(a) AS 09.38 does not apply to a permanent fund dividend taken under AS 14.40.251. Notwithstanding AS 09.35, the University of Alaska may take a permanent fund dividend under AS 14.40.251 by delivering a claim to the department certifying the following information:

(1) the name and social security number of the individual whose dividend is being claimed;

(2) the amount the individual owes the university; and

(3) a statement that

(A) the amount claimed is in default under AS 14.40.251;

(B) the university has notified the individual that future permanent fund dividends will be taken to satisfy the claim;

(C) the individual was notified of the right to request a hearing and allowed 30 days after the date of the notice described in (B) of this paragraph to request the university to hold a hearing on the claim;

(D) the claim has not been contested or, if contested, the issue has been resolved in favor of the university; and

(E) if the claim has been contested and resolved in favor of the university, no appeal is pending, the time limit for filing an appeal has expired, or the appeal has been resolved in favor of the university.

(b) The University of Alaska shall notify the individual of a claim under (a) of this section. The notice shall be sent to the address provided in the individual's permanent fund dividend application and must provide the following information:

(1) the amount of the claim;

(2) notice that the amount of the permanent fund dividend up to the amount of the claim shall be paid to the university to be credited against the individual's default balance; and

(3) notice of the individual's right to a hearing under (c) of this section.

(c) Within 30 days after the date of the notice under (b) of this section, the individual may request a hearing. AS 44.62.330 - 44.62.630 apply to a hearing under this subsection. At the hearing, the individual has the burden to show that

(1) the university has not sent a notice of default in compliance with AS 14.40.251(b);

(2) the notice of default has been rescinded after review under AS 14.40.251(c); or

(3) the amount owed by the individual is less than the amount claimed from the permanent fund dividend.

(d) If the amount owed is determined under (c) of this section to be some amount greater than $0, but less than the amount claimed, the University of Alaska may amend its claim to the amount determined to be owing.