Hawaii borrowers in default are among millions nationwide affected by end of payment pause

A pandemic-era pause for federal loan borrowers in default is set to end Monday, and millions of former and current students nationwide are bracing for renewed loan collections.

The U.S. Department of Education’s decision to resume collections is a significant step in winding down COVID-19 relief efforts that have been in place since March 2020. The pending change is causing anxiety for Hawaii residents not only in default on their student loans, but also those who are relying on them now for their education.

Monthly loan payments and interest resumed in October 2023 for most federal student loan borrowers. But those in default — meaning they had already missed payments for an extended period — were given more time before aggressive collection measures restarted. That protection is now ending, and borrowers who have not taken action to address delinquencies could face wage garnishments, tax refund seizures and other enforcement actions.

The change means that residents in Hawaii and throughout the nation who relied on federal loans to fund their education no longer have the safety net of the collection pause.

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. Additionally, 1,707 graduate students were awarded federal loans, averaging $19,143 per borrower.

The end of the loan pause is a deep source of anxiety for Jen Kim, a Makiki resident and single mother of three. Her eldest son graduated from UH Manoa for his undergraduate studies, then completed dental school at the University of Washington. He is finishing his dental residency in Nevada.

Between his undergraduate and dental school loans, Kim said her son still owes nearly $200,000 in federal student debt and has paid back about $12,000. With interest on those loans resuming at a rate of 6.5%, she worries that the balance will balloon.

“He’s done everything right. He went to school here, got into dental school, and now he’s training to serve our people back home,” Kim said. “But the interest is brutal. For every payment he makes, it feels like the total barely changes.”

Nationally, dental school graduates carry some of the highest student loan debt in the country. The American Dental Education Association estimates that the average debt for the class of 2024 was about $312,700.

While Kim’s son’s balance is technically below the national average, it still feels staggering to the Kim family — especially with the high cost of living in Hawaii and limited affordable housing options.

“We’ve already helped him cover basic costs like groceries and rent,” she said. “Now we’re helping with interest, too, and I’m pulling from my own savings. I just keep thinking: He wants to be a dentist in Hawaii, not in Vegas, but the system makes it hard for him to come home.”

The family had hoped the federal payment pause would last until he finished residency, but with the pause ending in 2023 and defaulted loan collections now restarting in May, the pressure is back.

“It’s not just the money. It’s the stress, the sense that no matter how hard he works, he’ll always be behind,” she said.

For Harvey Tagalicud, 23, a junior at UH Manoa’s Shidler College of Business, the financial pressure of loans has been a constant companion throughout his academic journey.

Tagalicud, a first-­generation college student, said his total debt could land anywhere between $18,000 and $35,000, depending on how much financial hardship arises during emergencies.

His experience with loans has included federal PLUS loans, a short-term “shell loan” for emergencies. Taga­licud said he has carefully avoided unsubsidized loans thanks to financial literacy support from programs like Upward Bound.

“Loans might be the most valuable way for me to, in the short term, jump through my final semesters in college,” he said. “It’s kind of a necessary evil — and I believe that’s a sentiment for a lot of us in academia right now.”

He said choosing the right loan type was just one part of a steep learning curve.

“We’re making one of the biggest financial decisions, the first big financial decision in our lives, and something that we can’t even comprehend sometimes, Tagalicud said.

The psychological toll, he added, is just as real as the financial one.

“We learn in consumer psychology that if scarcity exists for a person, that becomes an overarching thing that always limits in the back of your head,” Taga­licud said.

He emphasized that students are not trying to avoid responsibility, and said the current system discourages genuine learning.

“We’re not trying to dodge loan repayments. We’re trying to learn with genuine passion and curiosity, without being burdened by the financial weight that becomes one of the biggest decisions in our lives,” he said. “It’s important we create policies that encourage us to become lifelong learners, not just lifelong debt payers.”

For Ava Song, a third-year medical student from New York who plans to transfer to UH Manoa’s John A. Burns School of Medicine, managing her education means juggling three part-time jobs while taking on more than $180,000 in student loan debt.

Song, who plans to return to Hawaii to serve the community and take advantage of in-state tuition, hopes that JABSOM’s unique opportunities and financial aid packages will ease her financial burdens.

In New York she’s worked as a high school tutor, a clinic assistant sterilizing instruments and a weekend bartender — often logging 14-hour days split between work, classes and clinic rotations.

“It’s exhausting, but I don’t have much of a choice,” Song said. “Every dollar I earn is a dollar I don’t have to borrow and a dollar that doesn’t rack up interest later.”

Alicia Malia, a 37-year-old physical therapist who graduated from UH Hilo in 2011, pointed out that student loan debt does not always end with graduation or even after establishing a career.

“The system told us to get a good education so we could get good jobs and live a good life,” Malia said “But the reality is that to get that education, most of us had to borrow a ton of money. We worked our asses off during school just to afford living, and then we graduate into jobs where we still have to work just as hard — not just to live, but to pay back what we borrowed.”

Malia said she still owes around $28,000 in student loans, despite working full time in her field for over a decade. The pandemic-era pause in payments, she said, helped her finally get ahead on other bills and build up some savings.

“That break gave me room to breathe. I could help my parents, fix my car, even take a short trip for the first time in years,” she said.

But now, with payments resumed and collections restarting for those in default, Malia said she’s deeply worried about younger generations — including her niece, who just started at UH Manoa.

“They say it’s the American dream, but it’s just a dream — it’s so hard to attain,” she said. “We’re all chasing this version of success that’s tied to college, but the truth is, we were set up. If you don’t go to college, it’s hard to make a living. If you do, you’re buried in debt. By the time we finally pay everything off, our lives have already passed us by.”

Students and graduates who are unsure of their loan status can check their accounts at StudentAid.gov.