Bill would dun school
loan deadbeats

The measure would specifically go
after licensed professionals

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Star-Bulletin staff

The House Higher Education Committee is considering a bill that would suspend or deny professional licenses for individuals who default on their government educational loans.

Health care, construction, finance and other skilled trade professionals who fail to pay their student loans would face suspension or denial of the licenses until they begin repayment. Licensees who contact their loan agencies to work out their delinquencies or are granted a deferment would not be subject to suspension.

The bill was introduced by Rep. Bertha C. Kawakami (D, West Kauai-Niihau).

The University of Hawaii, the state Department of Commerce and Consumer Affairs, and the Hawaii Credit Counseling Service all submitted testimony last month in support of the bill.

Kawakami said there are few enforcement measures that encourage defaulters to pay off their government loans.

"Student loans provide an excellent opportunity and make higher education a possibility for all, and it is important that those who make use of this economic benefit fulfill their financial obligation," Kawakami said. "In order to ensure the continued economic viability of federal and state educational loan programs, those who have reaped the benefits of student loans and are now successful career professionals should be held accountable."

According to the University of Hawaii General Accounting and Loan Office, there are 1,008 delinquent student loans under the State Higher Education Loan Program amounting to more than $2 million. The program is funded by legislative appropriations.

Hawaii has the 11th-highest cohort default rate among the 50 states and the District of Columbia, according to a 1999 report by the U.S. Department of Education's Family Federal Education Loan Program and the William D. Ford Federal Direct Loan Program. Hawaii's default rate is 6.4 percent, compared with a national average of 5.6 percent.

As of June 30, 2000, 1,701 federal Perkins Loan recipients defaulted on loans totaling almost $3.5 million. The state's default rate for federal loans is 13.85 percent.

Kawakami's bill is patterned after state laws on child support, which suspend professional licenses of individuals who do not make child support payments. Similar legislation has been enacted in Maryland, Texas, Georgia and New York.

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