HONOLULU — Joshua Alferos was nearing his bachelor’s degree in electrical engineering when financial constraints halted his progress. With financial aid exhausted and family savings depleted, he faced the prospect of changing his major or dropping out. A breakthrough came when he discovered an innovative program offering zero-interest loans, backed by philanthropies and businesses, allowing him to complete his degree.
This experimental initiative offers loans without fees, payable only after reaching a specific salary, with employer assistance in repayment. Notably, repaid funds are reinvested to help future low-income Hawaiian students. “It’s pretty empowering, because you can help future students,” Alferos remarked at the University of Hawaiʻi, where the loan has enabled him to continue his studies.
This pay-it-forward model aims to extend financial aid’s reach and fill critical job shortages. While proposed in half of the U.S. states, high startup costs have stalled widespread adoption. However, pilot programs in Hawaii, Massachusetts, and New Jersey are demonstrating its viability, coinciding with renewed student loan enforcement by the federal government.
San Diego plans to launch a similar program, while a California Assembly bill seeks to establish a pay-it-forward fund. Despite delays, the bill will be revisited in January. The Hawaii pilot focuses on engineering students, addressing the state’s engineer shortage vital to defense, construction, and tourism sectors. This program resonates with Hawaii’s “kokua” tradition of mutual support.
Students begin repaying loans once earning $50,000, with no interest. Leading engineering firms and the university promote participation, which has been met with skepticism. “There was kind of an inherent skepticism that I wasn’t expecting,” said Alex Harris of the Harold KL Castle Foundation.
In other states, pay-it-forward initiatives target fields with high demand, like health care and IT in Colorado and New Jersey, and climate careers in Massachusetts. Under California’s proposed fund, students at public universities would repay based on income, supporting up to 10,000 students by 2030.
Programs require graduates to secure good jobs, aligning the interests of students and funders. While government adoption is slow, private and public collaborations are paving the way. Harris emphasizes the need for more awareness, as the Hawaii program has attracted fewer participants than expected.
“We know it works. The question is, how do you get it to work everywhere?” asked Julie Stone of Gary Community Ventures. The altruistic appeal of pay-it-forward programs offers students the chance to contribute to future opportunities, fostering a sense of community and gratitude.
The Hechinger Report covers education inequality and innovation. Sign up for our newsletter or listen to our podcast.
—
Read More Kitchen Table News
