Hawaii-2014-HB1524-Introduced

SECTION 1. The legislature finds that post-secondary education increases the opportunities for Hawaii's residents to acquire high quality jobs, which ultimately benefits the State's economy. However, tuition at public institutions of higher education have been rising more rapidly than family incomes. These rising costs have rendered financial aid programs inadequate to reach all students who have financial need.

The legislature further finds that the increasing unaffordability of higher education has forced students to borrow more money. Two-thirds of students graduating from American colleges and universities are graduating with some level of debt. According to the Consumer Financial Protection Bureau, federal student debt topped $1 trillion in 2013 and private banks have issued another $200 billion in student loans. The burden of high levels of student debt are not only damaging to the individual student's ability to succeed financially, but will also negatively impact the State's future economy.

The purpose of this Act is to require the University of Hawaii to convene a working group to:

(1) Examine the feasibility of establishing a pay forward, pay back pilot program at the University of Hawaii; and

(2) Develop a proposed pilot program if feasible.

SECTION 2. (a) The president of the University of Hawaii shall convene a working group to examine the feasibility of establishing a pay forward, pay back pilot program at the University of Hawaii to replace the current system of charging students tuition and fees for enrollment.

(b) The working group shall comprise:

(1) The president of the University of Hawaii;

(2) The project manager of the economic research organization at the University of Hawaii;

(3) The chairperson of the board of education;

(4) The director of finance;

(5) Members from the community at large, to be invited by the president of the University of Hawaii; and

(6) Any other person that the president of the University of Hawaii deems advisable for inclusion on the working group.

(c) If the working group determines that establishing a pay forward, pay back pilot program is feasible, the working group shall develop a proposed pilot program. The proposed pilot program shall:

(1) Identify one or more campuses to participate in the pilot program;

(2) Allow students who are residents of this State, as defined by the University of Hawaii, and who qualify for admission to the University to enroll without paying tuition or fees;

(3) Require students, in lieu of paying tuition or fees, to sign binding contracts to pay to the State or the university a certain percentage of the student's annual adjusted gross income, upon graduation from any University of Hawaii campus, for a specified number of years;

(4) Specify the number of years and the percentage of annual adjusted gross income for contracts at each participating campus and the bases for the specifications; and

(5) Identify an immediate funding source for the first twenty years of the pilot program.

(d) The end cost to each student participant in the proposed pilot program may vary by campus based upon the:

(1) Total cost of education at the campus;

(2) Portion of the cost that is paid by the State;

(3) Any other financial aid or scholarship moneys obtained and applied by the student participant to offset education costs;

(4) Number of years specified in the contract; and

(5) Percentage of annual adjusted gross income specified in the contract.

SECTION 3. The working group shall submit a written report of its findings and recommendations, including any proposed pilot program details and any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2015.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the working group established pursuant to this Act to examine the feasibility of establishing a pay forward, pay back pilot program at the University of Hawaii and, if determined to be feasible, develop a proposed pilot program.

The sum appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 5. This Act shall take effect on July 1, 2014.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1524
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII