Struggling borrowers in Hawaii, along with numerous others nationwide, face financial consequences as the cessation of the loan repayment hiatus approaches.
Brace yourself, students! The end of the pandemic-era loan reprieve is upon us, and borrowers across the nation, including those in Hawaii, are gearing up for the resurgence of loan collections. Here's what you need to know before the onslaught begins on May 5, 2025.
The U.S. Department of Education's decision to restart collections signifies a significant step in phasing out COVID-19 relief efforts that have been in place since March 2020. This course change is causing quite a stir, especially for those who rely on federal loans to fund their education and those in default.
While monthly loan payments and interest resumed in October 2023 for most federal student loan borrowers, those in default had a temporary reprieve before aggressive collection measures resumed. That protection is now expiring, and borrowers who haven't taken steps to rectify their delinquencies may face some harsh consequences.
In Hawaii, residents who have defaulted on their loans could face wage garnishments, tax refund seizures, and other enforcement actions. The end of the loan pause means New Hampshire residents no longer have the safety net of the collection pause, opening the door to financial hardships and potential credit score nightmares.
During the 2024 academic year, 6,382 undergraduate students across the University of Hawaii System alone received federal student loans, with the majority - 3,988 students - enrolled at UH Manoa. The average loan amount for UH Manoa undergraduates was $6,404. Moreover, 1,707 graduate students were awarded federal loans, averaging $19,143 per borrower.
Jen Kim, a Makiki resident and single mother of three, is feeling the pressure. Her eldest son, a graduate of UH Manoa and dental school at the University of Washington, still owes nearly $200,000 in federal student debt. With interest resuming at a rate of 6.5%, Kim fears the balance will snowball.
Nationally, dental school graduates carry some of the highest student loan debt in the country, with the average debt for the class of 2024 estimated to be around $312,700. Harvey Tagalicud, a junior at UH Manoa’s Shidler College of Business, shares similar fears, with potential loan debt between $18,000 and $35,000 looming over his head.
The collection resumption has Tagalicud feeling the financial squeeze, navigating the complex world of federal loans with a steep learning curve. “Loans might be the most valuable way for me to jump through my final semesters in college," he said. "But the psychological toll is just as real as the financial one."
Ava Song, a third-year medical student from New York planning to transfer to UH Manoa's John A. Burns School of Medicine, is another student grappling with debt and the psychological toll it takes. With $180,000 in student loan debt, she hopes that JABSOM's unique opportunities and financial aid packages will provide some relief.
Despite the financial pressures, students like Song, Tagalicud, and Jen Kim are determined to pursue their dreams, even if it meansshouldering mounting debt. As Malia, a 37-year-old physical therapist who graduated from UH Hilo in 2011, puts it, "We're all chasing this version of success that's tied to college, but the truth is, we were set up."
For those unsure of their loan status, StudentAid.gov offers a convenient platform to check your accounts. Stay informed, stay prepared, and don't let student loan debt derail your dreams.
- In 2025, the U.S. Department of Education's decision to restart loan collections in the resumption of loan payments and interest signifies a shift towards phasing out COVID-19 relief efforts and may pose challenges for students who rely on federal loans for their education.
- As the loan reprieve ends, community members across the nation, such as those in Hawaii, face potential consequences including wage garnishments and tax refund seizures for defaulted loans, putting their personal-finance and credit score at risk.
- To support their education and self-development, many students turn to the finance sector in search of loans, with the average loan amount for undergraduates at the University of Hawaii Manoa being $6,404 in the 2024 academic year.
- As loan collections resume, students like Jen Kim, a single mother with a dental school graduate carrying over $200,000 in student loan debt, may experience significant impacts on their personal finances due to increasing interest rates.
- Ava Song, a medical student transferring to the University of Hawaii John A. Burns School of Medicine, is another student juggling the financial pressures of student loans and the psychological toll it takes, hoping to find relief through the school's unique opportunities and financial aid packages.
