effectively eliminates traditional installment loans—often the only credit option available to working families without access to banks or credit unions. These loans are crucial for handling emergencies, smoothing financial gaps, and building credit histories.
AFSA raised concern over the bill’s use of an “All-In” APR, which includes unrelated costs like credit insurance in the APR calculation. This artificially inflates the rate and triggers the cap, making many legitimate loans nonviable. The federal Truth in Lending Act (TILA) does not include these add-ons for good reason: APR is a timing metric, not a full-cost measure.
In cautioning the governor regarding signing the bill, AFSA noted the devastating results from a similar law that passed in Illinois in 2021. Nearly 370,000 residents lost access to credit, the number of licensed lenders was cut in half, and those who could still qualify were pushed into larger, longer-term loans. Instead of reducing risk, the policy increased it.
In short, S.B. 39 would harm, not help, the very people it aims to protect. The bill’s APR cap doesn’t make loans cheaper; it makes them disappear altogether, leaving vulnerable Alaskans with fewer, riskier options.
This and other SGA letters can be found on the direct advocacy section of AFSA’s website.
June 20th, 2025