In the United States, around 43 million individuals are carrying a collective student loan debt of $1.77 trillion. Since March 2020, during the COVID-19 pandemic, the Department of Education has paused collections on defaulted loans, a policy that has been extended multiple times under the Biden administration.

However, this pause came to an end in May, as the Department of Education resumed collections, a decision influenced by the previous Trump administration. This shift has prompted many borrowers to explore ways to manage their repayments, ensuring they can avoid consequences like wage garnishment or tax refund seizures.

In the midst of these changes, exciting discussions are taking place in Congress about new repayment plans. Many Republicans are supporting the ideas introduced during the Trump era, which includes a Refund Assistance Plan that would adjust borrowers' monthly payments based on their income, ranging from 1% to 10%.

Amidst these developments, a different and hopeful approach has emerged for students at the University of Hawai’i Mānoa. The innovative “Hawai’i Renewable Learning Fund,” launched by Social Finance, is a $2.5 million revolving loan fund designed to provide zero-interest loans to low-income college students. This initiative aims to help students cover educational costs that remain after grants and scholarships, with the ultimate goal of fostering engineering talent in Hawaii and connecting graduates with local employers.

After graduation, borrowers earning over $50,000 can repay their loans through manageable monthly installments over five years. For those who earn less, there's the option to apply for an income-based deferment, allowing for a $0 monthly payment. The beauty of this fund lies in its sustainability; every dollar repaid is recycled back into the fund to support future students, creating a continuous cycle of support.

Hydie Kim Hudson, vice president of impact investments at Social Finance, shared her enthusiasm about the fund's mission: “Many talented students in Hawaii face barriers to degree completion, including limited affordable student financing options and high costs of living. The Hawaiʻi Renewable Learning Fund aims to address these barriers while also helping local employers hire talent for in-demand roles.”

This initiative is particularly timely, as Hawaii has identified a significant shortage of engineers in key sectors such as defense, construction, and tourism. Dean Brennon Morioka from the College of Engineering at the University of Hawai’i Mānoa noted that many students juggle part-time jobs, which can delay their graduation. This initiative is a step towards alleviating those pressures and enabling students to graduate on time.

Local engineering firms are also eager to support this transformative project, recognizing the mutual benefits it offers. Michael P. Matsumoto, president and CEO of SSFM International, expressed pride in participating, stating, “We are proud to be part of this transformative endeavor that lowers barriers to education and empowers our future engineers.”

The spirit of this initiative is spreading, with Social Finance planning to launch similar pay-it-forward programs in various states, including Colorado, Massachusetts, New Jersey, New York, and Florida, focusing on fields with urgent talent needs like healthcare and cybersecurity. Although efforts in California are currently on hold, a new program will debut in San Diego this fall, targeting behavioral health professionals.

Alex Harris, vice president of the Harold KL Castle Foundation, emphasized the importance of this innovative approach, stating, “I think of this as a really important proof of concept. It’s a new way of thinking about scholarship support that lets you extend your dollars.”

Funders are thrilled with the progress in Hawaii and are eager to see how this model can flourish in other regions. The recycling of funds allows for a continuous flow of support to students, enhancing public education and contributing to the economic development of Hawaii.

Students are beginning to see the profound impact of this renewable fund. Kirstin Hill, president and COO at Social Finance, shared insights into the students’ perspectives: “There’s something that feels very different in saying, ‘I’m repaying a loan and it’s not going off to some abstract place but it’s going to create this opportunity for someone else.’”

One student, Melanie, a civil engineering major at the University of Hawai’i Mānoa, shared her positive experience with the fund. “Just having the boost in finances allowed me to work fewer hours, so I can focus on school,” she remarked. “And once you begin your career … you don’t have to worry about the high interest rates … and it allows you to invest into the future engineers of Hawaii.”

Colton, a student from New Jersey, echoed similar sentiments, expressing pride in the pay-it-forward approach. He noted, “No one’s getting rich off this. The money is going back to someone just like you. There’s really a sense of gratitude. And that’s a wonderful thing.”

This initiative exemplifies a heartwarming shift towards a supportive educational environment, fostering a cycle of generosity and opportunity that can empower future generations.