The crisis of student loan debt in Hawaiʻi, the U.S.

HONOLULU (KHON2) — Student loan debt has been a hot button issue in the United States for nearly 20 years. The debate rages between those who believe that the educational debt sytem is broken and those who believe the system isn’t broken.

At this point, college attendees have accumulated $1.75 trillion in total student loan debt. This includes both federal and private loans.

Meanwhile, the average borrower owes $28,950; and about 92% of all student debt are federal student loans. The remaining amount is private student loans.

Most of the debt lies in the 55% of students who attend public four-year institutions, and approximately 57% of students from private nonprofit four-year institutions took on education debt.

“Americans with student loans are seemingly unsettled and anxious less than a month away from student loan payments resuming after a three-year pause,” explained Dr. Billy Hensley, President & CEO, National Endowment for Financial Education. “Nearly 31% of Americans have outstanding loans; yet, just 23% of borrowers continued to make consistent payments during the hiatus.”

Student loan debt in the state of Hawaiʻi

In Hawaiʻi, the total amount of student load debt is less than $5 billion, estimated to be at approximately $4.5 billion.

The average borrow owes about $37,000. There is only about 8.49% of the Hawaiʻi residents who have student loan debt. This makes Hawaiʻi the state with the smallest percentage of residents who have student loan debt.

This amount is held by approximately 122,000 people. This means that a little less than 20% of undergraduates take out loans in Hawaiʻi. About 7% of the population takes out student loans for two-year schools and about 29% take them out for four-year institutions.

For the four-year degree program students, they each receive approximately $6,575 per year, meaning the state spends about $5.6 million per year.

In an attempt to entice Hawaiʻi residents to pursue careers in the medical field, Governor Josh Green, M.D. and the Hawai‘i/Pacific Basin Area Health Education Center (AHEC) unveiled an aggressive and far-reaching loan repayment program to address the growing shortages of physicians and other healthcare professionals across the islands.

The program was developed by the John A. Burns School of Medicine, the Healthcare Association of Hawai‘i and the State Department of Health. It is funded by the Hawaiʻi State Legislature, and the Healthcare Education Loan Repayment Program (HELP) provides an unprecedented $30 million in educational loan debt repayment to health professionals licensed or otherwise certified to practice in and provide care to patients in Hawai‘i.

“This announcement is the result of many years’ worth of effort,” Gov. Green said. “I’m thinking back to my time working with colleagues in the state legislature on this loan repayment program and other ways to resolve the shortage of healthcare providers, so it is very rewarding to see it come to fruition so generously funded.”

HELP promises to build on the decade-old, federally funded Hawaiʻi State Loan Repayment Program by reaching a larger group of potential healthcare professionals.

The programs offers certain healthcare professionals loan repayments starting at $12,500 which is capped at $50,000. The eligible amount varies depending on the profession, location of practice and educational indebtedness.

All who qualify must provide care to or work for organizations that provide care to at least 30% of patients who are publicly insured.

Student loan debt’s recent history

In 2007, President George W. Bush made a play to placate those in dire need of help in navigating student loan debt repayments. He created the income-based repayment system (IBR).

For all the things the law attempted to target, it allowed student borrows to cap repayment schemes at 15% of their income which would lead to total loan forgiveness if the person did this for 25 years.

Unfortunately for President Barak Obama, this scheme did not come into effect until six months after his inauguration in January 2009. This led to strong Republican opposition in which they claimed Democrats were attempting to destroy the debt cycle.

As a result, Pres. Obama took the IBR scheme and tweaked so that borrowers could cap the repayments at 10% of their income needing to do this for 20 years in order to receive full forgiveness. This triggered a Republican backlash that continues.

In 2016, President Donald Trump indicated that he would increase the cap to 12.5% but reduce the length of time commitment to 15 years before complete forgiveness. So, in 2017, he increased the payment cap to 12.5% and lengthened the time commitment to complete forgiveness to 30 years.

In an effort to court voters during the 2020 election, Pres. Trump signed an Executive Order that paused all student loan repayments through the end of that year. He went on to declare that after the election, he would revisit the EO to see if he would want to extend that.

After 20 years of attempting to move the population forward on this stagnating debate, the metaphorical hot potato has landed into the lap of President Joe Biden.

As part of Pres. Biden’s effort to alleviate the debt crisis, his Administration has approved over $117 billion in debt relief to more than 3.4 million borrowers. This includes over $14 billion in relief for 1.1 million borrowers whose colleges took advantage of them or closed abruptly.

“Today, my Administration approved another $37 million in debt cancellation for over 1,200 borrowers who were deceived by the University of Phoenix,” said Pres. Biden in a statement. “These borrowers were cheated into believing that by attending the University of Phoenix they would have promising career prospects at Fortune 500 companies – yet those benefits and opportunities never existed.”

In an attempt to mitigate loan debt from for profit universities, Pres. Biden is targeting University of Pheonix borrows.

“My Administration won’t stand for colleges taking advantage of hardworking students and borrowers,” said Pres. Biden. “As long as I am President, we will never stop fighting to deliver relief to borrowers who are entitled to it – like those who attended University of Phoenix – and we will hold colleges accountable for misleading and cheating their students.”

Pres. Biden announced that he intends to achieve the largest increases in Pell Grants in over a decade. He also said that his program intends to fix the Public Service Loan Forgiveness program to allow borrowers who go into public service to obtain debt relief.

Throughout all of these debates, few talk about the history of paid higher education in the United States. Up until the Civil Rights movement successfully acquired better admissions prospects into colleges and universities for minority students, a higher education degree was free in the U.S.

The explosion of minority students applying for admissions led states like California under the leadership of Governor Ronald Reagan to begin charging tuition.

Since that time, students in the U.S. have been forced to take on copious amounts of debt in order to gain the knowledge required to be a productive member of society.