July 23rd 2025.
Joshua Alferos, a student at the University of Hawai'i, was facing a difficult situation. He was only two semesters away from earning a degree in electrical engineering when he ran out of money. Unfortunately, engineering programs often take longer than four years, and Joshua had already used up all of his financial aid and savings from his family. He was considering changing his major or dropping out of school altogether.
Just when things seemed hopeless, Joshua heard about a new student loan program that was being offered by philanthropies and private businesses. This program was different from traditional loans, as it had zero interest and no additional fees. The best part for Joshua was that the loan would not have to be repaid until he started earning a minimum salary after graduation. In addition, his employer would likely assist with paying off the loan. What made it even more special to Joshua was that the money he borrowed would go back into a pool to help other low-income students in Hawaii achieve their dreams of higher education.
Joshua was ecstatic about this opportunity and shared his excitement while sitting outside on the terrace of the student center at the University of Hawai'i. He was grateful for the loan, which allowed him to continue his studies and stay on track to graduate.
The concept of pay-it-forward for college funding has gained traction in recent years, with many states considering implementing similar programs. However, the high startup costs and other factors have caused most states to reject the idea. In response, charitable foundations and employers in Hawaii and other states have taken matters into their own hands by creating pilot programs to show the effectiveness of pay-it-forward. Two states, Massachusetts and New Jersey, have even partnered with private efforts to launch small-scale experiments. This is happening at a crucial time, as millions of people who have defaulted on their student loans are facing consequences from the federal government.
Another program is set to begin in San Diego this fall, and a bill has been introduced in the California Assembly to create a pay-it-forward fund for students in the University of California and California State University systems. As these efforts gain momentum, they are proving to be a successful and innovative way to cover the cost of college. According to Alex Harris, the vice president of the Harold KL Castle Foundation, this approach not only removes the burden of interest on students, but also allows states to stretch their scholarship funds further by re-loaning the money once it is repaid.
The idea of repaying student loans to benefit future students rather than large, profit-driven loan programs has resonated with many people, especially in Hawaii where there is a strong sense of mutual support and community called "kokua". Brennon Morioka, the dean of the University of Hawai'i College of Engineering, believes in this concept and teaches it to his own children.
Under the pilot program in Hawaii, low-income engineering students can borrow from a $2.5 million revolving fund that is supported by the Castle Foundation and other donors. Repayment of the loans does not begin until the students graduate and start earning a salary of $50,000 or more. To help fill open jobs, some of the state's biggest engineering firms have also agreed to assist their new employees with paying off the loans. The University of Hawai'i has also been instrumental in promoting this program.
The pilot program in Hawaii was initially focused on engineering because the state has a high demand for engineers in industries such as defense, construction, and tourism, but a shortage of qualified professionals. Kyle Kaneshiro, a principal in a civil engineering company, expressed his excitement about this program and how it makes it easier for companies to recruit talented individuals. He also noted that it was surprising that no one had thought of this idea before.
Pay-it-forward programs have also been established or are set to launch in other states, such as Colorado, Massachusetts, New Jersey, New York, and Miami. Each program is focused on a specific field that is in high demand and short supply, such as healthcare, information technology, and climate careers. In California, a bill has been proposed to create a zero-interest pay-it-forward fund for public university students, with the goal of supporting at least 10,000 students by 2030. This program is not limited to a specific field, but in San Diego, a separate pay-it-forward fund will be targeting majors in behavioral health, with loans being forgiven for graduates who work in this field for five years or more.
According to Kirstin Hill, president of Social Finance, a nonprofit that designs and manages pay-it-forward funds, these programs must be designed with economic development and employment needs in mind. This means that they are currently limited to certain professions and not others. For example, in 24 states, a pay-it-forward fund has been set up to help residents study nursing at an online university. Similarly, Google is also supporting students pursuing certifications in various fields.
The concept of recycling repayments to support future students is gaining popularity, as seen in the programs at Hope College and Western Governors University. These programs have proven to be successful in stretching scholarship funds and helping students achieve their goals. As more states and organizations join the pay-it-forward movement, it is becoming a crucial proof of concept for the future of higher education funding.
