More isle
students failing to
repay loans
Hawaii's rate once ranked
By Pete Pichaske
among the lowest but has risen
steadily from 1994
Star-BulletinWASHINGTON -- Chalk up repaying college loans as another casualty of Hawaii's economy.
The default rate for student loans in Hawaii, once one of the lowest in the nation, is rising fast and now exceeds the national average, according to figures released yesterday by the U.S. Department of Education.
Hawaii's rate for 1996 was 11.9 percent, the department found, compared with a national rate of 9.6 percent. Moreover, the state's rate has risen steadily from 8.7 percent two years earlier, even as the national rate declined dramatically from 22.4 percent.
Education Secretary Richard Riley and other education leaders credited the national drop to an improving economy that is creating more jobs for college graduates, and thus more opportunity to repay loans.
Conversely, Hawaii's increase was blamed on the state's economic woes.
The traditional value of honoring an obligation, which is common to many ethnic groups found in Hawaii and kept the state's rate historically low, has been overcome by the long-ailing state economy, local educators agreed.
"There's no question about it," said Cheryl Ernst of the University of Hawaii at Manoa, the state's largest college. "It's been so dismal here for such a period of time, it's affecting a lot of folks."
The default rate at the Manoa campus has climbed from 5.1 percent to 7 percent in the past three years.
An administrator for Hawaii Pacific University, where the rate has climbed from 6.1 percent to 10.5 percent, also blamed the economy.
Walter Fleming, associate vice president and dean for administration, records and financial aid, said about 10 percent of the school's delinquent accounts are for less than $500.
"You have to think these kids just ran out of options," he said. "I'm disappointed in our default rate, but because of the economic situation in our state, we probably did pretty well."
One of the highest rates in the state, according to the report, was at Hawaii Community College in Hilo, where 28 percent of the federal loans were in default.
Gail Makuakane-Lundin, interim dean of student services, said that figure did not quite match the school's figure.
But whatever the 1996 rate, she said it has been reduced drastically in the past year, since the school was ordered by the federal government to come up with a plan to lower its rate. The most recent default rate, said Makuakane-Lundin, was 13 percent.
"We've been very aggressive," she said, noting that the school contacts students who have defaulted or seem likely to. "We're looking very closely at at-risk students."