In Honolulu, Joshua Alferos was just two semesters away from earning his bachelor's degree in electrical engineering. He had been diligently working towards this goal, but unfortunately, he ran into a major hurdle - he ran out of money. Anyone who has pursued a degree in engineering knows that it often takes longer than the typical four years, and this was exactly the case for Alferos. He had used up his financial aid and the savings his family had set aside for him. Feeling defeated, he was considering either changing his major or dropping out altogether.
However, luck was on his side when he heard about a new form of student loan that could potentially save his education. It was an experimental program run by philanthropies and private businesses, offering loans at zero interest and without any additional fees. The best part? The debt wouldn't come due until he earned a minimum salary, and his future employer could even help him pay it off. But what truly stood out to Alferos was that the money he borrowed would eventually go back into a pool to help other young, low-income Hawaii residents pursue their education.
Alferos was ecstatic at this opportunity and expressed his gratitude while sitting on the outdoor terrace of the student center at the University of Hawai'i. Thanks to this new loan, he was able to continue his studies and stay on track to graduate. This innovative pay-it-forward approach to covering the cost of college has gained attention and support from many, including The Hechinger Report, who believe it can not only benefit a larger number of students but also help fill shortages of workers in critical industries.
This concept has been proposed and considered by half of the nation's state legislatures, yet most have rejected it due to high startup costs and other concerns. But in Hawaii and other places, charitable foundations and employers are taking the initiative to set up pilot programs to prove that pay-it-forward can work. Two states, Massachusetts and New Jersey, have even teamed up with these private efforts to conduct small-scale experiments. This comes at a crucial time when many people who have defaulted on their student loans are facing consequences from the federal government.
The momentum for pay-it-forward continues to grow, with a new program set to begin in San Diego this fall. California also has a bill in the works to create a pay-it-forward fund for some students in the University of California and California State University systems. As Alex Harris, vice president at the Harold KL Castle Foundation, which is the lead funder of the Hawai'i Renewable Learning Fund, puts it, these programs serve as a crucial proof of concept.
Not only does this approach remove the burden of interest for students, but it also allows states to extend their scholarship support by recycling the money once it is repaid. This unique feature has struck a chord with many, especially in Hawaii, where the culture of mutual support, known as "kokua," runs deep. Both Harris and Brennon Morioka, dean of the University of Hawai'i College of Engineering, have been taught and believe in the idea of lifting each other up when one person succeeds.
The pilot program in Hawaii specifically focuses on engineering students from low-income families and is funded by a $2.5 million revolving fund from the Castle Foundation and other donors. Repayment of loans does not begin until after graduation, and only when the borrower earns at least $50,000. To help fill open job positions, some of the state's biggest engineering firms have also agreed to assist their new employees with paying off their loans. The university also actively promotes the program.
The decision to start with engineering majors was a strategic one as the state relies heavily on engineers for its defense, construction, and tourism industries but has a shortage of them. As Kyle Kaneshiro, a principal in a civil engineering company and past president of the American Council of Engineering Companies of Hawaii, puts it, there is always a need for more engineers. He also expressed his excitement about this new option, saying, "How come nobody thought of this before?"
Hawaii is not the only state with a pay-it-forward program. Colorado, Massachusetts, New Jersey, New York, and Miami also have programs in place or set to launch in the fall. Each program focuses on a field with high demand and a short supply of workers, such as health care, information technology, and climate careers. In California, a proposed fund for public university students would begin in 2028, with a goal of supporting 10,000 students by 2030.
The success of these programs relies heavily on their design and implementation. As Kirstin Hill, president and chief operating officer at Social Finance, a nonprofit involved in designing and managing pay-it-forward funds, explains, they must be tailored to meet the economic development and employment needs of each state. This means that most programs are currently limited to specific professions.
For example, in 24 states with shortages of registered nurses, a pay-it-forward fund has been set up to support those studying nursing at Western Governors University. Graduates repay the money, interest-free, once they earn a certain salary, and their repayments are then loaned out again to other students. Google also has a similar program for students pursuing certificates in various fields. At Hope College in Michigan, donors have pooled their money to offer free education to students with the understanding that they will pay back the fund after they graduate.
In conclusion, pay-it-forward programs offer a promising solution to the problem of college affordability and workforce shortages. They not only benefit students but also have the potential to positively impact the economy. With more successful pilot programs and increasing support from state legislatures, it is clear that this innovative approach has a bright future and the potential to change the lives of many students.
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